A remainder is a legal term used in property law to refer to a type of future interest in an estate in land. It becomes possessory when the prior estate, usually a life estate or a term of years, ends. Unlike a reversion which reverts to the original grantor or their heirs, a remainder is vested in a third party.
Types of Remainders
Vested Remainders
A vested remainder is one where the interest is given to an ascertained person without any condition precedent other than the natural termination of the preceding estate.
Examples
- Example 1: “To A for life, then to B.” Here, B has a vested remainder.
- Example 2: “To A for 20 years, then to B and his heirs.” B has a vested remainder that will take effect after 20 years.
Contingent Remainders
A contingent remainder is dependent on either a condition precedent or the interest being given to an unascertained or unborn person.
Examples
- Example 1: “To A for life, then to B if B graduates from college.” B must graduate from college for the remainder to vest.
- Example 2: “To A for life, then to A’s first born child.” If A does not have any children at the time of the grant, the remainder is contingent.
Historical Context
The concept of remainders traces back to feudal England where land tenure and inheritance laws shaped the way estates were structured. The Statute of Uses (1535) played a significant role in shaping modern property law, particularly affecting the creation and transfer of remainders and other future interests.
Applicability in Modern Law
In contemporary real estate and property law, remainders are used in estate planning and the structuring of various real property transactions to determine how property interests will be transferred over time. They ensure smooth succession and clarity over property rights.
Special Considerations
Rule Against Perpetuities
The Rule Against Perpetuities is a legal doctrine intended to prevent the indefinite suspension of property interests. A contingent remainder must vest, if at all, within a certain period, typically 21 years after a life in being at the creation of the interest.
Acceleration of Remainders
When a preceding estate terminates prematurely, such as by the death of a life tenant before expected, vested remainders can accelerate into immediate possession.
Related Terms
- Reversion: A reversion is a future interest remaining in the original grantor after the grant of a lesser estate, which automatically returns to the grantor or their heirs.
- Executory Interest: A future interest in property that will cut short or divert another estate or interest.
- Life Estate: An interest in property that lasts for the duration of an individual’s life and terminates upon their death.
FAQs
What happens if the person holding a contingent remainder dies?
Can remainders be sold or transferred?
Are there any tax implications of remainders?
Summary
A remainder is a future interest in an estate that becomes possessory upon the termination of a preceding estate, but it does not revert to the original grantor. Remainders can be classified as vested or contingent, with various legal implications and special considerations such as the Rule Against Perpetuities. Understanding remainders is vital for effective estate planning and property management.
References
- Black’s Law Dictionary
- Restatement (First) of Property
- American Law Institute, “Restatement of the Law of Property”
