What Is a Future Interest?
A future interest is not a maybe — it is a legally recognized property right today, even though possession won’t begin until later. Every grant that splits ownership across time creates one, and California property questions test whether you can name it correctly and predict what happens to it.
Future interest, in one sentence: it is a present, transferable legal interest in real property that will (or may) become a possessory estate at some point after a prior estate ends.
Future interests fall into two families: reversions, retained by the grantor, and remainders, given to a third party. California codifies both. Under Cal. Civil Code § 768, a reversion is “the residue of an estate left by operation of law in the grantor… commencing in possession on the determination of a particular estate granted.” Under Civil Code § 769, a remainder is a future estate created together with a prior estate, dependent on that prior estate, and taken by a person other than the grantor.
Reversions: What’s Left Over
If O conveys “to A for life” and names no one else, O has not given away the entire fee — only a life estate. The remaining interest, which will return to O automatically when A dies, is a reversion. O doesn’t need to do anything to “keep” it; it exists the instant the life estate is created, because O never gave it away.
Remainders: Vested vs. Contingent
A remainder given to a named third party comes in two flavors, and distinguishing them is the single most tested skill in this area of California property law.
- Vested remainder. The holder is an ascertained, living person, and there is no condition precedent to their taking possession other than the natural termination of the prior estate. “To A for life, then to B” gives B a vested remainder — B need only survive to the moment A’s estate ends (and even if B dies first, B’s interest passes through B’s own estate).
- Contingent remainder. The holder is either unascertained or subject to a condition precedent beyond the natural termination of the prior estate. “To A for life, then to B if B graduates from law school” gives B a contingent remainder — B’s interest never vests unless the condition (graduating) is satisfied before A’s life estate ends.
A third category — vested remainder subject to divestment — vests immediately but can be cut short by a later condition. “To A for life, remainder to B, but if B ever sells alcohol on the property, then to C” gives B a vested remainder subject to complete divestment, and gives C a shifting executory interest.
Why the Vested/Contingent Line Matters
| Feature | Vested Remainder | Contingent Remainder |
|---|---|---|
| Holder identified? | Yes, ascertained and living | No, or subject to unmet condition |
| Devisable / inheritable? | Yes | Usually not until it vests |
| Subject to Rule Against Perpetuities? | No | Yes |
| Marketable / financeable? | Generally yes | Very difficult |
| Can it fail entirely? | No (passes through holder’s estate) | Yes, if condition never occurs |
This distinction drives real consequences beyond exam trivia. A contingent remainder is nearly impossible to mortgage, because a lender has no way to value collateral that might evaporate. It’s also generally inalienable during the life of the prior estate holder in many circumstances, which limits a contingent remainder holder’s practical options if they need cash before the condition resolves.
Future Interests and the Chain of Title
Future interests create genuine headaches for California title examiners and lenders. When a homeowner holds only a life estate, and a remainder person holds the future interest, a lender financing the life tenant must account for the risk that the remainder vests unexpectedly (on the life tenant’s death) and wipes out the loan’s security. Because remainders and reversions are often not clearly flagged in a routine title search — particularly older ones — a careful chain-of-title review is essential before financing or purchasing any property that might be subject to an outstanding future interest.
Future interests also constrain who can grant a lease. If O conveys “to A for life, remainder to B,” only A — the current possessory holder — can lease the property during A’s lifetime. B’s remainder gives B no present right to lease, because B does not yet possess anything. A prospective commercial tenant negotiating a long-term lease on property held in a life estate should always ask who holds the remainder, and whether that person’s consent is needed for the lease to survive the life tenant’s death.
Worked Example
O executes a deed: “To my son Marcus for life, then to my granddaughter Zoe if she survives Marcus, otherwise to the Sierra Land Trust.” Marcus is alive; Zoe is alive; nothing else has happened.
Question: What interests exist, and are they vested or contingent?
Analysis: Marcus holds a life estate. Zoe’s interest is a remainder, but it is contingent — her survival of Marcus is a condition precedent beyond the mere ending of the life estate. The Sierra Land Trust holds an alternative contingent remainder — it takes only if Zoe fails to survive Marcus. Because both Zoe’s and the Trust’s interests are contingent on the same either/or condition, only one will ever actually vest. If Zoe predeceases Marcus, her contingent remainder fails completely — it does not pass to her own heirs — and the Trust’s contingent remainder becomes possessory when Marcus dies. If Zoe survives Marcus, her remainder vests at that moment and the Trust takes nothing.
Common Mistakes to Avoid
- Confusing a reversion (grantor’s leftover interest) with a remainder (a third party’s interest) — if no remainder is named, the grantor automatically has a reversion.
- Assuming a contingent remainder simply “waits” to vest — if the condition never happens, it fails entirely and the property reverts to the grantor.
- Treating a vested remainder subject to divestment as contingent — it is vested from the start, just subject to being cut short later.
- Forgetting that the Rule Against Perpetuities applies to contingent remainders and shifting executory interests, but not to vested remainders.
FAQ
What is the difference between a remainder and a reversion?
A remainder is a future interest held by a third party named in the grant. A reversion is the interest automatically retained by the grantor (or the grantor’s successors) whenever the grantor doesn’t give away the entire estate.
Can a contingent remainder be sold or mortgaged?
Rarely in practice. Because the interest may never vest, buyers and lenders are reluctant to take on that risk, which makes contingent remainders difficult to market compared to vested remainders.
Does the Rule Against Perpetuities apply to all future interests?
No. It applies to contingent remainders and executory interests that might vest too remotely in the future. It does not apply to reversions or to vested remainders, including a vested remainder subject to divestment.
Key Takeaways
- Future interests split into reversions (grantor) and remainders (third parties) — Cal. Civil Code §§ 768–769.
- A vested remainder needs only the prior estate to end; a contingent remainder needs an additional condition or an unascertained holder.
- A contingent remainder that fails does not pass to the holder’s heirs — the property reverts to the grantor instead.
- Only a current possessory interest holder can grant a lease; a remainder holder cannot lease property they don’t yet possess.
- The Rule Against Perpetuities targets contingent remainders and executory interests, not vested remainders or reversions.
This article is educational and is not legal advice. Consult a licensed California attorney about your situation.
Related guides
- life estates in California property law
- fee simple determinable and conditions subsequent
- rule against perpetuities
- life estate and remainder interests in California wills