Texas Real Estate Sales Agent ExamProperty OwnershipHard
A property owner holds a life estate in a property, with the provision that upon their death, the property will pass to their niece. The niece holds a future interest in the property. What type of estate does the niece possess?
- AA remainder interest
- BA fee simple absolute estate
- CA leasehold estate
- DA reversionary interest
Show answer & explanationAnswer & explanation
Correct answer: A. A remainder interest
A remainder interest is a future interest in real estate that takes effect upon the termination of a prior estate, such as a life estate, and is held by someone other than the grantor (in this case, the niece).
Why the other options are wrong
- B. Fee simple absolute is the highest form of ownership, a present interest, not a future one that follows a life estate.
- C. A leasehold estate is a right to possess property for a limited time under a lease, not a future ownership interest.
- D. A reversionary interest occurs when the property reverts to the grantor or their heirs after the life estate, not a third party.
Remainder Interest
A future interest in real estate that becomes a present interest upon the termination of a preceding estate (e.g., a life estate), held by a third party.
- The recipient is called the 'remainderman'.
- Takes effect automatically after the prior estate ends.
- Distinct from a reversion, where property returns to the grantor.
Memory trick: Future Interests Flow, Reversions Return, Remainders Receive.