What describes the key difference between reversionary interest and remainder interest?

The key difference between reversionary interest and remainder interest lies primarily in their definitions and implications regarding the future use of property. A reversionary interest is established when a property owner grants usage rights to another party, known as a life tenant, but retains the right for the property to revert back to them upon the death of that life tenant. This means that once the life tenant no longer has rights to the property, ownership returns to the original owner or their heirs.

On the other hand, a remainder interest involves a third party who is designated to receive the property after the termination of the life tenant's interest. This means that the property is not automatically returned to the original grantor but instead passes to this third party immediately after the life tenant's interest ends. Understanding these distinctions is crucial for real estate professionals when dealing with property rights and the distribution of interests in both current and future ownership scenarios.