What is Reversion?

Legal Definition
A reversion in property law is a future interest that is retained by the grantor after the conveyance of an estate of a lesser quantum that he has (such as the owner of a fee simple granting a life estate or a leasehold estate). Once the lesser estate comes to an end (the lease expires or the life estate tenant dies), the property automatically reverts (hence reversion) back to the grantor.

A reversion interest is logically similar, but not legally identical, to the rights retained by someone who lends his property to another for a limited time. Although the bailee would have the right to possess the property during the limited duration, these rights are neither permanent nor exclusive. When the time comes, the property rights of possession will terminate and return to the holder of the reversion.

Reversions are commonly created in real property transactions, particularly during lease arrangements as well as devise (the transfer of real property through a will). In the context of a will, a testator may devise a simple life estate to a devisee. The testator may retain the reversion in the estate or give it to another individual. The owner of the life estate will retain ownership of the property during the devisee's life, and may freely alienate this interest. However, upon the death of the devisee the life estate will terminate and ownership of the real-property will fully vest in the holder of the reversion.

A tenancy for years is a simple illustration of a reversion interest in the context of leasing arrangements. An owner of real-property becomes a lessor by transferring a bundle of rights - including a right of entry - to the leasee for a certain period of time. The lessor typically retains a reversion interest in the property which will mature after the lease expires. A common example of this transaction is the leasing of an apartment to a tenant for a one-year period. When the lease expires, the rights of the leasee are terminated and exclusive ownership of the property returns to the lessor.

Reversion should not be confused with the possibility of reverter created in the grant of a fee simple determinable. Although both result in the return of the land to the original grantor or his heirs, reversions occur upon the natural expiration of the grantee's estate, while the possibility of reverter actively ends the grantee's otherwise-indefinite estate as a consequence of the grantee's failure to comply with the condition contained in the grant.

Unlike some other future interests, reversions have always been fully alienable.
-- Wikipedia
Legal Definition
A future interest that the grantor keeps. Follows fee tail estates, life estates, and terms of years. Contrast with remainders.
Legal Definition
Estates. The residue of an estate left in the grantor, to commence in possession after the determination of some particular estate granted out by him; it is also defined to be the return of land to the grantor, and Iiis heirs, after the grant is over. Co. Litt. 142, b.

2. The reversion arises by operation of law, and not by deed or will, and it is a vested interest or estate, and in this it differs from a remainder, which can never be limited unless by either deed or devise. 2 Bl. Comm. 175; Cruise, Dig. tit. 17; Plowd. 151; 4 Kent, Comm. 349; 19 Vin. Ab. 217; 4 Com. Dig. 27; 7 Com. Dig. 289: 1 Bro. Civil Law, 213 Wood's Inst. 151 2 Lill. Ab. 483. A reversion is said to be an incorporeal hereditament. Vide 4 Kent, Com. 354. See, generally, 1 Hill. Ab. c. 52, p. 418; 2 Bouv. Inst. n. 1850, et seq.
-- Bouviers Law Dictionary
Legal Definition
In real property law. A reversion is the residue of an estate left by operation of law in the grantor or his heirs, or in the heirs of a testator, commencing in possession on the determination of a particular estate granted or devised. How. St. Mich. 1882, § 5528; Civ. Code Cal. § 768; 2 Bl. Comm. 175. And see Barber v. Brundage, 50 App. Div. 123, 63 N. Y. Supp. 347; Payn v. Beal, 4 Denio (N. Y.) 411; Powell v. Railroad Co., 16 Or. 33, 16 Pac. 863, 8 Am. St. Rep. 251; Wingate v. James, 121 Ind. 69, 22 N. E. 735; Byrne v. Weller, 61 Ark. 366, 33 S. W. 421. When a person has an interest in lands, and grants a portion of that interest, or, in other terms, a less estate than he has in himself, the possession of those lands shall, on the determination of the granted interest or estate, refum or revert to the grantor. This interest is what is called the "grantor's reversion," or, more properly, his "right of reverter," which, however, is deemed an actual estate in the land. Watk. Conv. 16. Where an estate is derived, by grant or otherwise, out of a larger one, leaving in the original owner an ulterior estate immediately expectant on that which is so derived, the ulterior interest is called the "reversion." 1 Steph. Comm. 290. A reversion is the residue of an estate left in the grantor, to commence in possession after the determination of some particular estate; while a remainder is an estate limited to take effect and be enj'oyed after another estate ls determined. Todd v. Jackson, 26 N. J. Law, 525. In personalty. "Reversion" is also used to denote a reversionary interest; e. g., an interest in personal property subject to the life interest of some other person. In Scotch law. A reversion is a right of redeeming landed property which has been either mortgaged or adjudicated to secure the payment of a debt. In the former case, the reversion is called "conventional;" in the latter case, it is called "legal;" and the period of seven years allowed for redemption is called the "legal." Bell; Paterson. See Legal reversion.
-- Black's Law Dictionary
Legal Definition
The residue of an estate left in the grantor, to commence in possession after the determination of some particular estate granted out by him. See 16 Or. 33, 8 Am. St. Rep. 251, 16 Pac. 863.
-- Ballentine's Law Dictionary