Definition
A remainder is a future interest in property that becomes possessory when a preceding estate, such as a life estate, ends. The remainder interest can be either vested or contingent. A vested remainder is certain to become possessory upon the end of the prior estate, while a contingent remainder is dependent on some condition being met before it can become possessory.
Examples
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Life Estate and Remainder:
- Polly Rowen inherits a life estate in their home after the death of her husband. The remainder is devised to their son, Paul Rowen. When Polly dies, Paul will gain title to the house. Here, Paul is considered the remainderman.
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Eminent Domain:
- The local government decides to exercise eminent domain to acquire a section of Bob’s large property for a public highway. The portion of the property left with Bob after this acquisition is the remainder. Due to its odd shape and reduced utility, this remainder may have lesser value.
Frequently Asked Questions
What is the difference between a vested remainder and a contingent remainder?
A vested remainder is guaranteed to become possessory in the future, whereas a contingent remainder depends on the occurrence of some event or conditions being met before it can become possessory.
How does a remainder relate to a life estate?
A remainder interest in property is usually created by the same document that establishes a life estate. It takes effect after the life estate terminates, typically upon the death of the life tenant.
What happens to the property when a life tenant passes away?
Upon the death of the life tenant, the property automatically transfers to the remainderman, who then gains full possession and ownership.
What is a remainderman?
A remainderman is an individual or entity who is entitled to receive an estate after a life tenant’s death or the occurrence of a specified event.
In the context of eminent domain, what is the remainder of a property?
It refers to the parcel of property that remains with the owner after a governmental entity has used its eminent domain power to take part of the property for public use.
Related Terms
- Life Estate: An interest in property that lasts for the lifetime of a specified individual. Upon that individual’s death, the property either reverts to another party or passes to a remainderman.
- Eminent Domain: The right of a government to take private property for public use, with compensation to the owner.
- Reversion: An interest in an estate that reverts to the original owner upon the expiry of a life estate or leasehold.
Online Resources
References
- “Black’s Law Dictionary”
- “Fundamentals of Real Estate Practice” by John Reilly
Suggested Books for Further Studies
- “Principles of Real Estate Practice” by Stephen Mettling.
- “The Language of Real Estate” by John W. Reilly.
- “Mastering Real Estate Principles” by Gerald Cortesi.
Real Estate Basics: Remainder Fundamentals Quiz
### What is a remainder in real estate?
- [ ] An estate that takes effect after a mortgage is fully repaid.
- [x] An estate that takes effect after the termination of a prior estate, such as a life estate.
- [ ] A type of lease agreement.
- [ ] A specific property boundary line.
> **Explanation:** A remainder is a future interest in property that takes effect after the termination of a prior estate, such as a life estate.
### Who is a remainderman?
- [x] An individual who inherits property after the end of a life estate.
- [ ] A real estate broker.
- [ ] A property manager.
- [ ] An estate attorney.
> **Explanation:** A remainderman is the individual who inherits the property after the life tenancy ends.
### What differentiates a vested remainder from a contingent remainder?
- [ ] Vested remainder must be taxed higher.
- [x] Vested remainder is certain to become possessory, while contingent remainder depends on conditions being met.
- [ ] Vested remainder applies only to commercial properties.
- [ ] Contingent remainder must involve a will.
> **Explanation:** A vested remainder is certain to become possessory after the prior estate ends, while a contingent remainder depends on certain conditions being satisfied.
### What does the term "reversion" mean in real estate?
- [ ] Ownership that reverts to the state after property taxes are unpaid.
- [ ] A property's increase in value over time.
- [x] An interest that reverts to the original owner upon the conclusion of a life estate.
- [ ] Transfer of property due to foreclosures.
> **Explanation:** Reversion is an interest in an estate that reverts to the original owner upon the end of a life estate or leasehold.
### In the event of eminent domain, what is a remainder of a property?
- [ ] The piece leased out to a tenant.
- [ ] The mortgagee's share.
- [ ] The government's claimed land.
- [x] The part of the property left with the owner after the government takes part of it.
> **Explanation:** The remainder is the part of the property left with the owner after the government uses eminent domain to take a section for public use.
### What occurs when a life tenant dies?
- [ ] The property goes to the state.
- [ ] The life tenant’s family must decide what happens next.
- [x] The property is transferred to the remainderman.
- [ ] The life estate turns into a commercial lease.
> **Explanation:** Upon the death of the life tenant, the property automatically passes to the remainderman.
### How is a life estate different from a fee simple estate?
- [x] A life estate lasts for a person's lifetime, while a fee simple estate is an absolute ownership.
- [ ] A fee simple estate requires yearly renewal.
- [ ] A life estate cannot be sold.
- [ ] There is no legal difference between the two types.
> **Explanation:** A life estate lasts for the duration of an individual’s life, whereas a fee simple estate is absolute ownership that can be passed down indefinitely.
### What is meant by "contingent remainder"?
- [ ] A guaranteed future interest regardless of conditions.
- [x] A future interest that depends on the fulfillment of specific conditions.
- [ ] An immediate possessory interest.
- [ ] An interest only held in trust.
> **Explanation:** A contingent remainder is a future interest in property that requires certain conditions or events to occur before it can become possessory.
### What powers does eminent domain grant to the government?
- [ ] The ability to resell private property at a profit.
- [x] The ability to take private property for public use with compensation to the owner.
- [ ] The right to invade any private property for national defense.
- [ ] The power to enforce local zoning laws.
> **Explanation:** Eminent domain grants the government the right to take private property for public use, provided the owner is compensated fairly.
### Why might the remainder of a property hold less value after eminent domain is applied?
- [x] The remainder may be oddly shaped and less useful.
- [ ] The color of the property changes.
- [ ] The taxes on the land increases.
- [ ] The owner loses all rights to the remainder.
> **Explanation:** The remainder property might be of lesser shape and utility, thereby holding less value.
