Reversionary Interest

Definition - What does Reversionary Interest mean?

Reversionary Interest is the interest that a person has to return back to the settler, once the beneficiary interest has come to an end. It is divided into two categories, i.e., vested interest and contingent interest. The transferee’s right to own or occupy the land depends on the condition placed by the owner. However, if the condition is violated then the advantages of the interest cannot be enjoyed. It is one of the most powerful tools that induce the possibility of future ownership.

Petropedia explains Reversionary Interest

The Reversionary Interest is a commonly used term of trust. It is structured in many different ways such as:

  • If the condition is broken, the ownership changes automatically
  • If the condition is broken, it provides an option to repurchase at nominal and fair value

Besides, there are few points that should be taken care of before choosing Reversionary Interest. First, one must consider the triggering events before the situation gets worse due to destruction of conservation values. Second, “change of use” is difficult to implement without the reference to a description of ongoing uses of transfer date.

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