Reversionary Interests are used to provide for changed uses of the land if a pre-defined event occurs. This is very similar to a license which ceases to be effective at the time of real property disposition by sale or death – but another “trigger” may be used to allow or cause the transfer.
The legal rationale for why this is different from a license relates to the fact that with a reversionary interest the triggering event is defined in contract which then as a result of its recording is deemed to “run with the land” To run with the land is a not so fancy legal term of art which means that future taker’s of the land, take subject to those terms. As a result, the situation will continue until the triggering event occurs even if the original parties no longer have any interest in the real property.
It is this aspect and the ability to define other triggers, which distinguishes reversionary interests from a license. A license requires that the parties yet have “privity” – a connection to one another. In other words, with a license, once one of the parties no longer has any interest in their real property adjoining their neighbor, the contract ceases to have effect.
[Cautionary Point – Both a license and a reversionary interest that ceases to exist at the time of real property conveyance (i.e. generally – but not always – by sale) may not be updated as to status on the ground. The result is a clearly identifiable commencement of the prescriptive period, albeit one that is probably provided by constructive as opposed to actual notice. Because of this, best practice is to indicate that despite the use ceasing to exist, the party still using the land underneath is deemed to have a revocable license unless giving express notice to the opposing party of his or her right to the land. Despite this effort, there are no cases (of which I am aware) to suggest that a court is bound to uphold this type of covenant.]
Returning to examples of the use of a reverter within the context of a boundary dispute generally revolve around allowing a (potential) encroachment to remain in place through its useful life. For instance, a wooden fence which encroaches upon the title holders’ land is allowed to remain in place until it becomes so decrepit as to no longer be functional. While alone a reversionary interest is not likely worthwhile, it coupled with recognition that it or the disposition of the land claimed by the adverse possession claimant will no longer have effect – just as the non-revocable license – in a “whichever comes first” construction can be a very useful resolution method for the title holder who believes that these events will occur prior to the title holder’s disposition of the properties, by itself a reversionary interest by itself is unsatisfactory.
First, this event may occur after the original owner disposes of the real property and perhaps just as importantly how does one define the triggering event. If it is determined the even as from the example is when the fence falls down, what happens if it is buttressed so as not to do so?
Answer: We identify that action as another triggering event. OK, so then the the fence actually must fall down which creates the potential for trespass – by the fence – and fall so as to potentially damage to other vegetation, a fixture on the land, and much less likely – but of extreme consequence – onto children playing in the area. In other words, do you want your attorney to attempt to anticipate all of these potential problems for something which though not likely … may happen?
All this is done for a resolution which while settling future rights and responsibilities, is an agreement to allow conditions to align in the future so that correction of the property can occur. Though it may appear that this amounts to not much more than simply allowing one of the parties to ‘save face,’ this remedy can solve the problem of allowing one party who has become accustomed to the land – and as such may actually own the land – to not become the title owner of it and yet continue to enjoy it until the triggering event occurs.
For the title holders who do not have the ability to continue to use the land, this allows a compromise which will ultimately – though indeed it may be a long time coming – allow the land titled land to remain part of the title holder’s possession.
This allows the title holder to mitigate zoning issues which otherwise may crop up. Those issues include things like side and back yards, total lot size, and ratio of impervious surfaces (i.e. surfaces in which water can not penetrate) to total lot size to remain in tact.
As a note, in those and other situations, it might be worth while to have the estate benefited by the reversionary interest to be burdened by covenants which preclude it from building permanent structures within the area in order to prevent projection of side and back yard requirements onto the burdened estates property.