Illinois Leasing Agent Practice Exam

In a lease, what term refers to the future interest an owner may hold in the property?

1. Reversionary interest

2. Remainder interest

3. Life estate

4. Possessory interest

The correct answer is: Reversionary interest

The term that refers to the future interest an owner may hold in the property is reversionary interest. This concept is used in the context of leases where the property owner, or lessor, has the right to regain possession of the property after the lease term ends. Essentially, when a property is leased, the lessor temporarily transfers the right of possession to the lessee while retaining the underlying ownership. When the lease expires, the reversionary interest allows the owner to regain control over the property without needing to initiate any legal action since the ownership is not transferred—it merely allows for the return of possession. In this context, a remainder interest pertains to a different situation, where someone other than the original owner is set to take possession after particular conditions are met, which is not the same dynamic as the reversionary interest. A life estate is a type of ownership that grants rights for the lifetime of a specified individual, after which the property passes to another party. Possessory interest refers to the current right to occupy or use the property, specifically held by the lessee during the lease term. Therefore, reversionary interest is specifically concerned with the owner's future rights to the property through the lease agreement.