What is meant by a reversionary interest in real estate?

A reversionary interest in real estate refers to a situation where property ownership or rights revert back to the original grantor after a specified event or condition is fulfilled. This often occurs after the expiration of a lease or a life estate. In this context, when the grantor provides the property to another party, the reversionary interest allows them to regain ownership at a later date.

The essence of this concept is that it establishes a future interest in the property that ensures the original owner retains the potential for reclaiming their property. This can be critical in estate planning and property management, as it helps delineate future ownership rights contingent on certain conditions or the passage of time.

In contrast, the other options describe different aspects of property laws that do not specifically address the concept of a reversionary interest. For example, the transfer of property ownership to a new buyer relates to a complete sale or conveyance of title rather than a conditional return to the original owner. A financial return on investment discusses economic performance rather than ownership rights, and a right of first refusal is a legal option giving current tenants the first opportunity to purchase the property before it is offered to others, which again does not pertain to reversion.