šŸ  What Is a Remainder in Real Estate?

A remainder is a type of future interest in real estate that becomes possessory after a prior estateā€”usually a life estateā€”comes to an end. The person who will eventually receive ownership is known as the remainderman, but the remainder refers specifically to the interest itself, not the individual.

How a Remainder Works in Real Estate

A remainder is created when a property owner grants a present estate to one person and a future estate to another. Typically:

  • A life tenant receives the right to occupy the property for life.
  • A remainderman receives ownership after the life tenant's death.

The remainder holder does not have present possession. Their interest becomes a full ownership estate automatically when the prior estate ends, and typically avoids probate.

Types of Remainders

  • Vested Remainder ā€” The future owner is known, and no conditions must be met.
  • Contingent Remainder ā€” Ownership depends on a condition or an unascertained recipient.

Why Remainders Matter in Real Estate

Remainders are important because they:

  • Determine who receives property after a life estate ends.
  • Allow ownership to transfer outside of probate.
  • Impact whether a property can be sold or mortgaged.
  • Shape estate planning and inheritance strategies.

Practical implications:

  • A remainder holder cannot occupy or manage the property until the prior estate ends.
  • A life tenant cannot sell full ownership without the remainder holderā€™s consent.
  • Banks may require signatures from both interests during financing or sale.

Examples of Remainders

Example 1: Simple Life Estate
A parent grants a life estate to a spouse, and upon the spouseā€™s death, the property passes to the children. The children hold the remainder interest.

Example 2: Vested Remainder
A deed states: ā€œto Maria for life, then to Daniel.ā€ Danielā€™s right is guaranteedā€”he holds a vested remainder.

Example 3: Contingent Remainder
A grant reads: ā€œto Tom for life, then to Tomā€™s first child.ā€ If Tom has no children at the time of the grant, the remainder is contingent.

Why Remainders Matter for FSBO Sellers

Properties with life estates and remainder interests require special handling during a sale:

  • Both the life tenant and remainder holder must sign listing agreements and purchase contracts.
  • Buyers may hesitate due to shared ownership and delayed possession.
  • Title companies must confirm the remainder interest to issue title insurance.

Homeowners selling through Flat Fee MLS can better disclose these structures and avoid delays during closing.

šŸ”— Related Resources for Buyers & Sellers

Frequently Asked Questions

Is a remainder the same as a remainderman?
No. The remainder is the interest. The remainderman is the person who will receive ownership.

Can a remainder holder sell their interest?
Yes. A remainder interest can be sold, although the buyer must wait until the prior estate ends to take possession.

Does a remainder avoid probate?
Yes. Because ownership transfers automatically when the life tenant dies.

Can a remainder be taken away?
A vested remainder is generally secure, while a contingent remainder may fail if its condition isnā€™t satisfied.

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