California Real Estate Practice Exam

Owner A gives a life estate to a house he owns to his sister for the life of their mother. Upon the mother's death, what interests do Owner A and his children have?

1. Owner A has a remainder interest and his children have a reversionary interest

2. Owner A and his children both have remainder interests

3. Owner A has a reversionary interest and his children have a remainder interest

4. Owner A and his children both have reversionary interests

The correct answer is: Owner A has a reversionary interest and his children have a remainder interest

In this scenario, when Owner A grants a life estate to his sister for the life of their mother, he is creating a life estate that terminates upon the death of the mother. This means that during the mother’s lifetime, the sister has the right to use and possess the property, but that interest ends when the mother passes away. At that point, the original owner, Owner A, retains certain rights. A reversionary interest means that once the life estate ends, the property will revert back to the original owner. In this case, Owner A's reversionary interest means he will get the property back after his mother dies. Owner A's children, however, do not have a reversionary interest; instead, they would have a remainder interest in the property. Once Owner A passes away, the reversionary interest would pass to his children, meaning they would inherit the property after Owner A. This scenario illustrates that Owner A retains a reversionary interest until his mother dies, at which point the property reverts to him, and eventually it would go to his children, who would hold a remainder interest in the estate. This structure of interests is common in real property law, highlighting the distinctions between life estates, reversion