An unencumbered freehold is a present interest and nothing else
A worked RES examination question on future interests reversion, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
An owner holds a freehold plot outright and has done since he bought it eleven years ago with the proceeds of a business sale. Nothing has ever been carved out of it — no lease, no life interest, no option, nothing at all. He has been told by a colleague who is halfway through the same course that every freeholder holds a reversionary interest as well as a present one, and he has begun to draft his will on that footing.
Consider the following statements.
- (i) He holds a present interest in the plot.
- (ii) He holds a reversionary interest in the plot.
- (iii) A reversion arises only where a lesser interest has been carved out.
- (iv) He holds a future interest which falls in on his death.
The answer, and why
Answer: A
The rule. Reversionary, future and remainder interests exist only where a lesser interest — a lease or a life estate — has been carved out of the freehold. An unencumbered freehold is a present interest and nothing else.
Why A is correct. (i) and (iii) are right. Nothing has been carved out of this plot, so (ii) is false, and (iv) is false because his death does not convert an interest he does not hold.
The other options.
- B carries the false (ii).
- C carries both false statements and drops the true (i).
- D accepts every statement, which is the position the colleague in the stem is arguing for.
Exam note. No lease, no life estate, no future interest. Check for the carve-out before reaching for the vocabulary, because the vocabulary is what the question is baiting you with.
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