Executory Interests in Texas Real Property

Categories: Probate

When leaving property in a Will, sometimes a person wants to give his property to a beneficiary at a later time, like after an event occurs. Executory interests are a type of future interest in property. A future interest in property does not entitle the owner to use or possess the property immediately, but will give the owner possession in the future. There are three basic types of future interests that can be created. In this article, we will give a general overview of future interests in real property, and in particular, one type of future interest known as an executory interest. Many times these future interests can be confusing, so if you have questions about Texas probate matters, contact Austin probate attorney Farren Smith for a consultation.

Future Interests

A future interest is a present interest in a protected future right, but is not an expectancy. There are three principle types of future interests:

  • Reversionary interests;
  • Remainders; and
  • Executory interests.

A reversionary interest is a future interest kept by the transferor upon transferring the property to someone else for a present period of time. A remainder is a future interest created for a third party that is capable of becoming a present interest upon the occurrence of a specified event. An executory interest, which we will discuss more below, is a future interest in a third party that is not a remainder.

To illustrate the differences in these types of future interests, consider the following examples:

Reversion Example

“Ben Johnson, owning land in Round Rock in fee simple, conveys the land to Tom Hamilton for life.” In this case, Mr. Johnson transfers the land to Mr. Hamilton for Mr. Hamilton’s lifetime, but retains a reversion in the land and takes possession upon the death of Mr. Hamilton.

Remainder Example

Ben Johnson, owning land in Pflugerville in fee simple, conveys the land “to Tom Hamilton for life, and on Tom Hamilton’s death, to Jordan Masters and his heirs.” In this case, Mr. Johnson gives the land to Mr. Hamilton, and upon the death of Mr. Hamilton, the land goes to a third party, Mr. Masters.

Executory Interest Example

Ben Johnson, owning land in Austin in fee simple, conveys the land “to the First United Methodist Church of Austin for so long as the premises are used for church purposes, and if they shall ever cease to be so used, then and in that event to the Children’s Medical Center Foundation of Central Texas.” In this case, Mr. Johnson gives the land in fee simple to the First United Methodist Church of Austin, and upon the cessation of the church, the land goes to a third party charity, the Children’s Medical Center Foundation of Central Texas.

Executory Interests

As mentioned above, there are two types of future interests that can be created in a third party transferee: remainders and executory interests. If the future interest is not a remainder, then it is an executory interest.

Executory interests are further subdivided into two types:

  • Springing executory interests; and
  • Shifting executory interests.

Sample Language of Executory Interests in Texas Real Property

As these terms can be confusing, we will give a few examples of executory interests in Texas real property. The following language in a deed provides an executory interest in the property:

“To Ron Lee and his heirs; but if Catherine Lim returns from Canada, then and in that event to Catherine Lim and her heirs.”

“To Evan Perez when and if Evan Perez marries Alexandra Martinez.”

If you encounter executory interests or wish to create one, it would be best to consult with a Texas probate lawyer such as Farren Smith to discuss the proper language for creating the transfer.

Sources

  • 8-43A Texas Transaction Guide–Legal Forms