What is meant by reversionary interest in real estate?

Reversionary interest in real estate refers to the future interest that a grantor retains in a property after they have conveyed a lesser estate, typically a life estate, to another party. When the estate granted expires, the property automatically reverts back to the original grantor or their heirs. This concept is rooted in property law and ensures that the grantor retains a level of control and entitlement over the property even after they have transferred certain rights.

In the context of the options provided, the correct choice accurately describes this legal principle, highlighting the automatic return of property rights to the original owner when a stipulated event occurs, such as the death of a life tenant. The other choices do not address this specific legal concept directly, focusing instead on interests related to lenders, property value appreciation, or tenants, none of which capture the essence of reversionary interest as it pertains to the original grantor’s rights.