What is defined as reversionary interest?

Reversionary interest refers to the interest that the original property owner retains in a property after having transferred temporary possession to another party, typically through a lease. In this context, a fee simple interest not lived in by the owner describes the situation where the property owner has granted a leasehold to another party, but the ownership remains with the original owner. This means that once the lease expires or is terminated, the ownership and rights to the property revert back to the original owner, hence the term "reversionary."

This concept is key in understanding property rights and the implications of leasing arrangements, emphasizing that while a tenant may have the right to occupy and use the property, the underlying ownership remains intact with the lessor until the lease terminates.