A woman gifts her interest in real property to her sister. The deed of gift contained a possibility of reverter provision that stated,
“The PROPERTY hereby conveyed shall AUTOMATICALLY REVERT to [grantor], in the event [grantee’s son], ever acquires any interest therein by grant, inheritance or otherwise or is otherwise permitted to occupy, even temporarily, any portion of said property.”
The grantee later died intestate. The administrator of her estate filed a petition for aid and direction seeking a judicial order declaring the possibility of reverter void as an impermissble restraint on alienation. The circuit court held that the provision was void and unenforceable under Virginia law, and struck the provision from the deed.
The Supreme Court reversed the circuit court’s holding explaining that not all restraints on alienation are impermissible. The Court explained that when there are no “words of limitation” in a deed of conveyance, the conveyance is treated as a transfer of a fee simple interest unless a contrary intention is manifested. A contrary intention includes the express reservation of a contingent reversionary interest. However, such an express reservation of a contingent reversionary interest is only permissible where the restraint on alienation is limited in duration and as to the number of persons to whom transfer is prohibited. The Court noted that the language of the provision was limited in scope and duration as it applied only to the grantee’s son and that the grantor intended to create a fee simple defeasible upon a condition subsequent rather than a fee simple absolute.
At least the administrator of the estate found out rights of the parties before distributing the estate to the heirs and risking the loss of their interests.