Reversionary interest

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In property law, the term ‘reversion’ (returning or reverting something to its previous state) refers to the interest a party to whom a property will revert at the expiry of an agreement has in that property. Typically this relates to the reversionary interest of the landlord or freeholder to whom a property will revert when a lease expires.

When a leasehold expires, legal title to the property reverts back to the freeholder. However, the leaseholder (often the occupier) may be able to purchase the freeholder's reversionary interest giving them an absolute freehold title.

When a property is rented from a landlord, the property will revert to the landlord at the end of the lease. If the property has not been properly maintained or repaired in accordance with the lease, the landlord may be able to claim damages for the diminution in value of their reversionary interest (see Dilapidations for more information).

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