Also known as: reverter guarantees · possibility of reverter
Written by attorneys · grounded in primary & secondary sources — see below
A mortgage clause protecting the mortgagee against a loss occasioned by the occurrence of a terminating event under a possibility of reverter.
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Renata Russo conveyed land to a buyer for use as a restaurant only, retaining a possibility of reverter. She later mortgaged her interest to Riverside Healthcare under a loan containing a reverter guarantee clause. When the buyer ceased restaurant operations, the reverter triggered and title returned to Renata, allowing Riverside Healthcare to enforce the guarantee and recover its secured amount from the restored fee interest.
Robert Rivera held a fee simple conditional and mortgaged it to Radiance Media with a reverter guarantee in the mortgage. Upon Robert's death without qualifying issue, the possibility of reverter became possessory. Radiance Media invoked the guarantee to obtain payment from the value of the land that passed under the reverter.
Rita Russell owned a fee tail estate subject to a possibility of reverter and granted a mortgage containing a reverter guarantee to Redline Automotive. After Rita's death her surviving spouse asserted dower rights. The reverter guarantee allowed Redline Automotive to protect its lien priority against the spouse's subordinate claim.
Ravi Reddy conveyed a fee tail preserved for one lifetime only and later mortgaged his retained interest with a reverter guarantee to Radiant Technologies. Upon the life tenant's death the reverter ripened. Radiant Technologies used the guarantee to secure repayment from the restored estate before any other claims attached.
Raphael Rivera granted a fee simple conditional and took back a mortgage containing a reverter guarantee from Roberto Reyes. When the condition failed the possibility of reverter vested in Raphael. The guarantee clause permitted Raphael Rivera to collect the loan balance directly from the value of the revested fee.
A city received land subject to a possibility of reverter and later mortgaged its interest under a loan with a reverter guarantee. When a court-ordered integration triggered the reverter the mortgagee invoked the guarantee to recover its funds from the restored title before the land reverted to the original donor's estate.
It protects the mortgagee from loss when a terminating event causes a possibility of reverter to become possessory and removes the mortgaged interest from the security.
Supporting sources
Yes. The clause ensures the mortgagee can reach the value of the land once the reverter vests even though the original security was a future interest.
Supporting sources
The guarantee preserves the mortgagee's priority because surviving-spouse interests are expressly subordinate to any possibility of reverter that restricts the deceased spouse's estate.
…into an arrangement that creates a private right to compel or enforce the reversion of a public facility. Whether the right is a possibility of reverter, a right of entry, an executory interest, or a contractual right, it can be created only with the consent of a public body or official, for example the official action involved in Macon’s…