Rule Against Perpetuties

Question 1

RAP

Answer 1

The Rule Against Perpetuities (“RAP”) provides that certain
kinds of future interests are void if there is any possibility,
however remote, that the interest might vest more than 21
years after a person alive at the time of the grant has died.
Think of this Rule as one against perpetual uncertainty. We’re
trying to strike a balance between, on the one hand, letting
landowners exert control over who’ll take their land after
they’ve died and, on the other, knowing for sure who’ll take a
piece of land in the future. So we allow any uncertainty about
future ownership to persist only for a particular period of
time: the perpetuities period.

Question 2

Tip

Answer 2

Remember that the Rule Against Perpetuities
applies only to contingent remainders, executory
interests, vested remainders subject to open,
options to purchase, and rights of first refusal. The grantor’s
interests (reversions, possibilities of reverter, rights of
entry) are safe from the Rule; you don’t need to consider
them.

Question 3

When Perpetuities Period Begins to Run

Answer 3

The time the interest is created and the perpetuities period
begins to run depends on the instrument and the interest
created. For interests granted by will, it runs from the date
of the testator’s death; for deeds, it is the date of delivery.
The period runs on an irrevocable trust from the date it
is created; it runs on a revocable trust from the date it
becomes irrevocable.

Question 4

Must Vest

Answer 4

An interest vests for purposes of the Rule when it becomes:
(1) possessory, or (2) an indefeasibly vested remainder or a
vested remainder subject to total divestment.

Question 5

Tip

Answer 5

In analyzing Rule Against Perpetuities problems,
keep in mind that the key is when the interest
could possibly vest—not when it’s likely to vest or
even when it did. You must examine the grant as of the time
of its creation and be sure that if the interest vests it will be
within the period of the Rule (that is, life in being plus 21
years). If there’s any possibility that it could vest beyond the
period, it’s void.

Question 6

Lives in Being

Answer 6

Unless other measuring lives are specified, one connected
with the vesting of the interest is used. You are looking for a
person alive at the date of the conveyance whose life and/or
death is relevant to the prescribed condition’s occurrence.

Question 7

Interests Exempt From Rule

Answer 7

Except for vested remainders subject to open, the Rule
Against Perpetuities does not apply to vested interests. Thus,
other vested remainders, reversions, possibilities of reverter,
and rights of entry are not subject to the Rule. Moreover, there
is a charity-to-charity exception to the Rule (that is, the Rule
does not apply to any disposition from one charity to another),
and an exception for options to purchase held by a current
tenant.

Question 8

Consequences of Violating Offensive Interest Stricken

Answer 8

Violation of the Rule destroys only the offending interest.

Question 9

4 Step Technique for Assessing Potential RAP Problems: Step 1Determining Interests

Answer 9

First, determine which future interests have been created
by the conveyance and whether the Rule could apply to
that interest. Remember, the Rule potentially applies only
to contingent remainders, executory interests, and certain
vested remainders subject to open. The Rule does not apply
Present Estates and Future Interests
NOTES
31
to any of the three future interests capable of creation in the
grantor (the possibility of reverter, the right of entry, and the
reversion), indefeasibly vested remainders, or vested remainders
subject to total divestment.

Question 10

Step 2 – How Does the Future Interest Holder
Take?

Answer 10

Second, determine what has to happen for the future interest
holder to take. Does the holder of a previous estate need to
die? Does a previous holder need to have had children? Does
a certain condition need to be met?

Question 11

Step 3 - Find the Measuring Life

Answer 11

Third, look for the people alive at the date of the conveyance
whose lives and/or deaths are relevant to what has to
happen for the future interest holder to take

Question 12

Step 4–When Will We Know If the Future
Interest Holder Can Take?

Answer 12

Fourth, determine whether we’ll know for sure within 21
years of the death of a measuring life if the future interest
holder(s) can take. If so, the conveyance is good. By contrast,
if we won’t know for sure within 21 years of the death of a
measuring life whether the future interest holder can take,
the future interest is void.

Question 12

Step 4–When Will We Know If the Future
Interest Holder Can Take?

Answer 12

Fourth, determine whether we’ll know for sure within 21
years of the death of a measuring life if the future interest
holder(s) can take. If so, the conveyance is good. By contrast,
if we won’t know for sure within 21 years of the death of a
measuring life whether the future interest holder can take,
the future interest is void.

Question 13

Rule in Operation - Common Pitfall Cases: Bright Line Rule–Executory Interest With No
Time Limit Violates the Rule

Answer 13

An executory interest that follows a defeasible fee, with no
limit on the time within which it must vest (for example, “to A
for so long as no liquor is consumed on the premises, then to
B”), violates the Rule Against Perpetuities, and the executory
interest is stricken. (An executory interest following a defeasible
fee is valid only if the condition is specific to the fee
holder or expressly limited to the perpetuities period.)

Question 14

Tip

Answer 14

When a void interest is stricken, the interests are
classified as if the void interest were never there.
For example, if O conveys “to A for as long as no
liquor is consumed on the premises, then to B,” B’s interest
would be stricken, A would have a fee simple determinable,
and O would have a possibility of reverter. In contrast, if O
conveys “to A, but if liquor is ever consumed on the premises,
then to B,” B’s interest and the condition are stricken,
and A has a fee simple absolute. That’s because now, once
the offensive future interest is stricken (“then to B”), the
conveyance is no longer grammatically sound. Hence, the
entire language of condition is stricken, leaving us with “to
A.” A has a fee simple absolute.

Question 15

Age Contingency Beyond Age 21 in Open Class

Answer 15

A gift to an open class conditioned on members surviving
beyond age 21 violates the Rule.
EXAMPLE
“To A for life, then to those of A’s children who attain the age of
25.” A is alive. She has one child, B, who is 30. The remainder in
A’s children violates the Rule and is void. Why? Because A is still
alive. Thus, the class is still open. B could die tomorrow. A could
die thereafter, without having had another child, or A could live,
have another child, and die in labor or live. We won’t know today,
at the time of the grant’s creation, whether A will have a child to
reach 25 within 21 years of A’s death. Thus, the gift is void.
Some states have enacted perpetuities reform legislation that
reduces such age contingencies to 21.

Question 16

“Bad-as-to-One, Bad-as-to-All” Rule

Answer 16

If the interest of any class member may vest too remotely, the
Present Estates and Future Interests
NOTES
34
whole class gift fails. For the class gift to vest, the class must
be closed and all conditions precedent must be satisfied for
every member.

Question 17

Fertile Octogenarian

Answer 17

A woman is conclusively presumed to be capable of bearing
children, regardless of her age or medical condition.
A few states have enacted perpetuities reform statutes that
raise a presumption that women over a certain age (for
example, 55) cannot bear children. Also, medical testimony
regarding a woman’s childbearing capacity is admissible in
these states.

Question 18

Unborn Widow or Widower

Answer 18

Because a person’s widow (or widower) is not determined
until their death, it may turn out to be someone who was not
in being at the time of the disposition.
EXAMPLE
O conveys “to A for life, then to A’s widow for life, then to A’s
surviving issue in fee.” In the absence of a statute to the contrary,
the gift to A’s issue is invalid because A’s widow might be a
spouse who was not in being when the interest was created.
COMPARE
A remainder “to A’s children” would be valid because, unlike
issue, they would be determined at A’s death.
Where necessary to sustain a gift, a few state statutes raise a
presumption that any reference to a person’s spouse, widow,
or widower is to a person in being at the time of the transfer.

Question 19

Administrative Contingency

Answer 19

A gift conditioned on an administrative contingency (for
example, admission of will to probate) violates the Rule.
EXAMPLE
A gift “to my issue surviving at the distribution of my estate” is
invalid because the estate might be administered beyond the
period of the Rule.
Present Estates and Future Interests
NOTES
35
A few state reform statutes eliminate this problem by raising
a presumption that the transferor intended that the contingency
should occur, if at all, within 21 years.

Question 20

Options and Rights of First Refusal

Answer 20

An option is a contract, supported by consideration, that
creates in the optionee a right to purchase the property on
terms provided in the option. Under a right of first refusal,
if a seller receives a third party’s offer to purchase the
property, the right of first refusal gives its holder the right
to purchase the property, usually on the same terms as that
offer.

Question 21

Extension to Heirs and Assigns Violates the Rule

Answer 21

For exam purposes, options or rights of first refusal that are
not personal to the holder (that is, which are extended to
the holder’s heirs and assigns) will violate the Rule because
they might be exercised later than the end of the perpetuities
period. Note: The Rule Against Perpetuities does not apply to
options to purchase held by the current lessee.

Question 22

Tip

Answer 22

Watch for a fact pattern on the exam where a
tenant has an option to purchase beyond the
perpetuities period. Remember that the Rule does
not apply to such an option held by a current tenant or his
assignee, but it does apply to a former tenant and to any
party to whom the current tenant might transfer the option
separately from the lease (in jurisdictions permitting such a
transfer).

Question 23

Modern Trend–Apply Rule Against Restraints on
Alienation

Answer 23

Under modern authorities, the Rule Against Restraints on
Alienation is applied to options and rights of first refusal
rather than the Rule Against Perpetuities. An option or right
of first refusal will thus be valid if it does not impose an
unreasonable restraint on alienation. A significant minority
of courts will also construe an option or right of first refusal
as lasting only for a reasonable time to avoid invalidating the
interest.

Question 24

Application of Rule to Class Gifts: “Gift to Subclass” Exception

Answer 24

Each gift to a subclass may be treated as a separate gift
under the Rule.
EXAMPLE
“Income to A for life, then to A’s children for their lives. Upon the
death of each of A’s children, the corpus is to be distributed to
that child’s issue, per stirpes.” The gifts to each of A’s children’s
issue are considered separately. Thus, the gifts to issue of A’s
children living at the time of the disposition are good, but the
gifts to the issue of afterborn children of A violate the Rule and
are void.

Question 25

Per Capita Gift Exception

Answer 25

A gift of a fixed amount to each member of a class is not
treated as a class gift under the Rule.
EXAMPLE
“$1,000 to each of my great-grandchildren, whether born before
or after my death.” This creates gifts to individuals, each of whom
is judged separately under the Rule.

Question 26

TRUSTS

Answer 26

A trust is a fiduciary relationship with respect to specific
property (res) wherein the trustee holds legal title to the
property subject to enforceable equitable rights in a beneficiary.
The creator of a trust is the settlor, who must own the
property at the time of trust creation and must have had the
intent to create the trust.

Question 27

Application of Rule Against Perpetuities

Answer 27

The Rule Against Perpetuities applies to the equitable future
interests of the beneficiaries in a private trust just as it does
to “legal” future interests

Question 28

Creation of Trusts

Answer 28

A trust can be created by will (testamentary trust), inter vivos
transfer of the trust res, or inter vivos declaration that the
settlor is holding property in trust. All trusts of real property
must be in writing. Note that a settlor may bequeath (by will)
property to a trust created during their lifetime—that is, they
may “pour it over” into the trust.

Question 29

Charitable Trusts

Answer 29

A charitable trust must have a charitable purpose. The rules
governing charitable trusts differ from those applicable to
private trusts in three important ways: (1) a charitable trust
must have indefinite beneficiaries; (2) it may be perpetual
(that is, the Rule Against Perpetuities does not apply); and
(3) the cy pres doctrine, which allows a court to select an
alternative charity when the purpose of the settlor becomes
impracticable or impossible, applies. Charitable trusts may be
enforced by an action of the attorney general of the state.

Question 30

tip

Answer 30

Remember that the Rule Against Perpetuities does
apply to a shift from a private to charitable use or a
charitable to private use.

Question 31

RE FORM OF THE RA P
4.10.1 “Wait and See” or “Second Look” Doctrine

Answer 31

Under this majority reform effort, the validity of any suspect
future interest is determined on the basis of the facts as they
exist at the conclusion of our measuring life

Question 32

The Uniform Statutory Rule Against
Perpetuities (USRA P)

Answer 32

This codifies the common law RAP and, in addition, provides
for an alternative 90-year vesting period.

Question 33

Cy Pres Doctrine (“As Near As Possible”)

Answer 33

Some reform measures allow a court to reform invalid interests.
If a given disposition violates the rule, a court may
reform it in a way that most closely matches the grantor’s
intent, while still complying with the RAP