Rule Against Perpetuties Flashcards
RAP
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.
Tip
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.
When Perpetuities Period Begins to Run
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.
Must Vest
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.
Tip
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.
Lives in Being
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.
Interests Exempt From Rule
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.
Consequences of Violating Offensive Interest Stricken
Violation of the Rule destroys only the offending interest.
4 Step Technique for Assessing Potential RAP Problems: Step 1Determining Interests
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
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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.
Step 2 – How Does the Future Interest Holder
Take?
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?
Step 3 - Find the Measuring Life
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
Step 4–When Will We Know If the Future
Interest Holder Can Take?
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.
Step 4–When Will We Know If the Future
Interest Holder Can Take?
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.
Rule in Operation - Common Pitfall Cases: Bright Line Rule–Executory Interest With No
Time Limit Violates the Rule
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.)
Tip
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.