Pg 11 Flashcards
What is the official rule against perpetuities?
No interest is good unless it must vest, if at all, no later than 21 years after some life in being at the creation of the interest.
What is the layman’s explanation for the rule against perpetuities?
Within 21 years after the death of someone alive when the interest was created, the interest must definitely vest or fail to vest. An interest that does this is good.
An interest is void if there’s any possibility, however remote, that it may vest or fail more than 21 years after some life in being at the creation of the interest.
If it isn’t certain whether the interest will vest or fail, it is void
How do you know if something is subject to the rule against perpetuities?
If a remotely vesting property interest hinders a property’s alienability, marketability, or development it is subject to RAP
What is the quality that is necessary in order for the rule against perpetuities to not be violated?
The interest must vest or not vest within the period. This means it must be absolutely certain that either yes it will vest, or no it will not vest. If it is not certain, then the interest is not good.
What is the timeframe where something has to happen in order for the rule against perpetuities not to be violated?
21 years from some life in being. This 21 year period begins with someone’s death who was alive when the interest was created [death starts the clock].
What is the rationale behind the rule against perpetuities?
There’s a need to preserve the value of assets and an aversion to indefinite ownership or control of property because of how that affects land-use and sales. Land is meant to be put to good use.
What kind of things does the rule against perpetuities not apply to?
Vested interests
What is the key to rule against perpetuities?
Some life in being at the creation of the interest
When does the perpetuities period begin running?
When the contingent future interest is created
When considering rule against perpetuities, the focus should not be on the duration of the estate, but on what?
On the time of vesting
What is considered to be the “moment of creation“ for a rule against perpetuities issue?
– Gifts: the interest is created at the moment the gift was given
– wills: the interest is created when the testator dies
What are some examples of possible measuring lives for the rule against perpetuities?
– Preceding life estates
– beneficiary
– ancestor of the beneficiary
– any person that can effect a condition precedent attached to the gift
– for class gifts, any potential member of the class
What is the result if there has been a violation of the rule against perpetuities?
The offending interest is struck from the grant and classified as if it were never there
What are some examples of interests that can violate the rule against perpetuities?
All non-vested future interests, executory interests, contingent remainders, vested remainders subject to open, options to purchase that are not attached to a lease hold, rights of first refusal, etc.
How does the rule against perpetuities apply to vested versus non-vested interest?
It absolutely does not apply to vested interests
