Rule Against Perpetuities

Question 1

What is the rule against perpetuities?

Answer 1

The rule against perpetuities = certain future interests are void if there is ANY possibility that the interest may vest more than 21 years after a person alive at the time of the grant (who’s life is relevant measure to the grant vesting) has died. i.e., if there is a possibility that 21 yrs after measuring life we still are not sure if the property will vest.

Question 2

Which types of future interests does the rule against perpetuities apply to?

Answer 2

ONLY against:

• contingent remainders
• executory interests
• vested remainder subject to open
• options to purchase (but not to ones held by current tenant)
• rights of first refusal

NOT grantor’s interests (e.g. reversions, possibility of reverter, rights of entry)
Note: ONLY vested interest it applies to is the vested remainder subject to open

ALSO, doesnt apply to charity-charity transfers

Question 3

What are the legal consequences of violating the RAP?

Answer 3

That specific interest will be void - not others though.

Question 4

When is an interest considered “vested” wrt the RAP?

Answer 4

When either (1) it becomes possessory - i.e. transfers, or (2) when it becomes an indefeasibly vested remainder or a vested remainder subject to total divestment

Question 5

When does the RAP time period begin running?

Answer 5

granted by will? – date of testator’s death

deed? – date of delivery

Question 6

What are the 4 steps in analyzing a RAP problem?

Answer 6

1. Is the future interest one covered by RAP (contingent remainder, executory interest, vested remainder subject to open)
2. What has to happen for the future interest holder to take?
3. Who is alive at the time the conveyance was made whose life/death is relevant to future interest taking?
4. Will we know for sure within 21 yrs after the death of that/those people whether the future interest holder will take.

E.g. to A for life, and if B becomes a vet to B. A is alive B is 9 yrs old.

1. B has contingent remainder subject to condition precedent. 2. A has to die 3. A’s life is relevant measure. 4. If A dies today, in 21 yrs we may not know whether B can take b/c ppl can become vets whenever so this violates rule.

Question 7

What are 5 brightline cases of interests that will violate the RAP?

Answer 7

1. an executory interest that follows a defeasible fee with no limit on the time within which it must vest (e.g., “to A for so long as no liquor is served on premises, then to B)
   Note: in this case B’s interest becomes void, so then A is left with fee simple determinable and O has possibility of reverter
2. a gift to an open class conditioned on members surviving beyond age 21 (e.g. “ to A for life then those of A’s children who attain the age of 25” if A is a live and she has one child who is 30 (bc still could have more children)
3. A gift conditioned on administrative contingency (e.g. “to heirs survivor at the distribution of my estate”)
4. options/rights of refusal not personal to holder (e.g. extended to heirs) - but this does NOT cover options to purchase held by current lessee
5. In class gifts, if any class member’s gift vests too remotely then entire gift fails

Question 8

What is a trust? Does the RAP apply to trusts?

Answer 8

A trust = fiduciary relationship wrt certain property, in which trustee holds legal title subject to rights of a beneficiary (creator of trust = settlor, who owns property at time of creation). RAP applies to trusts, but NOT charitable trusts.

Charitable trust = (1) has indefinite beneficiaries (2) RAP doesnt apply, can be perpetual (3) subject to cy pres doctrine - i.e. court can sub out charity if it purpose becomes impossible/impracticable

Note: RAP applies to shift from private to charitable or vice versa