Property Quick Tip: The Rule Against Perpetuities

Whether you’re prepping for your property exam or brushing up for the bar exam, you’re apt to encounter the rule against perpetuities (RAP). The knock against the RAP is that it’s archaic and confusing. Fortunately, it’s not all that complicated once you understand the reasons for the rule and a few tips for applying it.

The traditional RAP says that no interest in real property is valid unless it must vest, or forever fail to vest, no later than 21 years after some life in being when the interest is created. In other words, the interest must be guaranteed to either vest or disappear within the 21-year period.

A useful way to paraphrase the RAP is that a future interest is void if there’s any possibility that it could vest more than 21 years after the end of all relevant lives in being when the interest is created.

The theory behind the RAP is that society benefits when property is available to be transferred and used. Therefore, we don’t want property to be tied up for too long waiting for uncertain future interests to vest. The RAP effectively imposes a time limit on this uncertainty. Future interests are void if they might create uncertainty for an excessively long time.

The RAP applies to only 3 kinds of future interests. First are contingent remainders. Second are executory interests, including options to buy and rights of first refusal. Third are vested remainders subject to open. These last typically are class gifts that are vested for some class members but still open to new members.

There are 2 notable exceptions to the RAP. The first is a lease with an option for the tenant to buy the property, no matter how long the lease is. The second is the charity-to-charity exception, which exempts future interests that would transfer property from one charity to another.

The RAP doesn’t apply to vested interests because we don’t have to worry about when those might vest. The RAP also doesn’t apply to any interest retained by a grantor, such as a reversion, a possibility of reverter, or a right of entry.

Here are a few tips and tricks for dealing with the RAP.

One important aspect of the RAP is the notion of lives in being. We’ll call these the measuring lives because these lives, plus 21 years, mark the deadline after which an interest can’t vest without violating the RAP.

Theoretically, the lives in being could be every person in the world. But as a practical matter, we need some group of lives that we can reasonably verify as both existing and ending. As a rule of thumb, a measuring life is anyone who both (1) is alive when the interest is created and (2) might have something to do with whether the interest vests. In other words, the measuring lives should be people who are somehow relevant to the conveyance.

It’s possible for lawyers to get fancy and specify measuring lives who have nothing to do with the conveyance, like the king of England (unless you’re a royal). But that’s not normal, and we won’t worry about that here.  

Incidentally, someone who’s in vitro at the time of the conveyance can be a measuring life. Examiners sometimes like to pull that trick, so keep it in mind.

For example, let’s say Arthur conveys land “to my wife, Bertha, for life, then to my first-born grandchild.” At the time, Arthur has two children, Clyde and Darla, but no grandchildren. The measuring lives are Arthur, the grantor; Bertha, who has to die before the remainder can vest; and Clyde and Darla, either of whom might produce Arthur’s first-born grandchild. Notice that Clyde and Darla can be measuring lives even though they aren’t named in the conveyance.

Maybe it’s just us, but we think the traditional phrasing of the RAP is a bit awkward. That’s why we like to think of the RAP in terms of our paraphrase: is there any way that the interest could vest too late? It’s a way to frame the question that’s more straightforward than the traditional formulation.

Once you identify the measuring lives, get creative. See whether you can imagine any scenario in which the interest could vest more than 21 years after the measuring lives end. As you do this, keep 3 words in mind:

Anything.

Can.

Happen.

That’s a slight exaggeration, but the RAP doesn’t play by life’s normal rules. In the world of the RAP, anyone can die at any moment, anyone can have children at any age, and anyone can get married at any time. As we’ll see, matters of life, death, marriage, and birth can be especially important under the RAP.

Let’s apply these tips to some examples.

Arthur conveys land “to Bertha for life, then to Bertha’s first-born child.” Bertha has no children at the time. The measuring lives are Arthur and Bertha. Is there any way the remainder could vest more than 21 years after they’re both dead?

No, there isn’t. Let’s assume Arthur dies the day after the conveyance. That leaves Bertha, and there’s no way she could have a child more than 21 years after her death. Therefore, it’s impossible for this contingent remainder to vest outside the 21-year period, and the remainder doesn’t violate the RAP.

By the way, even though anything can happen, the RAP hasn’t caught up with modern reproductive technologies. So we’ll ignore the possibility that Bertha’s child could be born from a frozen egg or embryo long after Bertha dies.

The slothful executor is a classic example of the anything-can-happen approach to the RAP. 

Arthur conveyed “to Bertha for life, then to Bertha’s oldest child then living after Bertha’s will is probated.” Could this remainder vest too late?

Yes, it could. Let’s again say Arthur dies the day after the conveyance. Two years later, Bertha has her only child, Clyde. Bertha dies 30 years later, and her will is admitted to probate. So far, so good. But let’s say Bertha’s executor is the 27-year-old Darla, who wasn’t alive when Arthur conveyed to Bertha. Darla is so lazy and incompetent that it takes her 25 years to probate the will. Clyde’s interest then would vest 25 years after Bertha’s death, in violation of the RAP. It’s all highly unlikely, but remember, anything can happen.

Let’s try one more, using the classic fertile-octogenarian scenario.

Arthur conveys land “to my wife, Bertha, for life, then to my first-born grandchild.” At the time, Arthur is 60 years old and has 2 adult children, Clyde and Darla, but no grandchildren. Is there any way the remainder could vest more than 21 years after Arthur, Bertha, Clyde, and Darla are dead?

Let’s find out. Imagine that Bertha, Clyde, and Darla all die in a car crash the day after the conveyance. Now Arthur is still alive, and he still has no grandchildren. (We’ll assume that the contingent remainder isn’t destroyed.) One year later, Arthur’s future wife, Ella, is born. Twenty years later, Arthur and Ella get married. Notice that Ella can’t be a measuring life because she wasn’t alive when Arthur conveyed to Bertha.

Arthur is now 81 years old, but he and Ella manage to have one child, Francis. Arthur dies when Francis is one year old. Now all the measuring lives have ended.

Francis goes on to have his first child at age 30. Arthur finally has his first grandchild, but it’s now 29 years after all the measuring lives are over. We’ve concocted a scenario in which the remainder to Arthur’s first-born grandchild vests too late and violates the RAP. Remember, anything can happen!

If a future interest violates the RAP, what happens next? 

At common law, an interest that violated the RAP would simply be deleted from the conveyance. That can be a harsh result, and many states today approach the problem differently.

Some states borrow from the law of wills and trusts to apply the cy pres rule. This rule rewrites the conveyance to get as close as possible to the grantor’s intent while complying with the RAP.

For example, Arthur conveys land “to Bertha for life, then to Bertha’s first child to reach age 25.” The age-25 condition violates the RAP because it allows for vesting more than 21 years after Arthur and Bertha are dead. But a court might conclude that Arthur’s intent was to give the land to Bertha’s oldest child. The court therefore might revise the conveyance to change the age-25 condition to age 21. Now the RAP is satisfied because there’s no way Bertha’s child could turn 21 more than 21 years after Bertha’s death.

Another approach is the wait-and-see method. Instead of striking the offending interest, the courts will wait to see whether the interest actually vests in time to avoid the RAP. Again, imagine that Arthur conveys “to Bertha for life, then to Bertha’s first child to reach age 25.” In a wait-and-see state, a court will simply wait to see whether one of Bertha’s children actually turns 25 within 21 years after the measuring lives are over. If the interest vests in time, the RAP is satisfied.

Quimbee can help you dig deeper into the RAP. Learn about other perpetuities reforms, such as the Uniform Statutory RAP. You can also learn how lawyers can avoid the RAP through savings clauses.

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