Ownership of real property - Rule against perpetuities: common law rule and statutory reforms

Learning Outcomes

After reading this article, you will be able to explain the Rule Against Perpetuities (RAP) at common law, identify interests subject to the rule, apply the RAP to class gifts and executory interests, and recognize the main statutory reforms. You will be able to answer MBE-style questions on RAP, including those involving "wait and see" statutes and the Uniform Statutory Rule Against Perpetuities.

MBE Syllabus

For the MBE, you are required to understand the operation and consequences of the Rule Against Perpetuities, both at common law and under modern statutory reforms. This article covers:

  • The definition and purpose of the Rule Against Perpetuities (RAP).
  • Which future interests are subject to the RAP.
  • The "lives in being plus 21 years" vesting period.
  • Application of the RAP to class gifts and executory interests.
  • Common pitfalls and "bad as to one, bad as to all" rule for class gifts.
  • The main statutory reforms: "wait and see" statutes and the Uniform Statutory Rule Against Perpetuities (USRAP).

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. Which of the following future interests is NOT subject to the Rule Against Perpetuities?
    1. Contingent remainder
    2. Executory interest
    3. Vested remainder in an individual
    4. Class gift remainder
  2. Under the common law RAP, which of the following violates the rule?
    1. "To A for life, then to B if B marries C."
    2. "To A for life, then to A's children who reach 30."
    3. "To A for life, then to B's children."
    4. "To A for life, then to B."
  3. Which statutory reform allows courts to uphold interests that actually vest within the perpetuities period, even if they might have vested too late?
    1. "Wait and see" statute
    2. Rule in Shelley's Case
    3. Doctrine of Worthier Title
    4. Doctrine of Merger

Introduction

The Rule Against Perpetuities (RAP) is a traditional common law doctrine that limits the creation of certain future interests in property. Its purpose is to prevent property from being tied up for generations by requiring that certain interests must vest, if at all, within a fixed period. The RAP is a frequent source of MBE questions, especially in scenarios involving class gifts, executory interests, and modern statutory reforms.

Key Term: Rule Against Perpetuities (RAP) The common law rule that no interest is valid unless it must vest, if at all, no later than 21 years after the death of a life in being at the creation of the interest.

Interests Subject to the Rule

The RAP applies only to certain types of future interests. Specifically, it covers:

  • Contingent remainders
  • Executory interests
  • Vested remainders subject to open (class gifts)
  • Certain powers of appointment
  • Options and rights of first refusal (unless personal to the holder and not assignable)

Vested remainders in individuals, reversions, possibilities of reverter, and rights of entry are not subject to the RAP.

Key Term: Vesting The point at which a future interest becomes a present, fixed right to possession, not subject to any condition precedent.

The Common Law Rule: "Lives in Being Plus 21 Years"

At common law, the RAP states:

"No interest is valid unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest."

This means that at the time the interest is created (when the grant becomes effective), it must be certain that the interest will either vest or fail within 21 years after the death of a relevant "life in being" (a person alive at the creation of the interest).

Key Term: Life in Being A person alive at the time the interest is created, whose life is used as a measuring life for the RAP period.

When Does the Period Begin?

  • Inter vivos gift: When the deed is delivered.
  • Will: At the testator's death.
  • Irrevocable trust: When the trust becomes irrevocable.

What Does "Vesting" Mean?

An interest "vests" when it is no longer subject to a condition precedent or open to new class members. If there is any possibility, however remote, that vesting could occur outside the perpetuities period, the interest is void from the start.

Worked Example 1.1

O conveys "to A for life, then to A's first child to reach age 30." At the time of the conveyance, A has one child, B, who is 5 years old.

Answer: This violates the RAP. A could have another child after the conveyance. That afterborn child might not reach 30 until more than 21 years after all lives in being (A and B) have died. Since there is a possibility of remote vesting, the interest is void.

Application to Class Gifts: "Bad as to One, Bad as to All"

Class gifts (remainders to a group, e.g., "to A's children who reach 25") are subject to a strict version of the RAP. If it is possible that any member of the class could vest outside the perpetuities period, the entire class gift is void.

Key Term: Class Gift A gift to a group of persons described by relationship or status, where the number of members may change.

Worked Example 1.2

O conveys "to A for life, then to A's children who reach 25." At the time of the conveyance, A has one child, C, age 24.

Answer: The gift is void under the RAP. A could have another child after the conveyance, and that child might not reach 25 until more than 21 years after A's death. Since one possible class member could vest too late, the entire class gift fails.

Executory Interests and Remote Vesting

Executory interests are especially vulnerable to the RAP. If an executory interest could vest beyond the perpetuities period, it is void.

Key Term: Executory Interest A future interest in a transferee that cuts short a prior estate or follows a gap in possession, and is not a remainder.

Worked Example 1.3

O conveys "to A so long as the land is used as a park, then to B."

Answer: B's interest is void under the RAP. The land could be used as a park for generations, and B's interest might not vest until far beyond 21 years after all lives in being have died. The gift to B is stricken, leaving A with a fee simple determinable and O with a possibility of reverter.

Common Pitfalls and "Fertile Octogenarian" Problem

The RAP assumes that anyone can have children, regardless of age or health ("fertile octogenarian" rule). This can make gifts to classes or based on age contingencies especially problematic.

Exam Warning

The MBE often tests the "bad as to one, bad as to all" rule for class gifts. If any possible class member could vest outside the perpetuities period, the entire gift fails—even if all current class members would vest in time.

Statutory Reforms: "Wait and See" and USRAP

Many states have enacted statutes to soften the harshness of the common law RAP.

"Wait and See" Statutes

These statutes allow courts to uphold interests that actually vest within the perpetuities period, even if they might have vested too late. The court "waits and sees" what actually happens.

Uniform Statutory Rule Against Perpetuities (USRAP)

USRAP provides an alternative 90-year vesting period. If an interest actually vests or fails within 90 years, it is valid, even if it might have violated the common law rule.

Key Term: Wait and See Statute A statutory reform that allows courts to uphold future interests if they actually vest within the perpetuities period, regardless of what might have happened.

Key Term: Uniform Statutory Rule Against Perpetuities (USRAP) A model law that validates interests if they vest or fail within 90 years, regardless of the lives in being at creation.

Worked Example 1.4

O conveys "to A for life, then to A's grandchildren who reach 25." At the time of the conveyance, A has one child, B, age 30, and one grandchild, C, age 2.

Answer: At common law, this gift is void because a grandchild born after the conveyance could reach 25 more than 21 years after all lives in being have died. Under a "wait and see" statute or USRAP, the court would wait to see if any grandchild actually reaches 25 within 90 years. If so, the gift is valid for that grandchild.

Key Point Checklist

This article has covered the following key knowledge points:

  • The Rule Against Perpetuities (RAP) requires certain interests to vest, if at all, within 21 years after lives in being at creation.
  • RAP applies to contingent remainders, executory interests, and class gifts, but not to vested remainders in individuals or reversionary interests.
  • If any class member could vest outside the perpetuities period, the entire class gift is void ("bad as to one, bad as to all").
  • Executory interests that might vest too late are void.
  • The "fertile octogenarian" rule assumes anyone can have children, regardless of age.
  • Statutory reforms include "wait and see" statutes and the Uniform Statutory Rule Against Perpetuities (USRAP), which allow actual vesting within 90 years.
  • MBE questions often test RAP using class gifts, executory interests, and statutory reforms.

Key Terms and Concepts

  • Rule Against Perpetuities (RAP)
  • Vesting
  • Life in Being
  • Class Gift
  • Executory Interest
  • Wait and See Statute
  • Uniform Statutory Rule Against Perpetuities (USRAP)
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