The Rule Against Perpetuities : Its Applicability to ... - 경희법학연구소

The Rule Against Perpetuities * :
Its Applicability to An Option to Purchase
미국법상 영대재산권 무효의 원칙의 환매특약에 대한 적용 연구
< CONTENTS >
Ⅰ. Introduction
Ⅱ. The Rule Against Perpetuities
Ⅲ. Case Analysis: The Symphony Space, Inc., v. Pergola Properties, Inc.
Ⅳ. Discussion: Exemption of Option From The Rule Against Perpetuities
Ⅴ. Conclusion
Pak, Wan-Q **
(박완규)
Key Words: The Rule Against Perpetuities, Option to Purchase, Commercial Transaction, Uniform
Statutory Rule Against Perpetuities, Feudal System, Exemption, Preemptive Right.
영대재산권무효의 원칙, 환매특약, 보통법, 환매기간, 부동산거래.
I. Introduction
The legal concept of a perpetuity refers to “any condition extending the inalienability
of property beyond the time of a life or lives in being plus twenty one years.” 1) The
* 영대 재산권 무효의 원칙은 영미법상의 ‘The Rule Against Perpetuities’를 지칭하는 것으로 그
의미를 번역하면 “미래 부동산 지배권 양도 당시 생존한 자의 생애기간에 21년을 더한 기간
안에 그 지배권이 현실화되어 누군가에 귀속되지 않으면 그 지배권은 무효이다.”라고 할 수
있다. 박완규, “미국법상 영대 재산권 무효의 원칙에 관한 연구”,

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common law Rule Against Perpetuities was created to prohibit the creation of perpetuities.
In seventeen-century England, land owners desired to control their interests in land for
unlimited durations beyond their own death. They wanted their own consanguine
descendants to perpetually own the property as every man's wish is the long term prosperity
of their children or offspring. Landowners wanted to make special landholding arrangements
among family members to implement their wish for a perpetuity. 2)
Perpetuities restrain the alienability of interests in real property. English Judges attempted
to prevent the inalienability of land. Inalienability of land was against public policy, and
it is still so today. An English judge stated this notion, “the principle was that restraints
of trade are contrary to public policy.” 3) The judges believed that if land were not traded
in commerce, it would be unproductive, and the national wealth would be decreased. 4)
On the other hand, alienability would help developing land and prevent concentration of
wealth on a few people or family. 5)
The common law Rule Against Perpetuities began to take a form in 17th century in
England, and it was completed in today’s form in the early 20th century. 6) After about
150 years of struggle with landowners in determining the perpetuity period within which
land must vest or fail, the courts fixed it as “lives in being plus 21 years thereafter.” 7)
John Chipman Gray8) came up with a concise formulation as follows: “No interest is good
unless it must vest, if at all, not later than twenty-one years after some life in being at
the creation of the interest.” 9)
1) Black’s Law Dictionary 1141 (6th ed. 1995).
2) The rule against perpetuities originated to address familial landholding arrangements in 17th century.
See Wildenstein & Co., Inc. v. Wallis 595 N.E.2d 828, 832 (N.Y. 1992).
3) In re Hollis’ Hospital, [1899] 2 Ch. 540, 553.
4) John A. Borron, Jr. & Lewis Mallalieu Simes, 3 Simes and Smith, The Law of Future Interests,
§ 1117, available at LFUTINT § 1117 (Westlaw).
5) See also case cited supra note 4.
6) See Jesse Dukeminier ET AL., Property, 244-45 (6th ed. 2006) (1981).
7) Id.
8) John Chipman Gray was a law professor at Harvard Law School from 1869 to 1913. Id. at 245.
9) Dukeminnier, supra note 8, at 245(citing JOHN C. GRAY, THE RULE AGAINST PERPETUITIES
§ 201 (4th ed. 1943)).

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The common law Rule Against Perpetuities holds that society is better off when the
living members control the property than when dead ones do. 10) Also, the common law
Rule Against Perpetuities balances the desires of the present generation to tie up their property
and those of the future generation: The common law Rule Against Perpetuities limits
nonvesting of future interest to a period of life in being plus 21 years. 11) In sum, the
gist of the rationale for the common law Rule Against Perpetuities are twofold; first, the
promotion of the productivity of land, and second, the spread of wealth among people. 12)
However, when it is applied to a commercial option13), such as, an option to purchase,
the common law Rule Against Perpetuities become problematic. The Rule will cause legal
inconsistency and confusion as well as inefficiency, which will be later discussed in detail
in Part IV. An option is different from a landholding arrangement among family members.
It is commercial in nature not familial. The optionee’s right is a contractual interest rather
than a property interest. The common law Rule Against Perpetuities is commonly
applicable, without much doubt, to some future interest including contingent remainders14), executory interests15), and class gifts16). All of these involve property rights in family
settings. But the majority courts apply the common law Rule Against Perpetuities to an
option to purchase as well, disregarding its commercial and contractual nature. We should
rethink the common law Rule Against Perpetuities’s applicability to options.
This paper aims to discuss and argue for exemption of an option to purchase from the
common law Rule Against Perpetuities.
In part II, some historical background and explanation of the common law Rule Against
Perpetuities will be presented. In part III, an analysis of a case with general implications
10) Borron, supra note 6, at § 1117.
11) Id.
12) Id.
13) ‘A commercial option’ here includes a preemptive right, an option appurtenant, and an option
to purchase. See Ferrero Constr. Co v. Dennis Rourke Corp, 311 Md. 560, 567 (1985).
14) A contingent remainder is a future interest in a grantee that is subject to a condition precedent
or that is given to an unascertained person.
15) An executory interest is a future interest in a grantee that divests another grantee's interest or
the grantor’s interest.
16) A class gift is a remainder created in a class of persons.
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on applicability of the common law Rule Against Perpetuities to an option to purchase
will be made, in part IV, the reasons for the exemption of an option to purchase from
the common law Rule Against Perpetuities will be discussed, and finally, part V will
conclude this paper.
II. The Rule Against Perpetuities
1. Some Historical Background: The English Feudal System and
American Land Law
1) The English Feudal System
The English feudal system dates back to the Norman conquest of England in 1066.
William the Conqueror became the King of the England, subordinating all the resistant
Anglo-Saxons, forfeiting their lands, and distributing them among his supporters. Those
supporters were called tenants in chief. They did not “own” the land in modern sense
but had “the right to use, possess, and enjoy the land,” on the king’ behalf. 17) Tenants
in common and their subordinates also made similar landholding arrangements with their
own vassals, through a process called subinfeudation.
Subinfeudation generated lessor tenants such as mesne lords and tenants in demesne,
in the feudal hierarchy. Mesne lords refers to a middle or intermediate lords, and tenants
in demesne refers the person who had possessory use of the land. The lords above him
(the King, tenants in common, mesne lords) had the rights to services. The subinfeudation
down the road by lower tenants produced the complex English feudal pyramid that
developed into today's Anglo-American law of estates in land. 18)
While tenants were given the right to land, they provided services and incidents to the
17) John G. Sprankling, Understanding Property Law, 91 (2nd. ed 2007).
18) Id. at 93.

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king or their lord. There were four types of services: Knight service, which required tenants
in common who held their lands in knight service to provide the king with certain number
of knights for military service each year; socage, which required tenants to provide their
lord with some fixed amount of money or a particular agricultural product, or specified
labor; frankalmoign, which required tenants to provide their lord with the service of praying
for his salvation; and serjeanty, which required tenants to provide ceremonial or personal
services to the king. 19)
In addition to services, tenants owed their lord incidents. The feudal incidents include:
homage and fealty, a ceremony by which military tenants gave their allegiance to the
king and became vassals; aids, tenants’ duty to financially support the lord in a case of
financial difficulties; forfeiture, the lord’s right to take the land back if a tenant fails to
perform feudal services or duties under his oath of loyalty; wardship and marriage, the
lord's right to possession of the tenant’s land if the tenant died leaving an heir under 21,
and to sell the heir in marriage. 20)
Feudal services gradually changed into money rents, and it lost its value with inflation,
while feudal incidents maintained their value because they gave the lords the right to
possess the land. 21) Wardship, for example, was not affected by inflation. However, tenants
could circumvent incidents by subinfeudation. 22) Wardship, an incident, for example, could
be avoided if a tenant subinfeudated the land to someone else. 23) By doing so, the land
would not be escheated to his lord even if he died without an heir. 24)
As a result, the Statute Quia Emptores was enacted in 1290 to prohibit the subinfeudation
and to guard the feudal system. 25) However, the Statute marked the beginning of the end
of the feudal system. 26) In exchange for prohibiting subinfeudation, the greater lords
permitted their tenants to alienate the land without their consent, which established the
19) Id. at 92.
20) Dukemenier, supra note 8, at 178.
21) Id. at 177-78.
22) Id. at 179.
23) Id.
24) Id.
25) Id.
26) Id. at 179-180.
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principle of alienability of land. 27) Also, the Statute resulted in direct holdings of the land
from the crown, removing all the mesne lords in the hierarchy as it worked with forfeiture
and escheat overtime. 28) In 1660, the Statute of Tenures was enacted effectively ending
the feudal system. 29) This Statute abolished the feudal incidents including aids, homage,
marriage, and wardship, and commuted all the remaining knight service tenures into socage
tenures. 30)
2) The Influence of English Land Law to America
American states adopted English principles of governing estates in land and future
interests, but in parcel with the rejection of English royal system also rejected the “feudal
relic of tenure”, 31) and severed all ties between American landowners and the king. 32) In
America, the fee simple absolute33) are dominant over the complex English estate in land. 34)
The mode of landholdings in America has become much more simple than the landholding
arrangements of the feudal system.
American legislators and courts prefer the fee simple ownership to other estates, future
interests in particular, because they tend to limit the alienability of land, which is viewed
as commodity, and they may be used as means for “dead hand control” affecting the good
faith present owners’ expectations of the land. 35) However, the remnants of the Feudal
tradition in law cause confusion among judges, lawyers, and law students. 36) The Rule
Against Perpetuities is one of them.
27) Id.
28) Id. at 180.
29) Sprankling, supra note 19 at 96.
30) Id.
31) Id. at 98.
32) Id.
33) It is the most basic form of estate, equivalent to a complete ownership of land.
34) Sprankling, supra note 19 at 98.
35) Id. at 100.
36) Id.

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2. The Rule Against Perpetuities: Its Origin and the Rule Explanation
1) The Origin of the Rule Against Perpetuities
The Rule Against Perpetuities is known to have its roots in the Duke of Norfolk's Case
22 Eng. Rep. 931 (Ch. 1681) 37) The Duke of Norfolk had several sons, and three of them
were involved with the issue of the case: Thomas, the eldest and insane; Henry, the
second-eldest; and Charles, the third-eldest. The Duke wanted to “guard against the
consequences of Thomas’ insanity.” 38) The Duke hired a lawyer to craft his desire in
documents, and the lawyer sought to avoid the prohibited perpetuity in drafting the
documents. 39) The lawyer created a trust under the term of which Henry was to enjoy
certain property during the life of Thomas; but if Thomas should die childless, and Henry
should become the Earl by inheritance, then Charles should enjoy that property. 40)
Later, Henry received the property as his father intended, but refused to return the
property according to the term of the trust, arguing that the devise to Charles under the
trust was void because it was involved a perpetuity. 41) Charles brought a suit in Chancery
to demand his right as the conditions for his taking had been met. 42) The issue was what
were perpetuities, and more specifically, whether there was a perpetuity in this case. 43)Lord
Chancellor Nottingham decided that the devise to Charles was not a perpetuity and was
thus valid. 44) The Chancellor held that the property had to vest at some point, but he
37) Herbert Barry, The Duke of Norfolk’s Case, 23 Va. L. Rev. 557, 538 (1937). (“Lord Nottingham’s
decision established as a principle that in an equitable estate a future interest to take effect upon
a contingency that cannot occur beyond the expiration of one or more lives in being is not void
by reason of remoteness ... later cases ... resulted in giving it a quality and scope that may have
been beyond its original purpose.”).
38) George L. Haskins, Extending The Grasp of The Dead Hand Reflections on The Origins of The
Rule Against Perpetuities, 126 U. Pa. L. Rev. 19, 36 (1977-1978). (citing the Duke of Norfolk’s
Case 22 Eng. Rep. 931 (Ch. 1681)).
39) Herbert Barry, supra note 39, at 552.
40) Id.
41) Peter Appel, The Embarrasing Rule Against Perpetuities, 54 J. Legal Educ. 264, 268 (2004).
42) Haskins, supra note 40, at 37.
43) Id.
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refused to determine how long a period the property could be tied up. 45)
Later courts attempted to determine the perpetuity period. 46)
2) Explaining The Rule Against Perpetuities
The common law Rule Against Perpetuities basically invalidates certain types of future
interests that might not vest or fail within the perpetuity period. The perpetuity period
refers to the duration between the creation of the interest and the death of a person related
to that interest plus 21 years. “It must vest” means that it should be certain that the interest
will vest or fail. “Life in being” means someone who is related to the interest and alive
at the time when the interest is created. Often the life tenant becomes the “life in being”
in the common law Rule Against Perpetuities cases. The common law Rule Against
Perpetuities is a rule of proof. 47) The grantee of the interest has to prove that his interest
will vest or fail after creation of that interest within the perpetuities period. The grantee
must find the person whose life can be used to prove the validity of the interest under
the common law Rule Against Perpetuities. 48) If the interest will vest or fail within the
life of that person plus 21 years, then it is valid. 49) If there is any possibility that the
interest will remain contingent after the perpetuities period ends, the future interest is void. 50)
44) Appel, supra note 43, at 268.
45) Barry, supra note 39, at 553.
46) See Id.
47) Jesse Dukeminier, A Modern Guide To Perpetuities, 74 Cal. L. Rev. 1867, 1870 (1986).
48) Id.
49) See supra note 8, at 246. For example, if O transfers his interest “to A for his life, then to A's
first child to reach 21”, A has a life estate and A's first child has a contingent remainder. The
remainder is valid because it is certain that within 21 years after A’s death, whether the
remainder will vest or fail. A’s life is called the validating life because it can be used to prove
the validity of the interest. Id.
50) Dukemenier, supra note 49, at 1870.

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III. Case Analysis:
The Symphony Space, Inc., v. Pergola Properties, Inc. 51)
1. An option to purchase in common law courts and under The Uniform
Statutory Rule Against Perpetuities
An option to purchase is defined as an offer by the seller of realty open for the buyer
to accept such offer at a specified time in the future. 52) An option to purchase gives the
optionee a right to purchase property within a specified time. 53) To be legally binding,
an option must be supported by consideration. 54)
The majority rule, in England as well as in America dictates that options are subject
to the common law Rule Against Perpetuities. 55) Accordingly, a court held that an option
to purchase realty without a time limitation constitutes a perpetuity and thus was invalid. 56)
However, some judicial attempts and legislative efforts have been made to deviate from
the strict and mechanical application of the common law Rule Against Perpetuities to
options. The minority courts have elaborated three options exempted from the common
law Rule Against Perpetuities: a lessee’s option to renew a lease; a lessee’s option to
purchase all or part of the leased premises; a usufructury’s option to extend the scope
of an easement or profit. 57)
In addition, some courts hold that rights of first refusal are not subject to the common
law Rule Against Perpetuities. A preemptive right or right of first refusal is the right held
by the optionee who has priority to buy the land if the landowner ever decides to sell
it. In Metro. Auth. v. Brunken Realty Corp. 58), the court held the common law Rule Against
51) The Symphony Space, Inc. v. Pergola Properties, Inc., 669 N.E.2d 799 (1996).
52) 60 Am. Jur. 3d Proof of Facts 255 § 2. (2001), available at 60 AMJUR POF 3d255 (Westlaw).
53) Id. at § 4.
54) Proof of Facts, supra note 54, at § 2.
55) See case cited supra note 15, at 565.
56) Proof of Facts, supra note 54, at § 7.
57) Supra note 15, at 568.
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Perpetuities inapplicable to preemptive rights or rights of first refusal in commercial and
governmental transactions. 59) The court held that “application of the common law Rule
Against Perpetuities would defeat the policies underlying the rule because it would
invalidate an agreement which promoted the use and development of the property while,
at the same time, imposing only a minor impediment to free transferability.” 60)
Legislators also have attempted to relax the common law Rule Against Perpetuities. The
common law Rule Against Perpetuities has been criticized because it invalidates a future
interest on the grounds of what might happen disregarding what actually happens. 61) The
Uniform Statutory Rule Against Perpetuities was prepared to make up for shortcomings
in the common law Rule Against Perpetuities. 62) As of 2011, the The Uniform Statutory
Rule Against Perpetuities has been adopted by 30 states. 63)
The Uniform Statutory Rule Against Perpetuities still maintains the common law Rule
Against Perpetuities. 64) If the interest violates the common law Rule Against Perpetuities,
then the court will wait and see what actually happens for 90 years. 65) If the interest fails
to vest within 90 years, the court will reform the disposition to conform closely to the
transferor’s intentions yet complies with the 90 years rule. 66)
Moreover, options, as non-donative transfers, are exempted with some exceptions67) 58) Metro. Transp. Auth. v. Brunken Realty Corp., 492 N.E.2d 379 (1986).
59) Id. at 385. The court reasoned, “Although preemptive rights unlimited in duration violate the rule
against remote vesting they do so only marginally ... This is so particularly in commercial and
governmental activities ... the need to insure free alienability is served more effectively if the
validity of the preemptive right is assessed by applying the common-law rule prohibiting
unreasonable restraints.” Id.
60) Id.
61) John D. Moore, The Uniform Statutory Rule Against Perpetuities: Taming The “Technically-Ridden
Legal Nightmare,” 95 W. Va. L. Rev. 193, 194 (1992).
62) See Id.
63) The Uniform Law Commission, Legislative Fact Sheet - Statutory Rule Against Perpetuities,
http://www.nccusl.org/LegislativeFactSheet.aspx?title=Statutory%20Rule%20Against%20Perpetuities
(Last visited Oct. 31, 2011).
64) See supra note 63, at 200-05.
65) See Id.
66) See Id.

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under the Uniform Statutory Rule Against Perpetuities. 68)
An option to purchase in today’s commercial and business transactions should be
exempted from the common law Rule Against Perpetuities. The analysis of the Symphony
case and discussions thereafter will show the reasons for exemption of an option to purchase
from the common law Rule Against Perpetuities as well as some flaws in the court’s ruling.
2. The Symphony Space, Inc, v. Pergola Properties
This is a New York State case. However, it provides general implications concerning
applicability of the common law Rule Against Perpetuities to commercial options, an option
to purchase in particular. The main issue of this case was whether an option to purchase
is exempted from the common law Rule Against Perpetuities. The court held it is not
exempted. The court, in so holding, discussed other critical issues as well, such as the
distinction between options exempted from the common law Rule Against Perpetuities and
an option to purchase, and the adoptability of ‘wait and see approach.’ 69)
Broadwest Realty Corporation owned a two-story building, which housed theaterical and
commercial space, in New York City. 70) On December in 1978, Broadwest sold the
building to Symphony, a non-profit entity, for the below-market price of $10,010. 71)
Broadwest paid $10 in consideration for an option to repurchase the building. 72) According
to the option agreement, Broadwest could exercise its option to purchase the building “at
any time after July 1, 1979, so long as the Notice of Election specifies that the closing
is to occur during any of the calendar years 1987, 1993, 1998, and 2003....” 73) In 1981,
67) Unif. Statutory Rule Against Perpetuities § 4 (Amended 1990), 8B U.L.A 321 (1993 & Supp.
2000), available at Unif.Statutory Rule Against Perpetuities § 4 (Westlaw). Nondonative interests
not exempted include, for example, a premarital or postmarital agreement, a separation or divorce
settlement. Id.
68) Id.
69) See case cited supra note 53, at 808.
70) Id. at 800.
71) Id.
72) Id.
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Broadwest sold and assigned its interest under the option agreement as well as its ownership
interest in the adjacent buildings to defendants Pergola, Bradford, Casandium, and Darenth
as tenants in common. 74) In 1988, the appraisal valued the property at $27 million given
the enforceability of the option, whereas without the option it was valued at $5.5 million. 75)
Pergola, on behalf of all the defendants, notified Symphony that it would purchase the
property under the option on January 5, 1987. Symphony then filed a declaratory judgment
action against the defendants, claiming that the option agreement violated the New York’s
statute76) that embraces the feature of the common law Rule Against Perpetuities.
The issue was whether an option to purchase commercial property is exempted from
New York’s statute. 77)78) The court held it is not. 79) The court concluded that new
commercial options80) are not exempted from New York statutory Rule Against Perpetuities,
stating,
“Inasmuch as the common law prohibition against remote vesting applies to both commercial and
noncommercial options, it likewise follows that the Legislature intended EPTL 9-1.1(b) to apply to
commercial purchase options as well ... creation of general exception ... for all purchase options
that are commercial in nature ... would remove an entire class of contingent future interests ...” 81)
73) Id. at 801.
74) Id.
75) Id.
76) Id. at 802.
77) N.Y. [EPTL] § 9-1.1[b] (McKinney 2002), available at McKinney’s EPTL § 9-1.1. The statute
provides, “No estate in property shall be valid unless it must vest, if at all, not later than
twenty-one years after one or more lives in being at the creation of the estate and any period
of gestation involved.” Id.
78) See case cited supra note 53, at 800.
79) Id.
80) Here, the court refers commercial options to an option to purchase.
81) See case cited supra note 53, at 804-05.

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The court distinguished the option to purchase in this case from the preemptive right
in Metropolitan Transp. Auth. v. Brunken Realty Corp., which was also commercial in
nature but held to be exempted from EPTL 9-1.1(b). 82) The court stated,
“... unlike options, preemptive rights (or rights of first refusal) only marginally affect
transferability: encourage the holder to develop the property by insuring an opportunity to benefit
from the improvement and to recapture any investment, ... promote the purposes underlying the
common law Rule Against Perpetuities, ... underscoring that preemptive rights impede alienability
only minimally whereas purchase options vest substantial control over the transferability of property
in the option holder, ... the option agreement creates precisely the sort of control over future
disposition... EPTL seeks to prevent.” 83)
The court also determined that the perpetuities period in this case was 21 years84) because the parties were corporations, and no measuring lives were stated in the instrument,
which invalidated the option as it could be exercised 24 years after the creation of the
interest. 85)
The court refused to adopt the “wait and see” approach to the Rule Against Perpetuities:
the defendants argued that the option was actually exercised by 1987, well within the
21-year limitation, and thus not in violation of the Rule Against Perpetuities. The court
stated that it is well settled that the court will look to what might happen rather than to
what has actually happened in determining the validity of the interest. 86) Moreover, the
court added, the very language in the statute precludes the court from determining the
validity of the interest based on what actually happens. 87)
82) See case cited supra note 60, at 384.
83) See case cited Supra note 53, at 805.
84) Id. at 806.
85) Had the court construed the parties' agreement as creating several options instead a single option,
only the last option of 2003 would have been invalidated, which made totally different outcome
of the case. See John A. Humbach, Shifting Paradigms Of Lawyer Honesty, 76 Tenn. L. Rev.
993, 1029 (2009).
86) See case cited supra note 53, at 808.
87) Id.
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The Symphony case well represents the majority courts’ posture, except where The
Uniform Statutory Rule Against Perpetuities has been adopted88), that supports application
of the common law Rule Against Perpetuities to an option to purchase. The court could,
if it wanted, hold an option to purchase exempted from the common law Rule Against
Perpetuities given that a preemptive right, a type of option, is held to be exempted. 89)
There is no reason for which one type of option is exempted and another is not under
the same statute
IV. Discussion: Exemption of An Option to Purchase
From The common law Rule Against Perpetuities
Subjecting options to the common law Rule Against Perpetuities has raised sharp
criticism. 90) An option to purchase should be exempted from the common law Rule Against
Perpetuities: First, the optionee's right in the option is a contractual interest rather than
a property interest; Second, an option is a commercial transaction not a familial
arrangement. 91)
1. An Option Creates a Contract Right
It can be argued that an option creates a contractual right and thus it should be exempted
88) See sources cited supra note 65. California, Colorado, and Connecticut are among those states
that adopted the Uniform Statutory Rule Against Perpetuities. Some other states do not apply
the Rule Against Perpetuities at all but have their own time frame. For example, there is no
limit in Idaho, and 360 years in Florida. Robert A. Esperti ET AL., Irrevocable Trusts: Analysis
with Forms, § 15.02[3] available at ITAF WGL 15.02 (Westlaw).
89) See case cited supra note 60.
90) See Dukeminier, supra note 49, at 1909.
91) See Haskins, supra note 40.

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from the common law Rule Against Perpetuities. Did the option in Symphony create a
contract right or a property right? The Symphony court must have found that the option
created a property interest. The court characterized the optionee's right as a contingent
‘future interest’ that is a property interest subject to the Rule Against Perpetuities. 92)
Because “it is well settled that the Rule Against Perpetuities has no application to contract
that do not create future interest in property,” 93) the court would not apply the common
law Rule Against Perpetuities to the option had it found that option created a mere
contractual right.
‘Contingent remainders’, ‘executory interests’, and ‘vested remainders subject to open’
(class gifts), create property rights subject to the Rule Against Perpetuities. These are all
matters in property rights. However, the right created by an option is a contractual right.
An option is an contract between the optionor promising his offer open for a certain period
time for acceptance to the optionee, who in turn pays some value to the optionor in
consideration of his promise. The optionee has the right to purchase the land, if it is
involved a land sale contract, within the specified time period. An optionee does not have
an equitable right until he exercises his right to accept the offer to purchase the land.
He is not bound by any duty or obligations until then. 94) Thus his right is contractual.
And thus, the Rule Against Perpetuities should not be applicable to an option. Doing so
would cause legal inconsistency and confusion. It will undermine the principle that the
common law Rule Against Perpetuities is not applicable to a contract.
2. An Option is a Commercial Transaction
An option is commercial in nature, therefore is not subject to the common law Rule
Against Perpetuities which was originated to prohibit a perpetuity within familial settings. 95)
92) See case cited supra note 53, at 805.
93) William Berg, Jr., I. Long-Term Options and the Rule Against Perpetuities, 37 Cal. L. Rev. 1,
33 (1948-1949).
94) The optionee has a right to purchase within a limited time but has no obligation to purchase.
95) Young v. Cass, 255 Ga. 508, 510 (1986).
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Technical and mechanical application of the Rule Against Perpetuities causes confusions
and often causes disregard for the parties’ intentions and fails to reflect commercial and
business activities. Because of its commercial nature an option should be exempted from
the Rule Against Perpetuities. An option is a useful tool in modern commercial transactions. 96)
It facilitates land transactions and development as a preemptive right does. 97) It may
restrain transactions to some degree as a preemptive right does, but its advantages outweigh
its disadvantages. 98)
The Symphony court found that a preemptive right restrains less than an option does.
However, it is not necessarily true. It depends on the option price, for example. If the
option price is fixed at lower than the market value, there is no reason for the optionee
not to exercise his option. 99) On the other hand, a preemptive right may restrain alienation
unreasonably if the price is fixed at lower than the market value, because the landowner
will lose money if it is sold to the holder of the preemptive right.
Therefore, it depends on conditions, the option price in particular, not the label, whether
it is a preemptive right or an option to purchase, for exercise of the right involved, that
determines the duration of restraint on alienation of land. Thus it can be argued that whether
it is an option to purchase or a preemptive right, as they are both commercially useful
means to promote transactions and development of land, as long as the benefits they bring
to society outweighs the harm, they should be exempted from the Rule Against Perpetuities.
Also, in Symphony as well as in some other transactions, optionors claim a Rule Against
Perpetuities violation to avoid their otherwise legitimate duties to which once they agreed
under the option agreement. 100) Upholding their claims will promote inequitable resolution.
In addition, statistics show that optionees in commercial transactions exercise their rights
well within the perpetuity period under the Rule Against Perpetuities. 101) Thus, there is
96) William Berg, Jr., III. Long-Term Options and the Rule Against Perpetuities, 37 Cal. L. Rev.
419, 447 (1948-1949).
97) See Id.
98) See Id.
99) See William Berg, Jr., II. Long-Term Options and the Rule Against Perpetuities, 37 Cal. L. Rev.
245 (1948-1949).
100) See Dukeminier, supra note 49, at 1909.
101) See Frederick R. Schneider, A Rule Against Perpetuities For The Twenty-First Century, 41 Real

The Rule Against Perpetuities: Its Applicability to An Option to Purchase | Pak, Wan-Q
no reason to adhere to such confusing centuries old rule in the era of modern transactions
because the majority of options will be exercised within the required non-perpetuity period
under the Rule Against Perpetuities.
3. Alternatives to Exemption
There may be still some concerns for restraint of alienation that the exemption might
bring about. Adoption of the Uniform Statutory Rule Against Perpetuities might be an
alternative to the total exemption. Enacting separate statues, independent from statutory
the common law Rule Against Perpetuities, that specifically limits the time period for
exercise of commercial options might be another alternative.
1) The Uniform Statutory Rule Against Perpetuities
The Uniform Statutory Rule Against Perpetuities was created to change the common
law Rule Against Perpetuities by “installing a workable ‘wait and see’ element.” 102) Under
the common law Rule Against Perpetuities, the validity is determined based on what might
happen not on what actually happens. As a result, even if the interest in question actually
vest within the perpetuity period, it is still invalid if the interest does not pass the ‘what
might happen test.’ By adopting ‘wait and see approach’ The Uniform Statutory Rule
Against Perpetuities makes it possible to avoid the harsh results of invalidating interests
because of what might happen, without compromising the policy goal of prohibiting
perpetuities. 103) The Uniform Statutory Rule Against Perpetuities cures some of the
shortcomings of the common law Rule Against Perpetuities by deferring the test of
perfection till a later date. Thus, The Uniform Statutory Rule Against Perpetuities might
be an alternative to total exemption from the common law Rule Against Perpetuities.
Prop. Prob. & Tr. J. 743, 785 (2007).
102) See Refs & Annos, supra note 69.
103) Id.
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2) Legislation of Separate Statutes of Perpetuities designed for Commercial
Options.
A statute of perpetuities for commercial options might be enacted as an alternative. 104)
The statutes may specifically provide for time limit within which the option must be
exercised. By doing so, confusion and inconsistency may be eliminated. 105) In this regard,
Korean law provides some insights. For example, under Korean Civil Code 561106), the
optionee must exercise his option to purchase the land within 5 years after execution of
the option agreement. This is a very clear and simple rule. The common law Rule Against
Perpetuities is very complicated. Due to its complexity, it is very difficult and time
consuming for attorneys to draft instruments to avoid the common law Rule Against
Perpetuities violation. Compliance with the common law Rule Against Perpetuities costs
a lot of unnecessary money to the parties in commercial transactions. This is inefficient
for society as well as for the parties. Thus it is suggested that legislation be developed
to provide simple and clear time limits for the exercise of commercial options.
104) More states now exempt commercial options from the Rule Against Perpetuities whether it is
a preemptive right or an option to purchase. States may adopt the Uniform Statutory Rule
against Perpetuities, abolish the Rule, or develop a new rule applicable to options. For example,
Massachusettes’ statute requires an option to be exercised within 30 years. Patricia Y. Reyhan,
Perpetuities Perpetuated: Symphony Spac, Inc. v. Pergola Properties, Inc., 60 Alb. L. Rev.
1259, 1270 (1996-1997).
105) A judge noted that he would not apply the common law Rule Against Perpetuities but develop
different doctrine for commercial options or wait for legislative action. See case cited supra note
97, at 510.
106) Korean Civil Code art. 591① (Kr. 2011).

The Rule Against Perpetuities: Its Applicability to An Option to Purchase | Pak, Wan-Q
V. Conclusion
Historical public policy supported the common law Rule Against Perpetuities to prohibit
grantors from disallowing the inalienation of land. The common law Rule Against
Perpetuities brings us many advantages. However, the common law Rule Against
Perpetuities also brings side effects along with its benefits, particularly when the Rule is
applied to commercial options. An option creates a contractual right in the optionee. The
well-settled principle is that the common law Rule Against Perpetuities has no application
to a contract. Application of the common law Rule Against Perpetuities to an option causes
legal inconsistency and confusion. Also, an option is a commercial transaction. It is very
useful instrument in commercial transactions. The advantages from commercial options
might outweigh the disadvantage of restraint on alienation that they may cause. The
common law Rule Against Perpetuities will discourage use of options. Finally, statistics
show that commercial options are usually exercised well within the perpetuity period under
the common law Rule Against Perpetuities. If that is so, there is no reason to maintain
the common law Rule Against Perpetuities for commercial options. With the foregoing
reasons, any commercial options, whether it is an option to purchase or a preemptive right,
should be exempted from the common law Rule Against Perpetuities.
Alternatively, The Uniform Statutory Rule Against Perpetuities might be adopted as it
seems more realistic and practical means to prohibit perpetuities. Also, making a separate
statutory law for commercial options might be an alternative as well. The statutory law
might clearly and specifically provide for time limit in years within which the option should
be exercised to be valid. This will save time and money arising from the common law
Rule Against Perpetuities application to commercial activities, and thus will promote
efficiency in society.
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References
1) 60 Am. Jur. 3d Proof of Facts 255 § 2. (2001), available at 60 AMJUR POF 3d255
(Westlaw).
2) Black’s Law Dictionary 1141 (6th ed. 1995).
3) The Duke of Norfolk’s Case 22 Eng. Rep. 931 (Ch. 1681).
4) Ferrero Constr. Co v. Dennis Rourke Corp, 311 Md. 560, 567 (1985).
5) George L. Haskins, Extending The Grasp of The Dead Hand Reflections on The Origins
of The Rule Against Perpetuities, 126 U. Pa. L. Rev. 19, 36 (1977-1978).
6) Frederick R. Schneider, A Rule Against Perpetuities For The Twenty-First Century,
41 Real Prop. Prob. & Tr. J. 743, 785 (2007).
7) Wildenstein & Co., Inc. v. Wallis 595 N.E.2d 828, 832 (N.Y. 1992).
8) Herbert Barry, The Duke of Norfolk’s Case, 23 Va. L. Rev. 557, 538 (1937).
9) In re Hollis’ Hospital, [1899] 2 Ch. 540, 553.
10) John A. Borron, Jr. & Lewis Mallalieu Simes, 3 Simes and Smith, The Law of Future
Interests, § 1117, available at LFUTINT § 1117 (Westlaw).
11) John A. Humbach, Shifting Paradigms Of Lawyer Honesty, 76 Tenn. L. Rev. 993,
1029 (2009).
12) John C. Gray, The Rule Against Perpetuities, § 201 (4th ed. 1943).
13) Jesse Dukeminier ET AL., Property, 244-45 (6th ed. 2006) (1981).
14) Jesse Dukeminier, A Modern Guide To Perpetuities, 74 Cal. L. Rev. 1867, 1870 (1986).
15 John D. Moore, The Uniform Statutory Rule Against Perpetuities: Taming The
“Technically-Ridden Legal Nightmare,” 95 W. Va. L. Rev. 193, 194 (1992).
16) John G. Sprankling, Understanding Property Law, 91 (2nd. ed 2007).
17) Korean Civil Code art. 591① (Kr. 2011).
18) Metro. Transp. Auth. v. Brunken Realty Corp., 492 N.E.2d 379 (1986).
19) N.Y. [EPTL] § 9-1.1[b] (McKinney 2002), available at McKinney's EPTL § 9-1.1.
20) Peter Appel, The Embarrasing Rule Against Perpetuities, 54 J. Legal Educ. 264, 268
(2004).
21) Robert A. Esperti ET AL., Irrevocable Trusts: Analysis with Forms, § 15.02[3]
available at ITAF WGL 15.02 (Westlaw).

The Rule Against Perpetuities: Its Applicability to An Option to Purchase | Pak, Wan-Q
22) The Symphony Space, Inc. v. Pergola Properties, Inc., 669 N.E.2d 799 (1996).
23) The Uniform Law Commission, Legislative Fact Sheet - Statutory Rule Against
Perpetuities,
http://www.nccusl.org/LegislativeFactSheet.aspx?title=Statutory%20Rule%20Against%
20Perpetuities (Last visited Oct. 31, 2011).
24) Unif. Statutory Rule Against Perpetuities (Amended 1990), 8B U.L.A 321 (1993 &
Supp. 2000), available at Unif.Statutory Rule Against Perpetuities (Westlaw).
25) William Berg, Jr., I. Long-Term Options and the Rule Against Perpetuities, 37 Cal.
L. Rev. 1, 33 (1948-1949).
26) William Berg, Jr., II. Long-Term Options and the Rule Against Perpetuities, 37 Cal.
L. Rev. 245 (1948-1949).
27) William Berg, Jr., III. Long-Term Options and the Rule Against Perpetuities, 37 Cal.
L. Rev. 419, 447 (1948-1949).
28) Young v. Cass, 255 Ga. 508, 510 (1986).
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* 숭실대학교 법과대학 부교수.
미국법상 영대재산권 무효의 원칙의
환매특약에 대한 적용 연구
박 완 규 *
본고는 미국 재산법상의 원칙인 ‘영대재산권 무효의 원칙’을 다루고 있다. 이 원칙
은 중세 영국의 봉건시대부터 뿌리를 두고 오늘의 형태로 발전해 왔다. 이 원칙은
로스쿨을 과정에서 가장 이해하기 힘들다 할 정도로 대부분의 법학도는 물론 기존
법률가들에게 무척 어려운 개념으로 이해된다(본고의 목적이 영대재산권 무효의 원
칙을 설명하기 위한 것이 아니고 환매특약에의 적용문제를 다루기 위한 것임을 밝혀
두고자 한다. ‘영대재산권 무효의 원칙에 대한 자세한 설명은 우리말로 작성된 필자
의 논문(박완규, “미국법상 영대 재산권 무효의 원칙에 관한 연구”,

The Rule Against Perpetuities: Its Applicability to An Option to Purchase | Pak, Wan-Q
하고 계속 적용된다는 점, 둘째, 영대재산 무효의 원칙은 가족 간의 재산 분배에서
비롯되었으므로 상업적 거래에는 적절하지 않다는 점이 지적되었다. 이런 불합리한
점을 해결하기 위한 대안으로는 상업적 환매특약에 영대재산권 무효의 원칙을 적용
배제 시키는 방법, ‘통일 영대재산권 무효의 원칙’을 채택하는 방법, 환매특약에 관한
별도의 규정을 마련하는 방법이 있을 것이다. 특히 우리나라와 같이 환매기간을 5년
을 명확히 제한하는 것은 상대적으로 법적 안정성과 효율성을 제공한다는 점에서
미국 법에서 참고할 만 할 것이다. 끝으로 본고를 통해서 우리 나라법상 환매기간
제한에 대한 관심과 향후 방향성에 대해서 생각해 보는 계기가 되기를 희망한다.
435