The Rule Against Perpetuities: Limits on Property Control

The concept of property ownership seems straightforward—you own an asset, and you decide who inherits it. However, when a property owner attempts to control the ownership of an asset for many generations after their death, they run into one of the most famously complicated rules in common law: the Rule Against Perpetuities (RAP).

This rule, often traced back to 17th-century English law, is a prohibition on creating future interests in property that are too remote or contingent, aiming to prevent the so-called “dead hand” of a former owner from indefinitely controlling property succession. Its primary goal is to ensure the free alienation—or marketability—of property, allowing current generations to buy, sell, and develop assets without being blocked by ancient restrictions.

Understanding the RAP is essential for anyone involved in estate planning, real estate conveyancing, or complex trust creation. Violating the Rule can void an entire provision of a will or trust, leading to unintended consequences for beneficiaries.

The Classic Common Law Formula: Lives in Being Plus 21 Years

The traditional common law definition of the Rule Against Perpetuities, as articulated by John Chipman Gray, is famously succinct yet dense: “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”.

To unpack this formula, we must understand three critical terms:

1. Interest: This refers to a property right, such as a future ownership right (a future interest). The RAP generally targets interests that are contingent, meaning the recipient or the condition required for them to take ownership is uncertain.
2. Vesting: An interest “vests” when the right to the property becomes certain, non-contingent, and belongs to a known, verified individual. Once vested, the Rule no longer applies to that interest.
3. Life in Being: This is a person who is alive, or “in being,” when the property interest is created (i.e., when the deed is executed or the testator dies). This identifiable person or group of people serves as the “measuring life” that determines the maximum time limit.

The time limit is, therefore, the entire lifetime of any relevant person alive when the interest was created, plus an additional 21 years (plus a period of gestation, if applicable). The key challenge under the common law is that the interest must be guaranteed to vest within this period, or it is voided from the start (void ab initio), even if the possibility of a violation is extremely remote.

What Property Interests Does the RAP Affect?

The Rule Against Perpetuities only applies to specific types of future property interests. It does not apply to present interests, nor does it apply to property interests retained by the grantor (like a reversion). It primarily targets contingent interests created for third parties. These include:

• Contingent Remainders: An interest that will pass to a third party upon the natural termination of a prior estate, but the recipient is not yet ascertained or a condition precedent has not been met (e.g., “To A for life, then to A’s first child to reach age 25”).
• Executory Interests: A future interest in a third party that must “cut short” or divest a prior estate to become possessory.
• Vested Remainders Subject to Open (Class Gifts): This is when a gift is made to a group (a “class”) like “my grandchildren,” and while some members are alive (and thus vested), others may still be born (leaving the class “open” to new members).

The Evolution: From Common Law Rigidity to Modern Reform

The harshness of the common law RAP, which often invalidated reasonable transfers based on technicalities or improbable events, led to widespread reform across the United States and other common law jurisdictions.

The Uniform Statutory Rule Against Perpetuities (USRAP)

Over half of U.S. states have adopted some version of the USRAP, which introduces a “wait-and-see” approach. Under USRAP, a contingent interest is not voided immediately; instead, it is given a second chance to vest within a flat 90-year period after its creation. If the interest vests or fails within that 90 years, it is valid. If it is still unvested at the end of 90 years, it is then declared invalid.

The Cy-Près Doctrine and Judicial Reformation

Many modern statutes also incorporate the *cy-près* doctrine (meaning “as near as possible”). If a property interest violates the rule, the court is instructed to reform or construe the provision to comply with the perpetuities period while staying as close as possible to the transferor’s original intent.

Summary: Key Takeaways on Property Control Limits

The Rule Against Perpetuities remains a vital component of property law, balancing the rights of owners with the public interest in property alienability. Here are the essential points to remember:

1. The common law RAP invalidates a property interest if there is any possibility it could vest more than 21 years after the death of every person alive when the interest was created (the “lives in being”).
2. The Rule applies only to contingent future interests (rights that are uncertain to take effect), not to currently vested interests or rights retained by the original grantor.
3. The purpose of the RAP is to prevent “dead hand” control and promote the ability of property to be freely bought and sold.
4. Modern reform, notably the Uniform Statutory Rule Against Perpetuities (USRAP), has introduced a more flexible “wait-and-see” approach with a 90-year alternative vesting period.
5. Due to complexity and state-specific variations, any document involving long-term future property transfers should be reviewed by a Legal Expert.

Frequently Asked Questions (FAQ)

What does it mean for an interest to “vest”?

An interest “vests” when the identity of the beneficiary is certain and any conditions precedent to their ownership are met. Before vesting, the interest is contingent, and the Rule Against Perpetuities is active. Once vested, the interest is a secure property right.

What is a “life in being”?

A “life in being” is any person who is alive at the moment the property interest is created. This person’s life is used as the measuring stick to determine the end of the perpetuity period. They must be relevant to the conveyance, though not necessarily a recipient.

Does the Rule Against Perpetuities apply to corporate stock agreements?

Generally, the RAP applies mainly to donative transfers (gifts, wills, trusts). While it has been applied to some commercial transactions (like certain mineral/oil and gas interests), courts have consistently upheld shareholder stock redemption agreements, often finding that a corporation’s existence in perpetuity is “antithetical” to the RAP’s purpose.

What is the difference between “Common Law” and “Wait-and-See”?

The Common Law RAP is an “all-or-nothing” rule: if there is any theoretical possibility of remote vesting, the interest is void immediately. The modern “Wait-and-See” approach (like USRAP) is more forgiving; it allows the interest to stand and “waits” for up to 90 years to see if the interest actually vests within the permissible period.

If my state has abolished the RAP, do I still need to worry about it?

Even if your state has abolished or significantly extended the RAP period for new trusts, you may still need to know the common law rule for: 1) older trusts/documents that predate the statutory change; 2) interests that fall outside the new statute’s scope (e.g., interests in land); and 3) to prevent property interests from being tied up for excessively long periods, even if technically legal.

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