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What is the Rule Against Perpetuities?
What’s important to know about this rule?
In this article, I will break down the meaning of “Rule Against Perpetuities” so you know all there is to know about it!
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Let me explain to you what Rule Against Perpetuities is and how it works!
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What Is Rule Against Perpetuities
The rule against perpetuities refers to an Anglo-American rule where the interest in a property or real estate must vest to another within twenty-one years following the death of those living at the time of the creation of the interest.
The rule against perpetuities is not only one of the most important rules affecting property today but is also highly complicated.
The idea is to prevent someone from keeping land or property within his or her family long after the person is dead.
This law helps prevent dynastic property that remains in the hands of a deceased person’s family for potentially hundreds of years.
Since the rule requires that the property’s interest vest, if at all, within 21 years after the death of a life in being at the time the interest was created, a person will no longer be able to exert the same level of control over property long after his or her death.
This notion of wanting to control ownership of a property after someone’s death is called the “dead hand” or “mortmain”.
Keep reading as I will further break down the rule against perpetuities and tell you how it works.
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Origin of Rule Against Perpetuities
The rule against perpetuities comes from the seventeenth century in England, particularly in the Duke of Norfolk’s case of 1682.
In this case, Henry, the 22nd Earl of Arundel, tried to create a shifting executory limitation where his property would pass on to his sons in a certain way and future generations based on certain conditions.
A dispute broke out between Henry’s sons relating to the transfer of property and the court, the House of Lords, considered that a shifting condition should not exist.
In the case Cadell v. Palmer, the court found that imposing conditions on a property should not exceed 150 years.
Eventually, in 1886, John Chipman Gray, an American scholar, formulated the rule against perpetuities 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.”
Ultimately, in common law, the time limit where the interest of a property should vest to another was set to 21 years.
The common law formulation is typically expressed as “lives in being plus twenty-one years”.
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Rule Against Perpetuities Elements
Let’s look at the different elements of the rule against perpetuities.
First, the rule states the following:
No interest is good unless it must vest, if at all, no later than 21 years after some life in being at the creation of the interest.
As you can see, this rule is composed of the following elements:
- Must vest, if at all
- No later than 21 years after some life in being
- The creation of the interest
“Interest” refers to any property interest, such as a fee simple or life estate.
“Must vest, if at all” means that the property should pass on to someone else.
“No later than 21 years after some life in being” means that the property must be passed on to some identifiable person whose life or lives are “in being” at the time of the creation of the interest.
“The creation of interest” refers to the point in time the interest leave’s the grantor’s hands.
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Why Is The Rule Against Perpetuities Important
The rule against perpetuities is important for several reasons.
The first reason why the English courts adopted and recognized this rule is that they did not want a person to attach long-lasting conditions or contingencies to their property.
If this was authorized, then future generations will be harmed when buying and selling their properties.
This will be the case as buyers will not be inclined to buy a property that has unresolved issues or may be subject to title disputes.
The second reason why this rule is important is that it prevents future generations from freely managing their property in accordance with their wishes.
In essence, the living will be controlled by the wishes of the dead.
Since the dead may have imposed a contingency on the property, the living is bound to such contingencies for hundreds of years following the person’s death.
Another reason this rule is important is that it helps prevent aristocrats from keeping their property and estate within their family for generations and generations to come.
If wealthy families were able to keep property within their family by imposing conditions on the property following their death, this would make it very difficult for others to acquire property over their lifetime.
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How To Avoid Violating The Rule Against Perpetuities
Let’s look at how you can assess if you are violating the rule against perpetuities without getting into too many complex scenarios.
The first question you must ask is whether or not there is a future interest in the conveyance that falls under the rule, a contingent remainder or executory interest.
Then, if you determine that there is such future interest, you should assess if there are any limitations on when a person who is entitled to the interest can actually get title to the property.
If the person with the interest does not end up getting the property at some point in time, we can consider the conveyance to be in violation of the rule as the interest may never vest.
If there is a limitation that has been established, then you must determine who are the relevant people when the future interest will vest (the “measuring lives”).
The last question you must answer is to see if it’s possible for all those who are currently alive and who are relevant for the future vesting will have their interests vest more than 21 years after their death.
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So there you have it folks!
What does the rule against perpetuities mean?
In a nutshell, the rule against perpetuities is a common law property rule stating that interest in land or property is not good unless it vests, if at all, no later than 21 years after some life in being at the creation of the interest.
This rule was intended to prevent people from tying up a property, whether real estate or personal property, after their death impacting future generations.
The rule against perpetuities requires that someone actually own a piece of land or property after a reasonable period of time following the death of the transferor.
Although the main premise of this rule is simple, it’s also one of the most complicated legal rules as well.
In common law, the courts have found that it would not be reasonable for the living to be bound by contingencies and conditions imposed on them by the dead.
Now that you know what the “rule against perpetuities” means and how it works, good luck with your research!
I hope you enjoyed this article on Rule Against Perpetuities! Be sure to check out more articles on my blog. Enjoy!
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