New York high court exempts options to renew leases from the rule against perpetuities

The New York Court of Appeals joined the majority of states in holding that the rule against perpetuities does not apply to options to renew leases. Bleecker St. Tenants Corp. v. Bleeker Jones LLC, 945 N.E.2d 484 (N.Y. 2011). It should be noted that only a minority of states have the traditional rule against perpetuities and New York's rule is codified by statute. "No estate in property shall be valid unless it must vest, if at all, not later than twenty-one years after one or more...

Automatic reverter creates fee simple determinable

In a straightforward application of traditional doctrine, a Tennessee court ruled that a deed condition that stated that a lot "shall automatically revert to Seller in fee simple" if the buyer does not comply with stated conditions (to install a waterline within a year) creates a fee simple determinable that transfers title automatically. Lasater v. Hawkins, 2011 WL 4790971 (Tenn. Ct. App. 2011)

More states prohibit transfer fee obligations

Statutes have been passed in Pennsylvania, South Dakota, Virginia and Washington prohibiting transfer fee obligations which requires payments of fees to a prior seller every time the property is sold. 2011 Pa. Laws 8; 2011 S.D. Sess. Laws 196; 2011 Va. Acts 706; 2011 Wash. Legis. Serv. 36.

Another state abolishes transfer fee obligations

The New Jersey legislature joined an increasing number of states that have passed statutes prohibiting enforcement of transfer fee obligations. 2010 N.J. Laws 102, codified at N.J. Stat. 46:3-28 to -33. read article The act applies prospectively only. Transfer fee obligations are duties to pay moneys to a prior seller of...

Increasing regulation of transfer fee covenants

More and more states are passing statutes prohibiting "transfer fee covenants" which purport to require owners of property to pay a portion of the sales price (or a fixed amount) to the original developer whenever the property is sold. Such provisions were held to be unenforceable restraints on alienation in the 1852 New York Court of Appeals case De Peyster v. Michael, 6 N.Y. 467 (1852), a case that is apparently not well known to those peddling these covenants today. De Peyster involved a "quarter sale" clause that required one-fourth of the sale price to go to the heirs of the van...

Joseph William Singer

Bussey Professor of Law, Harvard Law School

Estates & future interests