Tag: Real Property

  • Understanding the Rule Against Perpetuities (RAP)

    Whether one is studying for their property law exam in 1L or studying for the bar exam, the Rule Against Perpetuities (RAP) has frustrated many law students. The truth is that RAP it’s complex. Let us help to break it down for you for the bar exam.

    • The Rule: No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.
    • Context: RAP was created by courts at common law to prevent landowners from controlling their estates from the grave for centuries. Prior to the creation of the RAP, a curmudgeon landowner could create elaborate conditions through a will causing contingent ownership based on uncertain events, effectively tying up land infinitely. RAP voids vague and uncertain transfers of interest and promotes certainty in land ownership.
    • Why RAP is hard: RAP requires a four-dimensional brain to calculate the creation of an interest, determining whose life is to be measured, and whether the interest has vested by the end of that life + 21 years. One must evaluate every possible scenario at the moment the interest is created to determine if it’s void or not.

    Breaking Down the Rule Against Perpetuities

    To break down RAP, let’s understand it in a simpler language.

    RAP prevents remote vesting of property interests by requiring that (1) any future contingent interest must vest no later than (2) 21 years after the death of (3) a measuring life (some life in being) which existed at the creation of the interest.

    • Step 1: Identify the future interest. RAP only applies to contingent remainders, executory interests, and vested remainders subject to open (class gifts). It does not apply to vested remainders, reversions, or possibilities of reverter.
      • Note: A remainder can go to either an ascertainable person (vested) or an unascertainable person (contingent).
    • Step 2: Find the measuring life. Look for a “life in being” at the time the interest was created, someone whose life or death affects when the interest will vest. This is often the grantor, a beneficiary, or someone named in the condition.
    • Step 3: Speculate death of the measuring life, and add 21 years. RAP does not require the interest to vest within someone’s lifetime + 21 years after death. It only requires certainty that either the interest will vest or fail within this period. If there is any possible scenario, no matter how remote, that the interest might fail to vest 21 years after the death of the measuring life then the interest is void from the start.
    • Apply the “what if” test ruthlessly. Courts assume absurd possibilities: a 60-year-old woman could have more children, a person could marry someone not yet born, etc. These hypotheticals often fail otherwise reasonable transfers of interest in land.
    • Consequences: When RAP is violated the offending language is deleted.

    Examples of RAP

    Compare (1) “To A for life, then to A’s children who reach age 18”, and (2) “To A for life, then to A’s children who reach age 25”.

    Step 1: Here, the future interest is a contingent remainder. We don’t know if A has children who would meet the condition precedent (reaching age 18 or 25) to get the estate. If A has at least one child then we have a vested remainder subject to open.

    Step 2: Here, A is the measuring life.

    Step 3:

    • In Scenario 1 (Age 18): The interest is valid. Let’s say A has a child one day before dying. 21 years after A dies, A’s child will have reached age 18. If the child dies before age 18, the interest fails but within the timeframe of RAP.
    • In Scenario 2 (Age 25): The interest is void. Let’s say A has a child one day before dying. RAP requires measuring life + 21 years. A’s child cannot turn 25 within 21 years of A’s death. Therefore, the condition violates RAP and the interest is void.

    Consequences: When RAP is violated the offending language is deleted. Here, in scenario 2, the grant will become, “To A for life”. A holds a life estate, and because the remainder fails, the grantor retains a reversion in fee simple absolute upon A’s death.

  • Real Covenants, Equitable Servitudes, and Implied Reciprocal Schemes

    Real covenants overlap with equitable servitudes and its related concept of implied reciprocal schemes, often causing a lot of confusion for bar exam takers.

    We created the tables below to help clarify rules around these concepts.

    REAL COVENANTS

    Definition: Real covenants are written promises that impose restrictions on the use of land and run with the land.

    Common law requirements for real covenants:

    Burdened LandBenefitted Land
    Writing
    – Between original parties
    Writing
    – Between original parties
    Intent 
    – To bind successors 
    Intent 
    – To benefit successors 
    Touch & Concern
    – Burden the land
    – Restrict use or enjoyment of land
    Touch & Concern
    – Benefit the land
    – Increase use or enjoyment of land
    Vertical privity
    – Relationship between the previous and current owners
    Vertical privity
    – Relationship between the previous and current owners
    Horizontal privity
    – Relationship between the original parties of the burdened and benefited land
    Notice
    – Actual, inquiry, or record (constructive)
    Remedy: Legal DamagesRemedy: Legal Damages

    Modernly, real covenants have fewer requirements.

    • Burdened Land: Writing, Intent and Notice only.
      • Touch & Concern, and Privity (Horizontal and Vertical) are no longer required.
    • Benefited Land: Writing and Intent only.
      • Touch & Concern, and Privity are no longer required.

    EQUITABLE SERVITUDE

    Definition: Equitable servitudes are restrictions on how land may be used. Servitudes run with the land. Equitable servitudes were developed in the courts of equity. Remedies for breach are injunctions only.-

    IMPLIED RECIPROCAL SERVITUDE / SCHEME

    Definition: A common plan or development that creates an implied reciprocal servitude or scheme among multiple lots where each lot is bound by the restrictions and can enforce them against others, even if the restrictions are not stated in every deed.

    Equitable ServitudeImplied Reciprocal Scheme
    Writing requiredNo Writing Required
    – SOF does not apply
    Intent to bind successors Intent to bind/benefit successors
    (original owner’s common plan)
    Touch & Concern Land
    – Benefit dominant land
    – Burden servient land
    Touch & Concern Land
    – oral words
    – evidence, or
    – recorded notice
    Noticed RequiredNotice Required
    Privity Not RequiredPrivity Not equired

    Remedy: Injunction (Equity)

    Remedy: Injunction (Equity)

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