How often do you see one of these?
It's a long decision. I'm not editing down. I am however, making you click a quarter way through to get to the rest of the case. You could probably just click the link too. Whatever you want to do is fine with me.
Bleecker St. Tenants Corp. v Bleeker Jones LLC, 2009 NY Slip Op 05196 (App. Div., 1st, 2009)
This appeal requires us to consider the centuries-old Rule against Perpetuities, [*2]specifically,
whether the exception to the prohibition against remote vesting of
options appurtenant to a lease is applicable to the renewal option
clause contained in the parties' lease.
Plaintiff Bleecker Street Tenants Corp. is the owner of the
building located at 277-279 Bleecker Street, a six-story walkup that
was converted to cooperative ownership effective September 1, 1983.
Contemporaneously with the co-op conversion, the building's first-floor
commercial space was leased to defendant Bleeker Jones LLC's
predecessor in interest, Bleecker Jones Leasing Company, a partnership
made up of the same four individuals who made up the sponsor
The lease, drafted by the tenant, provided for an initial term
of 14 years, with nine options to renew for consecutive 10-year
periods, exercisable through a series of notices. The tenant could
exercise the renewal options by giving written notice at least six
months before the end of the preceding term; the lease also provided
that the landlord would send the tenant a "reminder notice" regarding
the option, seven months before the end of the preceding term, if the
tenant had not already exercised the option. In the event that the
landlord did not send the seven-month notice and the tenant did not
exercise the option on six months' notice, then the renewal option
would remain in effect until such time as the landlord sent the tenant
notice of its right to exercise the option. Once the landlord sent the
tenant this final written notice, the tenant would have 60 days within
which to exercise the renewal option. The lease further provided that,
in the event that the renewal option went unexercised and the landlord
did not send the 60-day notice, then, "[i]f the term shall have
expired, Lessee shall remain in possession as a month-to-month tenant"
until such time as the landlord sent the 60-day notice.
At the end of the initial 14-year lease term, on August 30,
1997, there was no exercise of the lease option. Accordingly, the
commercial tenant thereafter remained in possession as a month-to-month
Plaintiff commenced this action in December 2007, seeking a
declaration that the lease renewal options are void under the statutory
and common-law rules against perpetuities and unreasonable restraints
Defendants moved, and plaintiff cross-moved, for summary
judgment. The motion court granted defendants' motion, ruling that the
Rule against Perpetuities does not apply because the lease's renewal
option is appurtenant to the lease, in that it " originates in one of
the lease provisions, is not exercisable after lease expiration, and is
incapable of separation from the lease'" (quoting Symphony Space v Pergola Props.,
88 NY2d 466, 480 ). The court reasoned that during the period of
extended month-to-month possession, "[w]hile the term' of the lease may
expire upon the failure of either party to issue their respective
notices, the Lease itself does not."
New York's statutory Rule against Perpetuities includes a
codification of the common-law rule prohibiting the remote vesting of
interests and provides that "[n]o 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 . . ." (EPTL
9-1.1[b]). Stated another way, subsection (b) " invalidates any
interest that may not vest within the prescribed time period'" (Symphony Space v Pergola Props., 88 NY2d at 476, quoting Wildenstein & Co. v Wallis, 79 NY2d 641, 647-648 [*3]).
The rule flows from "the principle that it is socially undesirable for
property to be inalienable for an unreasonable period of time" (Symphony Space,
88 NY2d at 475), and is designed to " ensure the productive use and
development of property by its current beneficial owners by simplifying
ownership, facilitating exchange and freeing property from unknown or
embarrassing impediments to alienability'" (id., quoting Metropolitan Transp. Auth. v Bruken Realty Corp.,
67 NY2d 156, 161 ). Although the statutory period is lives in
being plus 21 years, where —- as here — the parties to the agreement
are corporate entities and no measuring lives are stated in the
instrument, "the perpetuities period is simply 21 years" (Symphony Space, 88 NY2d at 481; Bruken Realty, 67 NY2d at 161).
The rule against remote vesting has been held to be applicable to purchase options contained in leases (see Symphony Space at 476), as well as to lease renewal options contained in leases (see Warren St. Assoc. v City Hall Tower Corp., 202 AD2d 200, 200-201 ).
On their face, all except the first of the renewal options
provided for here would run afoul of the rule, as they vest more than
21 years after execution of the lease (see e.g. Warren St. Assoc., supra).
However, an exception to the rule's generally strict application exists
for options appurtenant to a lease, which are considered "part of" the
lease (see Buffalo Seminary v McCarthy, 86 AD2d 435, 441 n5 , affd
58 NY2d 867 ). The required characteristics of such options are
that they (1) "originate in one of the lease provisions," (2) are
"not exercisable after lease expiration," and (3) are "incapable of
separation from the lease" (Symphony Space, 88 NY2d at 480).