In 1978, Symphony Space, Inc., a nonprofit theater company, entered into a multi-document transaction involving a building on Manhattan's Upper West Side. As part of a sale–leaseback designed in part to take advantage of Symphony Space's tax-exempt status, Symphony Space acquired title to the entire building from the then-owner and simultaneously leased back the commercial portions to the seller for a lengthy term. In connection with that deal, the seller obtained a recorded, assignable option to repurchase the entire building (including areas not demised to the seller under the lease) at fixed prices on specified future dates extending as late as 2003—more than 21 years after the option's creation. The seller later assigned its leasehold and repurchase option interests to investors including Pergola Properties, Inc. When the assignees sought to exercise the repurchase option, Symphony Space refused and commenced a declaratory judgment action, arguing that the option violated New York's codified Rule Against Perpetuities (EPTL § 9-1.1(b)) because it could be exercised beyond the permissible vesting period. The lower courts agreed and declared the option void ab initio. The assignees appealed to the New York Court of Appeals, urging recognition of a commercial exception to RAP, a wait-and-see validation based on actual events, or statutory reformation to salvage the bargain.
Does New York's Rule Against Perpetuities apply to a commercial option to repurchase real property that, by its terms, may be exercised more than 21 years after its creation, and if so, is the option void ab initio notwithstanding arguments for a commercial exception, a wait-and-see approach, or statutory reformation?
Under New York Estates, Powers and Trusts Law (EPTL) § 9-1.1(b), no estate in property is valid unless it must vest, if at all, not later than 21 years after one or more lives in being at the creation of the estate. Where the parties are not natural persons, no measuring life is available, so the interest must necessarily vest, if at all, within 21 years. Options to purchase real property are subject to RAP unless they are strictly appurtenant to a lease—i.e., held by the lessee, exercisable only during the lease term, and limited to the leased premises—because such lease-appurtenant options are viewed as promoting, not restraining, alienability. New York does not apply a wait-and-see doctrine; an interest either is valid or void based on possibilities at creation. EPTL § 9-1.3 permits certain validating constructions only where consistent with the instrument's text and intent; courts may not rewrite clear temporal terms to save an otherwise invalid disposition. Preemptive rights or rights of first refusal may be treated differently due to their lesser restraint on alienation (see, e.g., Metropolitan Transp. Auth. v. Bruken Realty Corp., 67 N.Y.2d 156 (1986)).
Yes. The repurchase option, which by its terms could be exercised as late as 2003—more than 21 years after its 1978 creation—violates New York's Rule Against Perpetuities and is void ab initio. The Court of Appeals declined to create a commercial exception, refused to adopt a wait-and-see approach, and held that EPTL § 9-1.3 and severance doctrines could not reform or salvage the agreement's express temporal provisions.
The court began with the statute's text and New York's long-standing policy favoring free alienability of land. An option to purchase burdens title by chilling the owner's incentive to improve or alienate the property and by deterring third parties, who face the risk of being displaced by a later option exercise. Because RAP tests possibilities at the moment of creation, the critical fact is that the option might vest outside the perpetuities period; the possibility that it could also be exercised earlier does not save it. New York has not adopted wait-and-see; implementing such a doctrine would contravene the statute and is for the Legislature, not the courts. The court rejected a proposed commercial exception, reasoning that New York's RAP applies across the board unless the interest falls within a limited, well-justified category that does not unduly restrain alienation. While some jurisdictions exempt commercial transactions, New York precedent and EPTL § 9-1.1(b) do not. The court distinguished rights of first refusal, which generally impose a lesser restraint because they ripen only if the owner elects to sell, from fixed-price purchase options, which create a continuing fetter on marketability. The court also rejected the contention that the option was a lease-appurtenant option: it encumbered the entire building, including areas not demised to the lessee, was freely assignable, and extended independently of any tenant's possessory interest—features characteristic of an option in gross and thus subject to RAP. Finally, the court held that EPTL § 9-1.3's validating-construction presumptions could not be used to blue-pencil the explicit outside date (2003) down to 21 years without contradicting the parties' clear allocation of risks and benefits in setting multiple fixed exercise dates and prices. Nor could the court sever the offending periods or otherwise reform the bargain; doing so would impermissibly rewrite material terms. Because the option was void from inception, later events—such as attempts to exercise within 21 years—could not resurrect it.
Symphony Space cements several core teachings. First, New York strictly applies RAP to commercial options, absent narrow exceptions, and does not wait-and-see actual vesting. Second, it draws a bright line between purchase options (robust restraints on alienation that are subject to RAP) and rights of first refusal (often treated as lesser restraints). Third, it clarifies that only true lease-appurtenant options—held by the lessee, confined to the demised premises, and exercisable solely during the lease—fall outside RAP's reach. For law students, the case is a prime illustration of how perpetuities doctrine meaningfully affects real-world deal architecture and why precise temporal drafting (e.g., capping option periods at 21 years or tying them to a qualifying measuring life) is indispensable in New York.
Symphony Space underscores that New York's codified perpetuities rule is not a mere academic relic but a powerful constraint on real estate dealmaking. By voiding a sophisticated, long-horizon repurchase option, the Court of Appeals signaled that transactional innovation cannot sidestep the statute's temporal limits or the policy favoring alienability.