88 N.Y.2d 466 (N.Y. 1996); 646 N.Y.S.2d 641; 669 N.E.2d 799
Symphony Space v. Pergola Properties is a leading New York Court of Appeals decision that squarely applies the Rule Against Perpetuities (RAP) to a sophisticated commercial real estate transaction.
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.
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.