Title: Bleecker Street Tenants Corp. v. Bleeker Jones LLC

State: new-york

Issuer: New York Appellate Court

Document:

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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 12  
Bleecker Street Tenants Corp.,
            Respondent,
        v.
Bleeker Jones LLC, et al.,
            Appellants,
et al.,
            Defendants.
Jeffrey L. Braun, for appellants.
Marilyn K. Genoa, for respondent.
JONES, J.:
The appeal before this Court presents the novel
question whether options to renew a commercial lease are subject
to EPTL § 9-1.1(b), New York's rule against perpetuities.  We
hold that the rule against perpetuities does not apply to options
to renew leases.     
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No. 12
Plaintiff Bleecker Streets Tenant Corp. is owner of a
six-story walkup on Bleecker Street, which was converted to
cooperative ownership in September 1983.  Plaintiff leased the
building's first-floor commercial space to defendant Bleecker
Jones Leasing Company, defendant Bleeker Jones LLC's predecessor
in interest.  The lease agreement was contemporaneous with the
co-op conversion.  
The lease, in relevant parts, provided for an initial
lease term of 14 years, with nine consecutive options to renew
for a 10-year-period.  Each renewal option term was to "commence
on the first day of the calendar month immediately following the
expiration of the immediate preceding term of this lease."  The
lessee could exercise the renewal options together or
successively and by giving written notice to the lessor at least
six "months prior to the expiration date of the preceding term." 
If the lessee did not timely exercise a renewal option and the
lessor did not provide notice of the existence of an option seven
months prior to the date of each expiring, then each renewal
option remained in effect until the lessor notified the lessee in
writing of its right to exercise each option.  The lessee then
had 60 days to exercise such renewal option.  Lastly, "[i]f the
term shall have expired, [l]essee shall remain in possession as a
month-to-month tenant until" lessor complied with the notice
requirements.  The parties agree that, under these provisions, a
renewal option could be exercised even after the original lease
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No. 12
term had expired, during the month-to-month tenancies resulting
from the absence of written notice.
In August 1997, the initial 14-year lease term expired. 
Defendant Bleeker Jones did not exercise any lease option
thereafter.  It remained in possession as a month-to-month tenant
until plaintiff commenced this action in December 2007, seeking
to void the lease renewal options under EPTL 9-1.1(b) and the
common law rule against unreasonable restraints on alienation. 
Defendants moved and plaintiff cross-moved for summary judgment. 
Supreme Court granted defendants' motion for summary
judgment dismissing the complaint while denying that of
plaintiff.  The court concluded that the renewal options were
appurtenant to the lease, exercisable during the lease term and,
therefore, valid.  The Appellate Division reversed, declaring the
renewal options clause void under EPTL 9-1.1(b).  The court
determined that the lease term had expired prior to any renewal
option having been exercised and, thus, concluded that the option
could not be appurtenant to the lease.  We now reverse.  
"No 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 and any period
of gestation involved" (EPTL 9-1.1[b]).  This rule -- a
"prohibition against remote vesting" -- codified the American
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No. 12
common-law rule1 (Symphony Space v Pergola Props., 88 NY2d 466,
471, 475 [1996]).  Traditionally, the rule sought to limit an
owner's right to control title of property indefinitely, commonly
known as a landowner's dead-hand control (see id. at 475;
Metropolitan Trans. Auth. v Bruken Realty Corp., 67 NY2d 156, 160
[1986]).  Both in its early and modern forms, rules restricting
future dispositions of property were founded on the "principle
that it is socially undesirable for property to be inalienable
for an unreasonable period of time" (Symphony Space, 88 NY2d at
475).  The underlying objective of the rule remains: to protect
the alienability of property (see (1965 NYLegisAnn, at 206-207;
see also Berg, Long-Term Options and the Rule Against
Perpetuities, 37 Cal. L. Rev. 1, *2 [1949]).    
"Under the common law, options to purchase land are
subject to the rule against remote vesting" (Symphony Space, 88
NY2d at 476; see also Leach, Perpetuities in a Nutshell, 51 Harv
L Rev, 638, 660 [1938]).  Though scholars proposed that
commercial transactions be exempted from the rule against
perpetuities, in Symphony Space, the Court held that EPTL 9-
1.1(b) applies to all options to purchase (id. at 477).  An
option to purchase land "grants to the holder the power to compel
the owner of property to sell it whether the owner is willing to
1   The Legislature "intended to make clear that the American
common law rule against perpetuities has been and now is in force
in New York" (1965 NYLegisAnn, at 206-207).
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No. 12
part with ownership or not" (Bruken, 67 NY2d at 163).  If the
option to purchase does not comply with the rule against
perpetuities, that interest could be exercised, or vest, at a
time remote to the acquisition of such right.  As the Bruken
Court noted, the option to purchase in Buffalo Seminary v
McCarthy (86 AD2d 435 [4th Dept 1982], affd 58 NY2d 867 [1983])
"granted the holder an unlimited right to buy the owner's land at
any time" (id. at 163).  It is that uncertainty of title which
renders the property "inalienable for an unreasonable period of
time" (Symphony Space, 88 NY2d at 475).  The Symphony Space Court
reasoned: "Inasmuch as the common-law prohibition against remote
vesting applies to both commercial and noncommercial options, it
likewise follows that the Legislature intended EPTL 9-1.1(b) to
apply to the commercial purchase options as well" (id.).  
The Symphony Space Court also recognized that certain
options to purchase land, options appurtenant or appendant to a
lease, are not invalid under the rule against perpetuities if the
option "originates in one of the lease provisions, is not
exercisable after lease expiration, and is incapable of
separation from the lease" (id. at 480; see also  Metropolitan
Transp. Auth. v Bruken Realty Corp., 67 NY2d 156, 165 [1986];
Simes and Smith, Future Interests § 1244 [3d ed]).  The Court
reasoned that such options "encourage the possessory holder to
invest in maintaining and developing the property by guaranteeing
the option holder the ultimate benefit of any such investment. 
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No. 12
Options appurtenant thus further the policy objects underlying
the rule against remote vesting and are not contemplated by EPTL
9-1.1.(b)" (Symphony Space, 88 NY2d at 480).    
We now turn to whether the EPTL 9-1.1(b) applies to
options to renew leases.  
Under the common law, "it [was] well settled that
agreements for perpetual options to renew leases have always been
held valid" (Leach, Perpetuities in a Nutshell, 51 Harv.L.Rev. at
662; accord, Abbot, Leases and the Rule Against Perpetuities, 27
Yale L.J. 878, 883 [1918] ["There seems to be no question . . .
that such an option is good"]; Burns v City of New York, 213 NY
516, 520 [1915] [expressly-stated continual lease renewal
covenants are valid; it "was the law in England and has been
frequently stated by writers and in the opinions by the courts
both in England and in this country"]; Hoff v Royal Metal
Furniture Co., 117 AD 884 [2d Dept 1907] [concluded that
covenants for perpetual renewals "are lawful and in general
use"]; see also 3 ALR 498 [1919]; Berg, 37 Cal. L. Rev. at *22).2
2  Although scholars have questioned whether the validity of
such renewal options are excepted or exempted from the rule
against perpetuities, they have agreed that those interests are
valid, without reservations or limitations (see Abbot, 27 Yale
L.J. at 884; see also Berg, 37 Cal. L. Rev. at *22).  The option
to renew "has been consistently sustained for over 200 years in
England," in most cases with "no discussion of the rule . . .
Moreover several of the American cases do expressly consider the
validity of such covenants under the rule and uphold them none
the less.  But whether the rule be actually discussed or not, the
mere weight of decision seems sufficient to establish the result"
(Abbot, 27 Yale L.J. at 883-884).  Additionally, the concurring
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No. 12
 Thus, because the rule of perpetuities has not applied to
options to renew leases under the American common law and EPTL 9-
1.1(b) codifies the American common law, it follows that options
to renew leases also fall outside of the scope of EPTL 9-1.1(b).  
Moreover, an option to renew, like a purchase option
appurtenant to a lease, furthers the policy goals of the rule
against remote vesting.  At the same time, lease renewal options
or covenants for perpetual lease renewals are wholly
distinguishable from purchase options in two respects: an option
to renew a lease (1) is exercisable pursuant to the lease
agreement and, thus, inherently appurtenant to the lease and (2)
lacks the power to divest title of that property to the option
holder.  It also has been  noted that these "covenants" are often
part of commercial leases, rendering the lease more attractive
and readily alienable than less so (Simes and Smith, Law of
Future Interests, § 1243; Berg, 37 Cal. L. Rev. at *23).  Thus,
lease renewal options appropriately remain valid.   
Here, the parties expressly agreed upon nine
consecutive renewal options to the 14-year lease term,
exercisable according to particular notice requirements.  They
are not inconsistent with the purpose of the rule against
perpetuities because they continue the tenant's possession of the
and dissenting opinions dispute our reading of the authorities;
but neither cites any authority of any kind from any jurisdiction
that either says or holds that lease renewal options are subject
to the rule against perpetuities.  
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No. 12
property without interruption, thus encouraging the efficient use
of the property.  The dissent argues that excluding renewal
options from the rule's coverage will undermine the purposes of
the rule, suggesting the possibility of a former tenant "retaking
possession of the . . . property" after its lease has expired
(dissenting op at 6).  But our holding does not leave open this
possibility, for an option exercisable by a former tenant no
longer in possession is not a renewal option: it is an option to
enter into a new lease.  In the present case, it is clear that
from the lease that, so long as the renewal options existed, the
tenant would remain a tenant, lawfully in possession of the
property, at least on a month to month basis.  There is no sound
reason of policy to invalidate such a tenant's option to renew.  
Accordingly, the order of the Appellate Division should
be reversed, with costs, the motion of defendants Bleecker Jones
LLC and Bleecker Jones Leasing Company for summary judgment
granted and judgment granted declaring in accordance with the
opinion.
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Bleecker Street Tenants Corp. v Bleecker Jones LLC, et al.
No. 12
READ, J. (CONCURRING):
The majority holds that “the rule against perpetuities
does not apply to options to renew leases” (majority op at 1) in
New York because “the rule of perpetuities [did] not appl[y] to
options to renew leases under the American common law” (id. at
7).  But the authorities cited by the majority do not demonstrate
that options to renew leases enjoyed a blanket exemption from or
were outside the purview of the Rule against Perpetuities under
American common law.  Instead, these authorities show that an
option to renew did not run afoul of the historic prohibition
against remote vesting, subsequently codified in New York as EPTL
9-1.1 (b), if "appurtenant" or "appendant" to the lease, and, in
particular, if continuous (a so-called “perpetual” option or
covenant to renew).  Because the option to renew at issue in this
case was appurtenant to the lease (see Symphony Space v Pergola
Props, 88 NY2d 466, 478 [1996]), I agree with the result reached
by my colleagues in the majority, but I can not subscribe to
their reasoning.
I.
The majority correctly states that the common law
enforced "perpetual options to renew leases" (majority op at 6
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[first emphasis added; second emphasis in original]).  As
Professor William Berg, Jr. explains,
“[i]n the early years of the eighteenth century,
when the modern Rule against Perpetuities was in its 
formative stage, the highest court in England rendered
a decision in which it held that a lessor’s covenant
to renew a twenty-one year lease perpetually was not
violative of the Rule.  Thereafter, an almost unbroken
line of cases in England and America upheld covenants
of that type” (Berg, Long-Term Options and the Rule
Against Perpetuities, 37 Cal L Rev 1, 22 [1949]
[emphasis added]).
In his view, a perpetual renewal covenant was not
properly classified as an exception to the Rule, as many experts
claimed; rather it was simply “outside [its] province” (id. at
23) because
“under the view that the Rule is designed to destroy
indirect restraints upon the practical alienability of
property which are brought about by remote nonvested
future interests, covenants to renew leases, without
time limit, do not suspend the practical power to
alienate land.  So long as the value of the land does
not drop to the point where the rental becomes
prohibitive, the lessee always has in himself the legal
as well as the practical power to convey that which is
substantially a fee simple.  On the other hand, when
the lease becomes unprofitable, the lessee will give up
his right to renew and the lessor will resume complete
ownership” (id. [emphasis added]; see also Gray, The
Rule against Perpetuities § 230 [4th ed 1942]
[regarding perpetual leases as valid because they give
lessees estates akin to fees simple defeasible upon
conditions subsequent]).
Professor Berg also noted that, for  the lessor, a
“desire to retain ownership of the land as a good business
investment might influence” the granting of a lease with a
perpetual covenant; further “[o]n some occasions [the lessor]
might be motivated by a sentimental unwillingness to part with
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No. 12
the land, but in any event it is difficult to twist the
transaction so as to impute . . . the desire to create an
inalienable interest” (id. at 24).
The seminal 18th-century English case referred to by
Professor Berg -- Bridges v Hitchcock (5 Bro P C 6, 2 ER 498
[House of Lords 1715]) –- illustrates what a perpetual option to
renew a lease looks like and how such a covenant comports with
the policy underlying the Rule against Perpetuities.  In 1693,
Stapleton leased a property owned by Bridges known as “Ember
Mill,” which had fallen “greatly out of repair” (id. at 499). 
The lease was for 21 years, but provided 
“‘that if the lessee, his executors, administrators, or
assigns, or any of them, should, at any time thenafter,
before the expiration of the term thereby demised, be
minded to renew and take a further lease of the said
premises; that then, upon application made, at any time
before the last six months of the said term, the
appellant, his heirs or assigns, should grant such
further lease as should by the lessee, his executors,
administrators, or assigns, be desired, without any
fine to be demanded therefore, and under the same rents
and covenants only as in this lease’” (id.)
Upon taking possession, Stapleton and his partners set
to work rebuilding and improving the property: they tore down the
old corn millhouse and erected a brick millhouse in its stead, as
well as a millhouse and mills for manufacturing brass and iron
and several other buildings.  Hitchcock, who by 1714 had acquired
the whole interest in the premises from Stapleton and his
partners, “reasonably expected to obtain a new lease” (id. at
500), but Bridges resisted on various grounds.  Defending the
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No. 12
investments made in the property, Hitchcock argued that the
covenant for perpetual renewal should be enforced by the courts
because it was "the only foundation and encouragement which the
parties had, for expending so much money upon the premises as
they had done" (id.).  The House of Lords agreed.
Next, the majority also relies on law review articles
by Edwin H. Abbot, Jr. and Professor W. Barton Leach to support
the proposition that the Rule against Perpetuities never applied
to leases to renew at common law.  Abbot hypothesizes “a lease
for over 21 years [which] contains a covenant for renewal at the
option of the lessee[] [o]r . . . such a lease contains a
covenant for a perpetual series of such renewals” (Abbot, Leases
and the Rule Against Perpetuities, 27 Yale L J 878, 883 [1918]). 
Contrary to Professor Berg, he then states that “there seems no
escape from the conclusion that such an option if sustained . . .
form[s] an exception to" the Rule against Perpetuities; however,
he declares, “[t]here seems to be no question . . . that such an
option is good (emphasis added).  It has been consistently
sustained over 200 years in England.  The great weight of
authority in this country is to the same effect” (id.).  For
English common law authority, Abbot cites Bridges, which, as
previously discussed, involved a perpetual covenant to renew.
For American common law authority, Abbot adverts to
several cases, including three from New York: Robinson v Beard
(140 NY 107 [1893]); Gomez v Gomez (147 NY 195 [1895]); and Hoff
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No. 12
v Royal Metal Furniture Co. (117 AD 884 [2d Dept 1907], affd 189
NY 555 [1907]).  As Judge Graffeo points out in her dissent,
however, at the time these three cases were decided, New York had
a statutory rather than a common law Rule against Perpetuities. 
This statutory rule was “narrowly applied” and excluded options
(dissenting op at 2; see also Symphony Space, 88 NY2d at 478
(1996) [“[P]rior to 1965, New York’s narrow statutory rule
against remote vesting did not encompass options” [citing Buffalo
Seminary v McCarthy, 86 AD2d 435, 443 [4th Dept 1982], affd 58
NY2d 867 [1983]).  As a result, New York courts were not called
upon to decide whether the Rule against Perpetuities was an
obstacle to enforcing the options to renew in Robinson, Gomez and
Hoff.  In any event, the options were appurtenant to the leases
in each of these cases: Gomez and Robinson involved options for
successive terms of a period of years; Hoff, like Bridges,
involved a perpetual option to renew.*
Similarly, Professor Leach comments that in the United
States it was “well settled that perpetual options to renew
*All of the cases cited by Abbot from states other than New
York involved construction of leases with covenants for perpetual
renewal (see Banks v Haskie, 45 Md 207 [1876]; Boyle v Peabody H.
Co., 46 Md 623 [1877]; Blackmore v Boardman, 28 Mo 420 [1859];
Diffenderfer v Board, 120 Mo 447 [1894]; Drake v Board, 208 Mo
540 [1907]; and Thaw v Gaffney, 75 W Va 229 [1914]); see also
Garner v Gerrish (63 NY2d 575, 581 [1984] [remarking that Hoff
illustrates that perpetual leases “will not be enforced unless
the lease clearly grants to the tenant or his successors the
right to extend beyond the initial term by renewing
indefinitely”]). 
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No. 12
leases have always been held valid” (Leach, Perpetuities in a
Nutshell, 51 Harv L Rev 638, 662 [1938] [first emphasis added;
second emphasis in original]; see also Note, Options and the Rule
against Perpetuities, 13 U Fla L Rev 214, 220 [1960] ["American
jurisdictions today will uniformly protect the option appendant
to purchase and the option appendant to renew from the Rule
against Perpetuities"]); Camerlo v Howard Johnson Co., 710 F2d
987, 989 [3d Cir 1983] [holding that a perpetual lease option was
valid under Pennsylvania law and noting that "(t)he weight of
authority elsewhere holds that, absent a statutory prohibition, a
perpetual lease or a right to perpetual renewal of a lease does
not violate the (Rule against Perpetuities) or create a restraint
on alienation" [citing Abbot, Leases and the Rule Against
Perpetuities, 27 Yale L J 878, 883  (1918)]).  The two cases
adduced by the majority -- Hoff and Burns v City of New York (213
NY 516 [1915]) -- both deal with perpetual options to renew a
lease.
Finally, the majority opines that “an option to renew a
lease . . . is exercisable pursuant to the lease agreement and,
thus, inherently appurtenant” (majority op at 7 [emphasis
added]).  But there is no reason why an option to renew might not
originate in an instrument other than the lease (as was the case
with the option to purchase in Symphony Space); or be exercisable
after the lease has expired (as was apparently the case in Warren
St. Assoc. v City Hall Tower Corp., 202 AD2d 200 [1st Dept 1992],
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No. 12
appeal discontinued 84 NY2d 865 [1994]), or by a former tenant no
longer in possession (as hypothesized by Judge Graffeo in her
dissent).  We have consistently held that "options in real estate
are subject to the statutory" Rule against Perpetuities (Symphony
Space, 88 NY2d at 477 [citing Wildenstein & Co. v Wallis, 79 NY2d
641, 648 [1992]); and have applied the three-part test in
Symphony Space to assess the enforceability of a lease where the
holder's interest may vest beyond the perpetuities period.  The
reason put forward by the majority to depart from this precedent
and create a blanket exception from the Rule against Perpetuities
for all options to renew leases -- that they were historically
considered to be exempt from or outside the scope of the Rule --
is simply not supported by the authorities cited.  
II.
In Symphony Space, we held that an option is
appurtenant to a lease and therefore does not violate the Rule
against Perpetuities when it (1) "originates in one of the lease
provisions," (2) "is not exercisable after lease expiration," and
(3) "is incapable of separation from the lease"  (Symphony Space,
88 NY2d at 480).  The only issue that the parties dispute in this
case is whether the tenant’s renewal options were exercisable
after lease expiration.
The parties agree that, absent notice, the lease
provides for month-to-month possession following the initial 14-
year term.  During this possession, the lease creates asymmetric
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No. 12
barriers to terminating the landlord-tenant relationship.  The
tenant only needs to give a one-month notice before vacating. 
But the landlord is limited to triggering a 60-day notice period,
during which the tenant must choose between exercising a 10-year
renewal option or terminating the tenancy.  The lease also
specifies many other rights and responsibilities during any
month-to-month tenancy under the lease.  For example, the tenant
must maintain insurance covering at least $500,000 in property
damage, at the tenant's expense.
Notably, Symphony Space interprets the Rule against
Perpetuities to prohibit renewal options exercisable after a
“lease” expires, not after a “term” in a lease expires.  Here,
“term” has the meaning ascribed by the lease –- i.e., “‘term of
this lease’ or words of similar import” means “the initial term
and any renewal term in respect to which Lessee has exercised its
right of renewal” -- and makes no mention of monthly terms. 
Thus, “term” refers to the initial 14-year period and exercised
10-year options.
This definition plays a useful role in the lease.  For
example, in § 1.3, the lease states that “each renewal option
term shall commence on the first day of the calender month
immediately following the expiration of the immediate preceding
term of this lease” (emphasis added).  Because 10-year renewal
periods do not begin each month, it is clear that “immediately
preceding term” refers only to the initial term and renewal terms
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No. 12
-- just as the lease defines the word “term.”  The parties needed
a word or phrase to represent the 14-year and exercised 10-year
periods in order to lay their agreement out in a readable
contract.  There are many examples of this throughout the lease. 
The drafters did the sensible thing when creating a shorthand
phrase for use in a contract: they offered a definition within
that same instrument.
The Appellate Division read the relevant language to
mean “This Lease only includes the initial 14-year period and
exercised 10-year options.”  As a result, that court concluded
that the option was not appurtenant to the lease because the
parties did not expressly state that the lease encompassed the
rights and responsibilities that the lease itself obliges after
expiration of the initial 14-year term.  This was error.
Accordingly, like Supreme Court, I would hold the renewal option
to be appurtenant to the lease, and would reverse the Appellate
Division on that basis.
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Bleecker St. Tenants Corp. v Bleeker Jones LLC et al.
No. 12 
GRAFFEO, J. (dissenting):
I write separately because I believe that the
majority's broad rule exempting all options to renew leases from
the statutory rule against perpetuities cannot be reconciled with
the text of EPTL 9-1.1 (b) and is inconsistent with the
analytical framework that we adopted in Symphony Space v Pergola
Props. (88 NY2d 466 [1996]).
The rule against perpetuities has been codified in New
York since the early 1800s (see id. at 475).  It is premised on
the belief that "it is socially undesirable for property to be
inalienable for an unreasonable period of time" (id.).  As a
result, the rule's purpose is "'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 [1986]).
The majority correctly observes that, in the early 20th
century, we held that an option to renew a lease was outside the
scope of New York's rule against perpetuities if the lease
clearly manifested an intent to create a right to renew in
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No. 12
perpetuity (see e.g. Burns v City of New York, 213 NY 516, 520
[1915]; Hoff v Royal Metal Furniture Co., 117 App Div 884 [2d
Dept 1907], affd 189 NY 555 [1907]; see generally Leach,
Perpetuities in a Nutshell, 51 Harvard L Rev 638, 662 [1938]). 
By the early 1900s, New York had a statutory rule against
perpetuities, but it was drafted so narrowly that it covered
"only contingent remainders on terms of years and fees limited
upon prior fees upon contingencies" (Buffalo Seminary v McCarthy,
86 AD2d 435, 440 [4th Dept 1982], affd 58 NY2d 867 [1983],
citing, inter alia, Real Property Law, §§ 46, 50, formerly 1 Rev
Stats [1st ed], part II, ch I, tit II, §§ 20, 24; Matter of
Wilcox, 194 NY 288, 298 [1909]).1  Because an option to renew a
lease was not encompassed within these two categories of property
interests, the decisions in Burns and Hoff were consistent with
the statutes then in effect.
The more widely accepted American common law at that
time, in contrast, utilized a broader definition of the rule
against perpetuities:  "No interest is good unless it must vest,
1 Both section 20 of the cited provision of the first
Revised Statutes and former section 46 of the Real Property Law
stated that "A contingent remainder shall not be created on a
term of years, unless the nature of the contingency on which it
is limited, be such that the remainder must vest in interest,
during the continuance of not more than two lives in being at the
creation of such remainder, or upon the termination thereof." 
Section 24 of the cited provision of the first Revised Statutes
and former section 50 of the Real Property Law applied this
standard to the other type of property interest described in
Buffalo Seminary. 
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No. 12
if at all, not later than twenty-one years after some life in
being at the creation of the interest" (Buffalo Seminary, 86 AD2d
at 441 n 4 [internal quotation marks omitted]).  On its face, the
American rule covered all interests in real property, including
options and leases.  In 1965, the Legislature recognized this
principle when it enacted Real Property Law former § 43 with the
specific intent "to incorporate the American common-law rules
governing perpetuities" and thereby expanded the rule beyond the
restrictive reach previously applied (Symphony Space, 88 NY2d at
478).
EPTL 9-1.1 (b) is the current version of New York's
rule against perpetuities.  It was enacted in 1966 and similar to
its predecessor, the statute 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 and any period of gestation involved."  We
have determined on several occasions that section 9-1.1 (b)
applies to options in real estate (see e.g. Symphony Space, 88
NY2d at 477 ["It is now settled in New York that, generally, EPTL
9-1.1 (b) applies to options"]; Wildenstein & Co. v Wallis, 79
NY2d 641, 648 [1992] ["the rule (is) applicable to options in
real estate transactions"]; Buffalo Seminary, 86 AD2d at 442
["options are within the New York rule"]).
Based on this history, I do not believe that options to
renew leases should be categorically exempt from EPTL 9-1.1 (b). 
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No. 12
The majority reasons that, "because the rule against perpetuities
has not applied to options to renew leases under the American
common law . . . it follows that options to renew leases also
fall outside the scope of EPTL 9-1.1 (b)" (majority op at 7).  To
the contrary, there was no common-law principle in New York --
the early 20th century decisions that the majority relies on were
grounded on the absence of a statutory prohibition that applied
to perpetual leases (see generally Buffalo Seminary, 86 AD2d at
443).  Buffalo Seminary made this very point (see id.).
This Court's pre-1965 authorities were superceded when
the Legislature adopted the American rule that covered all
interests in real property and did not contain an exception for
an option to renew a lease.  Symphony Space, Wildenstein and
Buffalo Seminary emphasized that the current statute -- EPTL   
9-1.1 (b) -- applies to all real estate options.  As Judge Read
observes in her concurrence, the authorities relied on by the
majority discuss perpetual lease renewals, which are not at issue
in this case.  I therefore defer to the language of the statute
and this Court's prior discussions on the applicability of the
rule against perpetuities to options on real estate in holding
that an option to renew a lease is subject to EPTL 9-1.1 (b).
In Symphony Space, however, we recognized a limited
exception to the strict application of the statutory rule against
perpetuities for certain "options appurtenant" to a lease.  We
described an option appurtenant as one that (1) "originates in
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No. 12
one of the lease provisions," (2) "is not exercisable after lease
expiration" and (3) "is incapable of separation from the lease"
(88 NY2d at 480).  An option appurtenant "is valid even though
the holder's interest may vest beyond the perpetuities period"
because it "encourage[s] the possessory holder to invest in
maintaining and developing the property by guaranteeing the
option holder the ultimate benefit of any such investment" and
"thus further[s] the policy objectives underlying the rule
against remote vesting" (id.).  Both courts below correctly
employed the option appurtenant exception as the applicable legal
principle in this case and other courts that have dealt with
options to renew leases have used similar reasoning (see e.g.
Double C Realty Corp. v Craps, LLC, 58 AD3d 480 [1st Dept 2009];
Warren St. Assoc. v City Hall Tower Corp., 202 AD2d 200 [1st Dept
1994], appeal withdrawn 84 NY2d 865 [1994]).
There are important reasons why our Court should adhere
to this limited exception to EPTL 9-1.1 (b) instead of creating a
new category of interests in real property immunized from the
rule against perpetuities.  First, an option to renew a lease,
whether for successive periods of time or in perpetuity, does not
have to be contained in the lease itself and may instead be
created in a separate written document executed by the parties,
perhaps after the lease has commenced or prior to expiration of
the lease.  If so, it could be drafted so that the ability to
exercise the option is independent from the lease and unaffected
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No. 12
by the tenant's nonperformance (see Symphony Space, 88 NY2d at
480).  Since this arrangement would not qualify as an option
appurtenant under Symphony Space, the majority is incorrect when
it states that an option to renew a lease is always "exercisable
pursuant to the lease agreement and, thus, inherently appurtenant
to the lease" (majority op at 7). 
Second, even if an option is set forth in a lease, it
could be worded to allow the option to be exercised after the
initial term of the lease has expired.  This, of course, would
provide a disincentive to the property owner to expend money for
improvements to the leased space after the expiration of a
tenancy since the option holder could wait until improvements
were completed before exercising the option and retaking
possession of the improved property at the price that was
predetermined in the former lease.  It would also impose a
significant impediment to the owner's ability to sell the
property at a fair market price because the tenant would have the
power to resurrect the expired lease (if the required renewal
notifications are not issued by the owner), thereby impeding a
potential purchaser's ability to use and develop the property. 
The rule against perpetuities was designed to deter such barriers
to transferability (see Symphony Space, 88 NY2d at 480-481).
These are just examples of the reasons why I believe
Symphony Space presciently articulated the limited, three-prong
"options appurtenant" exception to EPTL 9-1.1 (b).  Applying that
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No. 12
test to the facts of this case, the option to renew in the lease
at issue violates the statutory rule against perpetuities for the
reasons stated by the Appellate Division:  the lease expressly
provided that it would expire and the tenancy would become month-
to-month if the renewal provisions were not exercised before the
end of the lease's term; once that occurred, each month-to-month
tenancy did not extend the period of the lease terms (see 120 Bay
St. Realty Corp. v City of New York, 44 NY2d 907, 909 [1978];
Kennedy v City of New York, 196 NY 19, 23-24 [1909]); and the
option nevertheless permitted the tenant to renew the lease after
it had expired.  The majority acknowledges this fact, noting the
parties' agreement that the "renewal option could be exercised
even after the original lease term had expired" (majority op at
3).  Under the Symphony Space test, I conclude that the option is
void.2  
Consequently, I would affirm the order of the Appellate
Division.
*   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *
Order reversed, with costs, motion of defendants Bleeker Jones
LLC and Bleecker Jones Leasing Company for summary judgment
granted and judgment granted declaring in accordance with the
opinion herein.  Opinion by Judge Jones.  Chief Judge Lippman and
Judges Ciparick, Smith and Pigott concur.  Judge Read concurs in
result in an opinion.  Judge Graffeo dissents and votes to affirm
in an opinion.
Decided February 24, 2011
2 I would also hold that the tenant's argument premised on
EPTL 9-1.3 is meritless.
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