Daily Development for Wednesday, October 21, 2009
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri

LANDLORD AND TENANT:  The exception to the Rule Against Perpetuities for options that are “appurtenant” to a lease does not apply to options that are exercisable after expiration of the lease term during the month-to-month tenancy created by a holdover provision in the lease.  Bleecker Street Tenants v. Bleeker Jones, 882 N.Y.S.2d 42 (A.D. 1 Dept. 2009). 

The Lease between plaintiff landlord defendant tenant provided for an initial 14-year term, with nine options to renew the Lease for consecutive 10-year periods.  The Renewal Options were exercisable by Tenant by giving notice to Landlord prior to the end of the then-existing term, and Landlord was required to send Tenant a reminder notice regarding such options (the “Reminder Notice”). 

If Landlord did not send the Reminder Notice and Tenant did not exercise its Renewal Options, the Lease provided that the Renewal Options would remain in effect until such time as Landlord sent the Reminder Notice, and “[i]f the term shall have expired, Lessee shall remain in possession as a month-to-month tenant.” 

After expiration of the initial 14-year term, Tenant did not exercise its Renewal Options and became a month-to-month holdover tenant.  The Landlord commenced an action to declare the Renewal Options void under the Rule Against Perpetuities (“RAP”) and the New York Supreme Court held that the Renewal Options were exempt from RAP since they were options “appurtenant” to the Lease. 

The Supreme Court, Appellate Division (the “Court”), reversed the holding of the lower court and found that the exception for options appurtenant to a lease did not apply to the Renewal Options.  In Symphony Space v. Pergola Properties (99 N.Y.2d 466 (1996)), the New York Court of Appeals, stated that the exception to RAP for options appurtenant to a lease applies where the options (i) originate in one of the lease provisions, (ii) are not exercisable after lease expiration and (iii) are incapable of separation from the lease.  In this case, the Court found that the Renewal Options were exercisable after expiration of the Lease since the Lease expressly provided that such options continued to exist during Tenant’s month-to-month tenancy, after expiration of the Lease term.  The month-to-month tenancy did not extend the term of the expired Lease. 

Therefore, the Court applied RAP and found that the Renewal Options violated RAP’s rule against remote vesting (EPTL 9-1.1(b)) because the Renewal Options were exercisable 21 years after the date of the Lease.  The Court also found that the Renewal Options did not violate the prohibition against unreasonable restraints against alienation under common law and RAP (EPTL 9-1.1(a)) because the Renewal Options did not directly restrain Landlord from transferring its property, although they may have indirectly affected the building’s sale price.

Comment: On first thought (and that‘s all you usually get in these comments) the editor is suspicious of the conclusion that the lease was no longer in effect when it was being continued on a month to month to basis following the original term.  Although the usual rule is that a month to month holdover tenancy is a new lease (Friedman on Leases [Randolph Edition} at 18-46, such a rule perhaps not to apply to holdover arrangements what were agreed to in the original lease specifically to accommodate he situation where notice of renewal still had time to run. 

Here, the parties apparently stipulated that the renewal option was part of the extended term.  Why shouldn’t the option be able to “shelter” from the operation of the RAP under these circumstances.  If, conceivably, under the original lease, there was a period of time when there would be NO lease and the option could be renewed, of course that’s a different matter.

Items reported here and in the ABA publications
are for general information purposes only and
should not be relied upon in the course of
representation or in the forming of decisions in
legal matters.  The same is true of all
commentary provided by contributors to the DIRT
list.  Accuracy of data and opinions expressed
are the sole responsibility of the DIRT editor or
individual contributors and are in no sense the
publication of the ABA.

Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality


DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 to 15 messages per work day.

DIRT Developments are posted periodically, as supply dictates.

To subscribe, send the message

subscribe Dirt [your name]



To cancel your subscription, send the message
signoff DIRT to the address:


for information on other commands, send the message
Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only
commercial and general real estate matters but also focuses specifically upon
residential real estate matters.  Because real estate brokers generally find
this service more valuable, it is named “BrokerDIRT.”  But residential
specialist attorneys, title insurers, lenders and others interested in the
residential market will want to subscribe to this alternative list.  If you
subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as
BrokerDIRT carries all DIRT traffic in addition to the residential discussions.

To subscribe to BrokerDIRT, send the message

subscribe BrokerDIRT [your name]



To cancel your subscription to BrokerDIRT, send the message
signoff BrokerDIRT to the address:


DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law.  Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, any substitute reporters, DIRT, and its sponsors.

All DIRT Developments, and scores of other cases, arranged topically, are reported in hardcopy form in the ABA Quarterly Report.  This is a limited subscription service, available to ABA Section Members, ACMA members and members of the NAR.   Qualified subscribers may Subscribe to this Report ($30 for Two Years) by Sending a Check to Ms. Bunny Lee, ABA Section on Real Property, Trust & Estate Law, 321 N. Clark Street, Chicago, Il 60610. Contact Bunny Lee  at (312) 988-5651, Leeb@staff.abanet.org   ABA members also can access prior and current editions of this report on the ABA RPTE section website.

DIRT has a WebPage at: