Bleecker Co-op Wins Perpetuities Claim

Update: The decision described in my blog post of January 21 has been overturned. See post dated February 24, 2011. The original post is below as it was originally written. In an earlier post I discussed Bleecker St Tenants Corp v. Bleecker Jones LLC where the co-op claimed that the Rule Against Perpetuities defeated a renewal right under a long term commercial lease signed years ago. The Perpetuities Rule has long bedeviled law students and is a famously esoteric mind-bender. At its most simplistic, it prohibits options which might vest in perpetuity. The co-op creatively tried to use it to defeat the long term, below market lease which is no longer needed since the IRS Section 216 80/20 rule was amended. The lease had a reminder clause for renewals: the co-op was required to remind the tenant to renew. Since the renewal option lasted for 60 days after the reminder, technically the tenant could renew after the lease expired thereby taking it out of one of the many tortured exceptions to the Perpetuities Rule. NY Supreme Court Justice Edmead held for the tenant on the basis that language extending the lease on a month to month basis was good enough to be covered by the \"appurtenant to a lease\" exception but the Appellate Division overturned Edmead holding that since the lease term expired, the renewal was not covered by the exemption. The co-op gets a windfall based on a centuries old Rule. I bet there are lots of co-op lawyers being asked by co-op boards to dust off Olde English law books to see if there are any other technicalities out there!

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