SB 152
Department of Legislative Services
Maryland General Assembly
2020 Session
FISCAL AND POLICY NOTE
Third Reader
Senate Bill 152 (Senator West)
Judicial Proceedings Judiciary
Estates and Trusts - Rule Against Perpetuities
This bill limits a statutory exception to the rule against perpetuities that establishes that the
rule does not apply to an option of a tenant to purchase all or part of the premises leased
by the tenant. The bill limits the exception so that it applies to an option that is exercisable
only during the term of the lease. The bill applies only prospectively and may not be applied
or interpreted to have any effect on or application to any option to purchase leased premises
granted before the effective date of the bill.
Fiscal Summary
State Effect: The bill does not materially affect State operations or finances.
Local Effect: The bill does not materially affect local operations or finances.
Small Business Effect: None.
Analysis
Current Law/Background: The common law rule against perpetuities finds it origins
from the original English common law case, The Duke of Norfolk’s Case (1682). The Court
of Appeals of Maryland has specified that the rule against perpetuities states “no interest
is good unless it must vest, if at all, not later than twenty-one years after some life in being
at the creation of the interest.” Ferrero Construction Co. v. Dennis Rourke Corp.,
311 Md. 560, 536 A.2d 1137 (1988).
Future interests in property can be either vested or nonvested. A vested interest currently
belongs to someone, even though the person to whom it belongs may not come into
possession of the property for years. Generally, the term “vested” signifies that there has
been a fixation of a present right to either the immediate or the future enjoyment of
property. A nonvested interest belongs to no one until some event in the future determines
who actually will take the interest. Nonvested future interests were brought into American
property law from English common law.
Limitations were placed on nonvested future interests, chiefly through the rule against
perpetuities, because the law does not favor nonvested future interests that cannot vest, or
will not vest, within a recognizable period of time. The common law rule depends on
possible, not actual, events, and any hypothetical violation of the rule extinguishes a future
interest. The rule also does not simply apply to estates and trusts, but also in commercial
transactions. Commonwealth Realty Corp. v. Bowers, 261 Md. 285 (1971). Consequently,
many real estate and commercial contracts and documents that create preemptive rights are
technically void because they violate the rule.
The State has adopted 13 exceptions to the rule against perpetuities; those include (1) an
option of a tenant to renew a lease and (2) an option of a tenant to purchase all or part of
the premises leased by the tenant.
Additional Information
Prior Introductions: HB 1360 of 2019 was referred to the House Rules and Executive
Nominations Committee, but no further action was taken.
Designated Cross File: HB 94 (Delegate Rosenberg) - Judiciary.
Information Source(s): Comptroller’s Office; Judiciary (Administrative Office of the
Courts); Register of Wills; Department of Legislative Services
Fiscal Note History: First Reader - January 20, 2020
af/sdk Third Reader - February 6, 2020
Analysis by: Donavan A. Ham Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 152/ Page 2


Statutes affected:
Text - First - Estates and Trusts - Rule Against Perpetuities: 11-102 Estates and Trusts
Text - Third - Estates and Trusts - Rule Against Perpetuities: 11-102 Estates and Trusts