North Carolina § 41-29 - Options in gross, etc.

§ 41-29. Options in gross, etc.

An option in gross with respect to an interest in land or a preemptive right in the nature of a right of first refusal in gross with respect to an interest in land becomes invalid if it is not actually exercised within 30 years after its creation. For purposes of this section, the term "interest in land" does not include arrangements relating solely to an interest in oil, gas, or minerals. History (1995, c. 525, s. 1.) COMMENTARY This section imposes a 30-year time limit on the duration of options in gross and preemptive rights in gross with respect to an interest in land. The appellation "in gross" refers to the fact that the optionee or preemptioner has no possessory interest in the property. If an option or preemptive right pertains to an interest in land, the option or preemptive right becomes invalid if it remains unexercised 30 years after its creation. Example. A, the owner of Blackacre, sells an option to B under which A obligates himself, his heirs, and assigns at any time in the future to convey Blackacre to B, his heirs, and assigns for $X.00. Or, A, the owner of Blackacre, sells Blackacre to B. As part of the transaction, B obligates himself, his heirs, and assigns at any time in the future to reconvey Blackacre to A, his heirs, and assigns for $X.00. If either option remains unexercised 30 years after its creation, it ceases to be valid. (Both options are excluded from the Statutory Rule Against Perpetuities by G.S. 41-18(1) and (9).) Options Held by a Lessee Not Affected by this Section. This section does not apply to an option or right of first refusal (preemptive right) that is not in gross. Thus, this section does not apply to an option or preemptive right held by a lessee to renew, extend, or enter into a new lease of or to purchase the leased premises. Such options or rights of first refusal do not deter the lessee from making improvements on the property, and so public policy is not viewed as requiring controls on their duration. Legal Periodicals. - For article, "Perpetuities Reform in North Carolina: The Uniform Statutory Rule Against Perpetuities, Nondonative Transfers, and Honorary Trusts," see 74 N.C.L. Rev. 1783 (1996).