North Carolina § 41-30 - Leases to commence in the future.

§ 41-30. Leases to commence in the future.

A lease to commence at a time certain or upon the occurrence or nonoccurrence of a future event becomes invalid if its term does not actually commence in possession within 30 years after its execution. For purposes of this section, the term "lease" does not include an oil, gas, or mineral lease. History (1995, c. 525, s. 1.) COMMENTARY G.S. 41-30 provides that a lease to commence at a time certain or upon the happening of a future event becomes invalid if the term does not actually commence in possession within 30 years after the lease's execution. Such leases are excluded from the Statutory Rule Against Perpetuities by G.S. 41-18(1) and (9). Excluding such leases from the Rule Against Perpetuities removes a source of considerable litigation under the common-law Rule Against Perpetuities concerning the validity of so-called "on completion" leases - leases to commence on the completion of a building. Such leases would be clearly valid at common law if the lessor was obligated to complete the building within 21 years, but in the absence of an explicit obligation of this sort, some courts have held the lease to be invalid. E.g., Southern Airways Co. v. DeKalb County, 101 Ga. App. 689, 115 S.E.2d 207 (1960); others, though, have upheld such leases on the theory that the lessee's interest was vested from the beginning (Isen v. Giant Food, Inc., 295 F.2d 136 (D.C. Cir. 1960)); or that there was an implicit obligation to complete the building within a reasonable time (Wong v. DiGrazia, 60 Cal.2d 525, 386 P.2d 817 (1963); Singer Co. v. Makad, Inc., 213 Kan. 725, 518 P.2d 493 (1974); see also Read v. GHDC, Inc., 334 S.E.2d 165 (Ga. 1985); Ryland Group, Inc. v. Wills, 331 S.E.2d 399 (Va. 1985)). Although the risk under the common-law Rule Against Perpetuities that such leases would be declared invalid from the beginning would be removed by the wait-and-see feature of the Statutory Rule Against Perpetuities, such leases are excluded from the Statutory Rule entirely. A shorter period than the 90 years allowed by the Statutory Rule is more appropriate to commercial transactions that impinge upon the marketability of land, and the 30-year period selected should give reasonable time for such leases to commence in possession. 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).