669 N.E.2d 799 (1996)
In 1978 Broadwest Realty Corporation owned a two-story building on Broadway between 94th and 95th Streets in Manhattan that contained a theater occupying approximately 58 percent of the floor space and separate commercial space.1 Broadwest had been unable to secure a permanent tenant for the theater and was operating its properties, including adjacent Pomander Walk and the Healy Building, at a net loss.2
Symphony Space, Inc., a not-for-profit arts organization that had previously rented the theater for one-night engagements, entered into negotiations with Broadwest.3 On December 1, 1978, Broadwest and Symphony executed a contract for the sale of the building to Symphony for a purchase price of $10,010, with $10 paid at closing and the balance secured by a purchase-money mortgage.4 On December 31, 1978, the parties executed four separate documents: a deed conveying the building to Symphony, a lease from Symphony to Broadwest of the commercial space for $1 per year running from January 1, 1979 to May 31, 2003, a $10,000 mortgage note from Symphony due December 31, 2003, and an option agreement granting Broadwest the exclusive right to repurchase the entire building during specified exercise periods.5
The option agreement set four exercise periods: after July 1, 1979 with closing in 1987, 1993, 1998 or 2003; following maturity of the mortgage note; during the ninety days after termination of the lease other than for nonpayment of rent; and during the ninety days after notice of Symphony’s default under the mortgage. Purchase prices ranged from $15,000 to $28,000 depending on the closing year.6 The option was stated to be unconditional and to run with the land.7 The transaction was structured so that Symphony could obtain a property-tax exemption for the theater parcel while Broadwest retained approximately $140,000 in annual rental income and reduced its own taxes by $30,000 per year.8
In the summer of 1981 Broadwest sold and assigned its interests in the lease, option, mortgage, and the adjacent properties to defendants Pergola Properties, Inc., Bradford N. Swett, Casandium Limited, and Darenth Consultants for $4.8 million.9 In January 1985 defendant Swett served notice exercising the option on the ground of alleged default and set a May 6, 1985 closing.10 Symphony disputed the default and, in March 1985, commenced this declaratory-judgment action.11 Defendants served additional exercise notices in April 1985 and March 1987.12 After the trial court granted Symphony summary judgment and the Appellate Division affirmed, the Appellate Division certified the question whether the order was properly made, and the Court of Appeals granted review.13
Whether the New York statutory prohibition against remote vesting applies to options to purchase commercial property?14
New York’s statutory Rule against Perpetuities under EPTL 9-1.1(b) applies to options to purchase real property, including those arising in commercial transactions, because the 1965 amendment incorporated the American common-law rule against remote vesting that encompasses purchase options creating contingent equitable interests which may vest beyond lives in being plus twenty-one years.15
Yes. The common-law prohibition against remote vesting subjects options to purchase land to the Rule because such options are specifically enforceable and create a disincentive for the landowner to develop the property while hindering alienability.16 In Buffalo Seminary v. McCarthy the Appellate Division held that an unlimited option in gross violated the statutory rule and this Court affirmed on that opinion.17 The reasoning extends equally to commercial purchase options since the common law did not distinguish between commercial and noncommercial options and the Legislature intended EPTL 9-1.1(b) to cover the full scope of the common-law prohibition.18
The option agreement at issue here originated in the December 1978 sale-and-leaseback transaction between Broadwest Realty Corporation and Symphony Space, Inc. involving the two-story Broadway building and granted Broadwest the unconditional right to repurchase the entire property at prices between fifteen thousand and twenty-eight thousand dollars.19 This commercial option therefore falls squarely within the coverage of EPTL 9-1.1(b) and is subject to the statutory prohibition against remote vesting.20
The New York statutory prohibition against remote vesting applies to the option agreement.21
Whether the option agreement permits exercise of the purchase right beyond the twenty-one-year perpetuities period under section 3(a)?22
An option that may be exercised more than twenty-one years after its creation violates EPTL 9-1.1(b) when no measuring lives are stated. The instrument manifests a contrary intention that precludes application of the saving statute in EPTL 9-1.3.23
Yes. Where corporations are parties and no measuring lives appear the perpetuities period is twenty-one years from the date of the instrument.24 Section 3(a) expressly permits exercise at any time after July 1, 1979 so long as closing occurs in 1987, 1993, 1998 or 2003.25 Section 1 requires notice of at least one hundred eighty days before closing under that subdivision.26 The latest possible exercise under section 3(a) therefore falls in July 2003 more than twenty-four years after the December 1978 creation of the option.27
The unambiguous language of the agreement demonstrates the parties’ intent that the option remain exercisable throughout the full twenty-four-year span.28 The saving statute in EPTL 9-1.3 cannot rewrite that clear expression of contrary intention.29
The option agreement permits exercise of the purchase right beyond the twenty-one-year perpetuities period under section 3(a).30
Whether the option agreement permits exercise of the purchase right beyond the twenty-one-year perpetuities period under sections 3(b) through 3(d)?31
An option that may be exercised after the twenty-one-year perpetuities period violates EPTL 9-1.1(b) when the instrument’s express provisions for closing dates and contingencies manifest a contrary intention that renders the saving statute in EPTL 9-1.3 inapplicable.32
Yes. Section 3(b) authorizes exercise at any time following maturity of the mortgage note whose latest closing date is fixed at December 31, 2003 allowing exercise until October 2003.33 Sections 3(c) and 3(d) permit exercise during defined periods after lease termination or mortgage default.34 Both the lease and mortgage extend until 2003 so that the triggering events could occur after December 1999 yet still produce a closing in 2003.35
By designating December 31, 2003 as the latest possible closing date the agreement itself manifests the parties’ expectation that exercise could occur beyond the twenty-one-year period.36 The saving statute therefore does not apply.37
The option agreement permits exercise of the purchase right beyond the twenty-one-year perpetuities period under sections 3(b) through 3(d).38
Whether the wait-and-see approach should be used to assess validity of the option?39
New York courts determine the validity of an interest under EPTL 9-1.1(b) by examining whether the interest must vest within the perpetuities period if at all. They do not wait to see whether it actually vests in time.40
No. The statutory language of EPTL 9-1.1(b) requires that an interest must vest if at all within the prescribed period. Therefore it voids any interest that may vest too remotely judged by the circumstances existing at the time of the grant.41 This Court has consistently refused to adopt a wait-and-see doctrine and has held that validity is determined by what might have happened under the terms of the instrument rather than by subsequent events.42 The option here could have vested after expiration of the twenty-one-year period and is therefore void from the outset regardless of the fact that defendants attempted to exercise it in 1985 and 1987.43
Adoption of the wait-and-see approach would require legislative action and cannot be accomplished by judicial decision.44
The wait-and-see approach should not be used to assess validity of the option.45
Whether rescission of the 1978 contract of sale is available on the ground of mutual mistake?46
Rescission on the ground of mutual mistake is unavailable when the mistake consists solely of a misunderstanding of the Rule against Perpetuities and granting relief would contravene the public policy embodied in the Rule against Perpetuities.47
No. CPLR 3005 removes technical objections where relief can be justified by analogy to mistakes of fact. It does not equate every mistake of law with a mistake of fact or permit rescission merely because the parties misread the law.48 The parties’ error here was nothing more than a misunderstanding of the Rule against Perpetuities and the statute does not authorize undoing the transaction on that basis.49 Moreover the Rule against Perpetuities is a statutory prohibition reflecting public policy whose purpose is to defeat the intent of parties who create remotely vesting interests.50 Granting rescission would produce the same result as enforcing the option and would tend to compel performance of contracts that violate the Rule.51
Rescission is therefore inappropriate.
Rescission of the 1978 contract of sale is not available on the ground of mutual mistake.52