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Perpetuities

This page contains a practice note on the new Perpetuities and Accumulations Act 2009; and an article on the "old" law in relation to instruments taking effect prior to 6 April 2010. There is also a case report on Cosmichome Limited v Southampton City Council [2013] EWHC 1378 (Ch) where the court held that the relevant start date for the perpetuity period was when the option came into existence and the interest in land arose.


Perpetuities and Accumulations Act 2009

A short practice note on the new legislation

Perpetuities and Accumulations Act 2009

This Act received the Royal Assent on 12 November 2009. The effect of the Act is not retrospective in relation to property transactions, but any instrument taking effect on or after 6 April 2010 will be caught by it. The meaning of “taking effect” is not defined, and it is possible that difficulties may arise in connection with instruments such as options and rights of pre-emption.

Application generally

Section 1(1) of the 2009 Act states:
    "The rule against perpetuities applies (and applies only) as provided by this section."
The remainder of s1 of the Act then deals with trusts, wills and powers of appointment only. This means that the vast majority of property transactions (including options, rights of pre-emption and easements) will no longer be affected by the rule against perpetuities, so far as instruments taking effect on or after 6 April 2010 are concerned.

There are, however, certain statutory restrictions applicable to leases, which although they appear similar to perpetuity restrictions, will continue to apply as they are unaffected by the 2009 Act - see below.

The old perpetuity rules will still apply to property transactions where the instrument came into effect before 6 April 2010. Therefore it will still be necessary to check whether past transactions complied with those rules.

Where a contract pre-dates 6 April 2010 but annexes an agreed form of completion document, and the completion date will be on or after 6 April 2010, it may be appropriate to consider whether the form of the completion document should be changed to remove unnecessary perpetuity-related drafting. Where the document is not changed, its effect will depend on how it is drafted.

Wher ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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