Legal Definitions - wait-and-see principle

The wait-and-see principle is a modern approach used in some areas of property law to determine the validity of certain future interests in property. Traditionally, the strict "Rule Against Perpetuities" would immediately invalidate a future interest if there was any theoretical possibility, no matter how remote, that the interest might not become certain (or "vest") within a specific legal timeframe (generally, 21 years after the death of someone alive when the interest was created).

The wait-and-see principle modifies this strict rule. Instead of immediately invalidating an interest based on a remote possibility of late vesting, a court will "wait and see" if the interest actually vests within the legally permitted period. If it does, the interest is considered valid. If, after the waiting period, it becomes clear that the interest will not or cannot vest within the allowed time, then it is invalidated. This approach provides more flexibility and often saves property arrangements that would otherwise be struck down by the older, more rigid rule. It is sometimes also called the second-look doctrine.

Here are some examples illustrating the wait-and-see principle:

• Trust for Future Grandchildren: Imagine a will that establishes a trust, stating that the funds should be distributed to "my grandchildren who reach the age of 25." At the time the will-maker dies, they have children but no grandchildren yet. Under the traditional Rule Against Perpetuities, this gift might be immediately invalidated because there's a theoretical possibility that a grandchild could be born many years later and not reach 25 until well beyond the legal perpetuities period (e.g., 21 years after the death of all the will-maker's children). However, with the wait-and-see principle, a court would not immediately strike down the gift. Instead, it would allow time to pass to see if any grandchild actually reaches 25 within the permissible timeframe, measured from the death of the will-maker's children. If they do, the gift is upheld; if not, it would then be invalidated.

• Conditional Land Grant to a Charity: A property owner deeds a piece of land to a local community center, but includes a condition that if the land is ever no longer used for community purposes, it should then pass to a specific environmental charity. The traditional Rule Against Perpetuities might invalidate the charity's future interest immediately, based on the remote possibility that the community center might cease its use hundreds of years in the future, long past any legally allowed vesting period. Applying the wait-and-see principle, a court would allow the condition to play out. It would "wait and see" if the community center actually stops using the land for its stated purpose within the perpetuities period. If this event occurs within the legal timeframe, the charity's interest becomes valid. If it becomes clear that the condition will not or cannot be met within that period, the charity's interest would then be invalidated.

• Long-Term Option to Purchase Property: A landowner grants a neighbor an option to purchase a specific adjacent parcel of land at a set price, exercisable "at any time within 30 years." The traditional Rule Against Perpetuities could deem this option invalid from its inception because a 30-year period might exceed the standard perpetuities period (a life in being plus 21 years), meaning the option could theoretically be exercised too late. With the wait-and-see principle, a court would not automatically invalidate the option. Instead, it would allow the 30-year period to run. If the neighbor exercises the option within the legally permissible perpetuities period (e.g., within 21 years of the death of the grantor or grantee, if they were the relevant "lives in being"), then the option is considered valid. If the option is only exercised after that legal period has expired, it would then be deemed invalid.