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The Nebraska Supreme Court Announces Major Change in State's Real Estate Law. Domina Law Group pc llo Client Prevails.

" 'The reign of terror of the rule against perpetuities has ended.' This is what the Nebraska Supreme Court's June 18, 2010 decision in Bauermeister v Waste Management Co., 280 Neb 1, --- NW2d --- (2010) means," said Dave Domina. Domina and Domina Law Group pc lloargued the case for the Bauermeisters at the trial court, in the Court of Appeals, and in the Supreme Court.

The Supreme Court's decision to review the Court of Appeals placed squarely at issue whether an option in a purchase agreement, involving a Douglas County, Nebraska farm containing the largest landfill in the State, barred exercise of the seller's right to repurchase the land under the ancient "rule against perpetuities." Generally, the rule against perpetuities prohibits the creation of future interests or estates which, possibly, might not become vested within lives in being plus 21 years. The justification for the rule has been public policy against restricting the alienation of the sale of land.

The Supreme Court, reversing the Nebraska Court of Appeals, noted that the rationale for the rule against perpetuities is no longer as vibrant as other public policy considerations. The Court noted that, within a few weeks after the 1989 contract between the Bauermeisters and Waste Management was executed, Nebraska's Legislature adopted a version of a uniform state rule against perpetuities, which was narrower than the common law rule.

The Court noted that courts across the United States have abandoned the common law rule against perpetuities in a series of decisions. The Nebraska Supreme Court joined the trend in the law at moving away from the rule against perpetuities, restricting its applicability, and limiting the common law rule to the scope of the 1989 Nebraska statute.

The Court concluded, "It would not be prudent to now deny [the Bauermeisters] the benefit of their bargain while allowing Waste Management to avoid the terms of [its] agreement."

While the Supreme Court's decision was, on its face, limited to the terms of the contract between the parties, the decision is "strong precedent for the idea that the rule against perpetuities no longer inflicts its terror against parties engaging in commercial real estate contracts," Domina concluded.

Categories: Property Division

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