Texaco Refining & Marketing, Inc. v. Samowitz

Majority - Peters, C. J.

No, neither General Statutes § 47-33a nor the common law Rule Against Perpetuities invalidates an option to purchase real property contained within a long-term commercial lease when the option is exercised during a valid renewal period within the leasehold term. Regarding General Statutes § 47-33a (a), the court held that the statute applies only after an option to purchase is exercised, at which point it transforms into an executory agreement for the sale of real property. The statute's purpose is to regulate the performance of such an agreement, not the period in which an option within a lease can be exercised. A broader interpretation would impose unreasonable burdens on long-term commercial leases by requiring periodic re-execution and re-recording of options, which the legislature likely did not intend. Since Texaco commenced its action for specific performance on December 30, 1987, within eighteen months of exercising its option on August 14, 1987, its claim was timely under the statute. Regarding the common law Rule Against Perpetuities, the court concluded that an option to purchase contained in a commercial lease, especially if exercisable within the leasehold term, is valid without regard to the rule. The fundamental purpose of the Rule Against Perpetuities is to promote the free alienability of property and prevent marketability restrictions over long periods. However, an option coupled with a long-term commercial lease is consistent with these policy objectives because it often stimulates property improvement, thereby enhancing its marketability rather than hindering it. Extending the rule to cover such options would also be inconsistent with the legislative adoption of the 'second look' doctrine. This position aligns with the weight of authority in the United States.