Also known as: antialienation rule · anti alienation rule · restraint on alienation
Written by attorneys · grounded in primary & secondary sources — see below
A doctrine providing that unreasonable direct restraints on the alienation of property interests are invalid. Reasonableness is assessed by balancing the purpose served by the restraint against the harm it causes to transferability.
Alexandra Armstrong owned commercial space leased to Alliance Holdings. The lease required Alliance's consent before Alexandra could assign her interest to another landlord. When Alexandra sought to assign to a suitable replacement, Alliance withheld consent without a reasonable basis. The assignment proceeds because the consent restraint is valid only if consent is not withheld unreasonably.
Avalon Pharmaceuticals burdened its research campus with a servitude limiting future sales to pharmaceutical firms only. Years later the company sought to sell to a general commercial developer. The restriction is invalid because it directly restrains alienation and its utility does not outweigh the resulting injury to marketability.
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Alfred Ashford devised a warehouse to his daughter Ariana Azizi with a clause requiring the property to remain in residential use. Ariana later wished to convert the building to mixed commercial use. The clause does not constitute a restraint on alienation and therefore remains enforceable against her.
Austin Abbott leased retail space from Anchor Bank. The lease barred assignment without the bank's prior consent. When Austin located a creditworthy assignee, the bank refused consent for arbitrary reasons. The assignment is permitted because the landlord may not withhold consent unreasonably.
Albert Allen received a devise of farmland subject to a right of first refusal held by a neighboring farm at a price equal to the highest bona fide offer and exercisable within thirty days. Albert received an offer from a developer and notified the neighbor. The right of first refusal is enforceable and does not operate as a restraint on alienation.
A restraint requiring consent is valid, but consent may not be withheld unreasonably unless the lease expressly grants an absolute right to withhold it. The rule distinguishes between restraints on the landlord's interest and restraints on the tenant's interest.
The court weighs the utility of the restraint against the injurious consequences of enforcing it. If the harm to alienability outweighs the benefit, the restraint is invalid.
No. A restraint on the use that may be made of transferred property is not treated as a restraint on alienation under the applicable Restatement rules.
A right of first refusal is not a restraint on alienation if its price and time terms are reasonable. If the terms are unreasonable, the provision is judged under the rules applicable to disabling, forfeiture, or promissory restraints.