Also known as: disabling restraint on alienation · disabling restraints against alienation · restraint on alienation · disabling restraint
Written by attorneys — see sources below.
A restraint on alienation that renders any attempted conveyance of the affected interest void. The restraint operates by stripping the holder of the legal power to transfer the interest rather than by imposing liability or triggering forfeiture.
Delilah Duran leased commercial space from Davenport Pharmaceuticals under a lease requiring tenant consent before the landlord could sell its interest. When Davenport sought to sell to a third party, Delilah refused consent for personal reasons unrelated to the buyer's qualifications. The attempted sale was treated as void because the lease imposed a disabling restraint that prevented alienation without consent.
Deborah Dunn received land subject to a recorded servitude stating the parcel could never be sold to anyone. When she attempted to convey the property to a buyer, the deed was held void because the servitude imposed an absolute disabling restraint that eliminated any power of alienation.
Daphne Doyle's will devised shares to her nephew with an absolute clause forbidding any sale or assignment for any reason. The nephew's attempted transfer to a third party was declared void because the clause created a disabling restraint that made alienation impossible from the moment of the donative transfer.
David Dawson leased property from Dynamic Solutions under terms requiring landlord consent for any assignment by the tenant. When David attempted to assign the lease without consent, the assignment was treated as void because the lease imposed a disabling restraint on the tenant's interest.
Derek Douglas inherited shares under a will containing a clause barring all transfers for the life of the company. His attempt to pledge the shares as collateral failed because the clause operated as a disabling restraint that prevented any alienation from the date of the gift.
Daniel Diaz sought to assign a commercial lease to a new tenant. The landlord withheld consent without any commercial justification. The assignment was permitted to proceed because the consent requirement could not function as an absolute disabling restraint when consent was unreasonably withheld.
In 1970, the Perlitches entered into a 25-year sublease with Robert Bixler for 14,400 square feet of hangar space at the San Jose Municipal Airport to conduct an airplane maintenance business. The sublease covered an original five-year term plus four five-year options to renew. The rental rate was to be increased every ten years in the same proportion as rents increased on the master lease from the City of San Jose. The premises were to be used by Bixler for the purpose of conducting an airplane maintenance business. The lease provided that written consent of the lessor was required before the lessee could assign his interest, and that failure to obtain such consent rendered the lease voidable at the option of the lessor. Subsequently, the Perlitches assigned their interest to Ernest Pestana, Inc. In 1981, Bixler agreed to sell the business, equipment, inventory, improvements, and the existing lease to Jack Kendall, Grady O'Hara, and Vicki O'Hara. The proposed assignees had a stronger financial statement and greater net worth than Bixler and were willing to be bound by the lease terms. Bixler requested consent from Ernest Pestana, Inc., but the lessor refused, claiming an absolute right to withhold consent arbitrarily and demanding increased rent and other more onerous terms as a condition of consent. The proposed assignees filed suit for declaratory and injunctive relief and damages, alleging that the refusal was unreasonable. The trial court sustained the demurrer without leave to amend. The Court of Appeal affirmed.
View caseA disabling restraint renders the attempted conveyance void by removing the power to alienate. A promissory restraint instead imposes contractual liability on the transferor for breaching a promise not to convey.
Supporting sources
A disabling restraint in a donative transfer is invalid if it would make transfer impossible for any period after the transfer takes effect. Courts weigh purpose, nature, and duration against the policy favoring free alienation to determine validity of narrower restraints.
Supporting sources
No. A clause limiting how property may be used after transfer regulates conduct on the land rather than the power to convey title. Courts treat such provisions as use restrictions that do not trigger the rules governing disabling restraints on alienation.
Supporting sources
…v. Darger, supra, 119 Cal. App.3d at p. 682.) Reasonableness is determined by comparing the justification for a particular restraint on alienation with the quantum of restraint actually imposed by it. "[T]he greater the quantum of restraint that results from enforcement of a given clause, the greater must be the justification for that…