Also known as: restraints of alienation · restraint on alienation · restraints on alienation
Written by attorneys · grounded in primary & secondary sources — see below
A provision in a conveyance or agreement that attempts to prevent or limit the transfer of a property interest. Such a restraint is enforceable only when it satisfies specific doctrinal limits on consent requirements or when its utility outweighs harm to alienability.
Roland Rhodes owns a commercial building leased to Riverside Healthcare. Rhodes contracts to sell the building to a new investor. The lease requires tenant consent to any landlord transfer. Riverside Healthcare withholds consent without a commercial reason. The restraint is valid but the tenant must act reasonably.
Renee Rogers conveys land subject to a recorded covenant allowing sale only to nonprofit arts groups. Rocky Mountain Mining later acquires the parcel and seeks to sell to an office developer. The covenant directly restricts the class of buyers. A court weighs the covenant's purpose against its effect on marketability.
Select any source to read its text and confirm it supports the definition.
Robert Rivera holds a long-term lease on warehouse space from Redwood Bank. The lease requires landlord consent for any sublease. Rivera locates a creditworthy subtenant operating the same business. Redwood Bank refuses consent for reasons unrelated to the subtenant's qualifications.
Renata Russo leases retail space from a commercial landlord. The lease states that any assignment requires the landlord's prior written consent. Russo finds a financially stronger assignee. The landlord withholds consent to extract a higher rent from a new tenant.
Rachel Ramirez conveys property to a nonprofit theater company. The deed grants the grantor an option to repurchase at a fixed price if the buyer ever sells. Decades later the buyer wishes to transfer the land at market value. The option creates a long-term barrier to alienation.
Rebecca Ross devises land to her son provided he never sells it outside the family. The son later receives an offer from an unrelated buyer. The condition attempts to lock the property within the bloodline indefinitely.
A restraint requiring consent is valid if the party whose consent is needed cannot withhold it unreasonably. A freely negotiated lease clause may grant an absolute right to withhold consent. Courts examine commercial reasonableness when consent is refused.
A direct restraint is invalid if unreasonable. Reasonableness turns on balancing the restraint's utility against the harm it causes to alienability. Courts consider the restraint's purpose, scope, and duration.
A right of first refusal is not a restraint if its price and exercise period are commercially reasonable. An unreasonable formula or unlimited window converts the right into an invalid restraint. Courts apply the same balancing test used for other direct restraints.
A disabling restraint renders any attempted transfer void by its own terms. A promissory restraint imposes contractual liability on the transferor but does not void the conveyance. Both are subject to the same reasonableness analysis under the Restatement.
…(1980) § 8:15, at pp. 578-579. See also 2 Powell on Real Property, ¶ 246[1], at p. 372.97.) The common law's hostility toward restraints on alienation has caused such restraints on leasehold interests to be strictly construed against the lessor. (See Schoshinski, supra , § 8.16, at pp. 583-588; 2 Powell, supra , ¶ 246[1], at pp. 372.97,…