Also known as: restraints on alienation · restraint against alienation · restraints against alienation · rule against restraints on alienation
Written by attorneys · grounded in primary & secondary sources — see below
A restriction imposed by conveyance or contract that limits or prohibits the transfer of an interest in property. The restriction is invalid when unreasonable because it conflicts with the policy favoring free alienability of land. Reasonableness turns on a balance between the restraint's utility and the harm it causes to marketability.
Rosalind Reed owns a commercial building leased to Rina Rahman for a ten-year term. Reed contracts to sell the building to a third party and asks Rahman for consent under the lease clause. Rahman refuses without stating any commercial reason tied to the property's character or her operations. The refusal is treated as unreasonable, allowing the sale to proceed.
Riverstone Manufacturing acquires land subject to a recorded covenant that bars any sale or mortgage for twenty-five years. The company later needs to refinance and seeks to mortgage the parcel. The absolute bar on transfer is weighed for utility against its effect on financing options and is held invalid.
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Renee Rogers holds a five-year lease from Ralph Richardson on warehouse space. Rogers negotiates a sale of her business and requests Richardson's consent to assign the lease. Richardson withholds consent solely because the assignee operates in a different industry, without evidence of harm to the premises. The withholding is deemed unreasonable under the lease standard.
Ravi Reddy leases retail space from Redline Automotive under a clause requiring landlord consent to any assignment. Reddy locates a financially sound assignee and submits the request. The landlord refuses on personal dislike alone. The refusal is evaluated under the reasonableness standard applied to commercial lease consent provisions.
Raymond Ramos purchases a home subject to a recorded covenant barring sale to non-white buyers. A later purchaser attempts to enforce the covenant against a sale to a Black family. The covenant is treated as state action that enforces a restraint on alienation and is held unconstitutional.
Rising Sun Electronics holds a long-term option to repurchase property at a fixed price that effectively blocks any market sale by the current owner. The owner seeks to sell to a third party at fair market value. The option's duration and price terms are examined to determine whether the restraint on alienation is unreasonable.
A consent requirement is valid only if the landlord or tenant cannot withhold consent unreasonably unless the lease expressly grants an absolute right to withhold consent. Courts examine whether the refusal is based on commercial reasons tied to the property or the parties' relationship.
Courts weigh the utility of the restraint against the injurious consequences of enforcing it on alienability. A direct restraint that significantly narrows the buyer pool or depresses value is more likely to be struck down.
An absolute bar on transfer contradicts the incidents of fee simple ownership and the policy favoring free circulation of land. Courts treat such provisions as repugnant to the estate created.
…(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,…