Also known as: restraint on alienation · restraints against alienation · restraint against alienation · restraint on alienability
Written by attorneys · grounded in primary & secondary sources — see below
A legal restriction imposed by conveyance or contract that limits or prohibits the subsequent transfer of a property interest. Such restrictions are classified as disabling, promissory, or forfeiture restraints and are subject to invalidation when unreasonable under the circumstances.
Ricardo Rojas leased commercial space from Redline Automotive. The lease required Redline's written consent before Ricardo could assign his interest. Ricardo located a financially stronger assignee planning identical use, but Redline refused consent citing only future negotiation leverage. The court evaluated whether the refusal satisfied the reasonableness standard governing the restraint.
Robert Rivera purchased a parcel subject to a recorded servitude limiting future ownership to members of a designated family line. When Robert sought to sell to an outside buyer, the neighboring owner invoked the servitude to block the transfer. The court weighed the servitude's claimed utility against its impact on marketability of the burdened estate.
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Regina Robinson received a devise of Blackacre conditioned on continued residential use only. She later wished to convert the property to commercial purposes and sell it. The court examined whether the use condition constituted a restraint on alienation or merely regulated the transferee's activities after transfer.
Rosa Ruiz leased retail space from Raven Logistics. The lease required Raven's consent to any assignment by Rosa but contained no absolute-refusal clause. Rosa proposed assigning to a stronger tenant using the space identically, yet Raven withheld consent for strategic reasons. The court assessed the restraint under the applicable consent standard.
Roland Rhodes received a devise granting a designated family member a right of first refusal at seventy percent of any third-party offer, exercisable within thirty days. Roland received a market-rate offer and the family member sought to exercise the right. The court determined whether the preemptive terms rendered the provision a restraint on alienation.
Ryan Roberts leased warehouse space from Reliance Insurance. The lease required Reliance's consent to assignment without granting absolute discretion. Ryan located a suitable assignee, but Reliance refused for reasons unrelated to the assignee's financial strength or use. The court applied the reasonableness standard to the consent restraint.
A consent requirement is valid but the landlord or tenant may not withhold consent unreasonably unless the lease expressly grants an absolute right to refuse. The distinction turns on whether the lease contains a freely negotiated absolute-refusal provision.
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Reasonableness is determined by balancing the utility of the restraint against the injurious consequences of enforcement on alienability of the burdened estate.
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A restraint on the use that may be made of transferred property by the transferee is not treated as a restraint on alienation under the governing Restatement provisions.
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A right of first refusal is not a restraint on alienation if its price and exercise-period terms are reasonable. Otherwise it is evaluated under the rules applicable to disabling, forfeiture, or promissory restraints.
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…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…