Rule Against restrains on Alienation

Question 1

What are the three types of restrains on alienation? Which are void or not?

Answer 1

Three types of restraints on alienation (i.e. transferability), are:

1. disabling restraints - makes attempted transfer ineffective
2. forfeiture restraints - attempted transfer forfeits interest
3. promissory restrains - attempted transfer breaches coventant

Wrt legal (not equitable) interests, disabling restraints are generally invalid but forfeiture and promissory are sometimes allowed.

Question 2

In what types of estates are restraints valid?

Answer 2

In a fee simple estate, all restrains are generally void - BUT forfeiture or promissory restrains for a limited time and reasonable purpose may be upheld.

In a life estate, disabling restrains are void and promissory/forfeiture restraints are vlid. Same with restraints on vested future interests.

Note: discriminatory restraints - e.g. based on racial, religious, ethnic group violate 14A

Other valid restraints on transferability:

• reasonable restrictions in commercial transactions
• reasonable options and rights of first refusal
• restrictions on assignment and sublease of leaseholders (e.g. req’ing landlord consent)