Rule Against Restraints on Alienation

Question 1

Rule Against Restraints on Alienation

Answer 1

• generally, any restriction on the transferability of a legal (as opposed to equitable) interest is void

Question 2

Types of Restraints on Alienation

Answer 2

3 types:
1) disabling restraints, under which attempted transfers are ineffective
-> void if placed on any legal interest
2) forfeiture restraints, under which an attempted transfer forfeits the interests
3) promissory restraints, under which an attempt transfer violates breach of covenant
- for the last two, may be valid, but depends on nature of restraint + interest involved

Question 3

Restraints on a Fee Simple

Answer 3

• all absolute restraints on fee simple estates are void
• any such restriction falls away + grantee may freely transfer the property
• forfeiture or promissory restraints on fee simple estates for a limited time and reasonable purpose may be upheld
• discriminatory restraints can’t be enforced

Question 4

Restraints on Future Interests

Answer 4

• restraints on vested future interests are generally valid to the extent that restraints on present interests of the same type are valid
• ex: forfeiture and promissory restraints on vested remainders for life are valid, but disabling restraints on vested remainders for life are void

Question 5

Other Valid Restraints on Alienation

Answer 5

• reasonable restrictions in commercial transactions
• reasonable options and rights of first refusal
• • restrictions on assignment and sublease of leaseholds (ex: requiring landlord’s consent)