Rule against restraints on alienation

Question 1

Restraint on Alienation generally

Answer 1

Generally, any restriction on the transferability of a legal (non-equitable) interest is void. Equitable interest is for ex a spendthrift clause in a trust instrument –> OK

Question 2

Types of retsraints on alienation

Answer 2

a. disabling restraints where attempted transfers are ineffective
i. void on ANY legal interest

b. forfeiture restraints—where an attempted transfer forfeits the interest
c. promissory restraints—when a transfer breaches a covenant.

b. Forfeiture and promissory restraints for a LIMITED TIME and REASONABLE PURPOSE may be upheld. (e.g. restraint limited to life of coowners that neither will live with a stranger)
i. discriminatory restraints—judicial enfocement of these is discrimatory state action

Restraints on life estate- same. disabling restraints are void, forfeiture an promissory restraints are ok (if you transfer you forfeit the interest or theres a covenant prohibition)

Restraints on future interests– restraint on vested future interest are generally valid if the restraint on the present interest of the same type are valid.

Question 3

Other valid restraints

Answer 3

a. reasonable restrictions on in commercial txns
b. reasonable options and rights of first refusa
c. restrictions on assignment and sublease of leasholds (requiring landlord consent)