THE RU LE AGAINST RESTRA INTS ON ALIENAT ION

Question 1

TYPES OF RESTRA INTS ON ALIENAT ION

Answer 1

Generally, any restriction on the transferability of a legal (as
opposed to equitable) interest is void.
There are three types of restraints on alienation: (1) disabling
restraints, under which attempted transfers are ineffective;
(2) forfeiture restraints, under which an attempted
transfer forfeits the interest; and (3) promissory restraints,
under which an attempted transfer breaches a covenant. A
disabling restraint on any legal interest is void. Forfeiture and
promissory restraints may be valid, depending on the nature
of the restraint and the interest involved.

Question 2

RESTRA INTS ON A FEE SIMPLE

Answer 2

As mentioned in Module 2, all absolute restraints on fee
simple estates are void; thus, any such restriction falls away
and the grantee may freely transfer the property. A partial
restraint is one that purports to restrict the power to transfer
to specific persons, or by a specific method, or until a specific
time. Forfeiture or promissory restraints on fee simple estates
for a limited time and reasonable purpose may be upheld
(for example, this might look like a restraint on transfer that’s
limited to the joint lifetimes of co-owners, which could be
seen as a reasonable way to ensure that neither co-owner
would have to reside with a stranger).

Question 3

Discriminatory Restraints

Answer 3

Judicial enforcement of restraints prohibiting the transfer
or use of property to or by a person of a specified racial,
religious, or ethnic group is discriminatory state action
forbidden by the Fourteenth Amendment. Discriminatory
restrictions may also violate the Fair Housing Act.

Question 4

RESTRA INTS ON A LIFE ESTATE

Answer 4

Forfeiture and promissory restraints on life estates are valid,
but disabling restraints are void.

Question 5

tip

Answer 5

Remember that the Rule Against Restraints on
Alienation applies only to legal interests. Restraints
on the alienation of equitable interests (for example,
spendthrift clauses in trust instruments) are valid.

Question 6

tip

Answer 6

Remember that the Rule Against Restraints on
Alienation applies only to legal interests. Restraints
on the alienation of equitable interests (for example,
spendthrift clauses in trust instruments) are valid.

Question 7

RESTRA INTS ON FUTURE INTERESTS

Answer 7

Restraints on vested future interests generally are valid to the
extent that restraints on present interests of the same type
are valid. For example, forfeiture and promissory restraints on
vested remainders for life are valid, but disabling restraints
on vested remainders for life are void.

Question 8

OTHER VALID RESTRA INTS ON
ALIENAT ION

Answer 8

The following are valid restraints on alienation:
* Reasonable restrictions in commercial transactions
* Reasonable options and rights of first refusal
* Restrictions on assignment and sublease of leaseholds
(for example, requiring landlord’s consent)