Restraint On Alienation

Definition of "Restraint On Alienation"

Written by

Karen Beam-Browne

Keller Williams Realty (Fayetteville)

The definition of restraint on alienation is a limitation on the right to convey or transfer owned real estate to another party. This restriction on conveying property has an effect that limits its transferability. Some of the restrictions may be illegal and the subject of restraint on alienation has been debated by courts over the last century, especially considering how societal views have changed even in the last few decades. 

The law states that ownership of a property adheres to basic rights of ownership. This basic right ensures the right to own the title of the property, the right to possess and enjoy the property while excluding everyone else, and the right to sell or alienate the property without anything dictating how or if you are allowed to alienate the property. The restraint on alienation works directly against the last right mentioned as an owner has the absolute right to sell, donate, gift, or put up their property for lease. 

Restraint on alienation through history

In the past, America has had many instances when restraint on alienation occurred and was allowed. Most of these instances can no longer be applied and, in some cases, are considered illegal. Until 1948 when the Shelley v. Kraemer case was brought to the Supreme Court, it was allowed for the owner of a house to sell it and restrict the new owner from selling to any person as the property was covered by a racial restriction. Meaning, in the deed of the house which Shelley wanted to buy, it was stipulated that it could only be bought by a Caucasian family.

Other restrictions that were common in those years were to only transfer or sell the property to people that pertained to the same family so that property or farm would remain in the same family for generations. These types of covenants are now considered unconstitutional and are swiftly ruled against in courts.

Types of restraints on alienation still encountered today

Disabling Restraint - This kind of restraint is always voided as it is incredibly unconstitutional. It simply specifies that the buyer of the property or the buyer’s heirs are not allowed to transfer or sell the property purchased.

Forfeiture Restraint - This kind of restraint transfers the property to the original owner. Highly controversial, this restraint can not be applied when a deed of purchase is signed. This kind of restraint was commonly used when people were granted farms by grantors. In this situation, if the grantee went bankrupt, the land would go back to the grantor.

Promissory Restraint - This is a written promise to not sell the property without consent. This can lead to a disabling restraint if the original owner does not allow the new owner to sell, thus making it unconstitutional.

The only thing that can affect this right of alienation today are remnants of these restraints on alienation. Because of their history, they are still troubling courts across the country. The subject is heavily debated to this day and some rules have become laws that either protect the owner or explain the ways in which this restraint on alienation can occur. These have fewer restraints and can be validated by courts, but many factors such as purpose, duration, and equal bargaining power are considered.

To put it into simpler terms: owning real or personal property gives the owner the right to alienate it in any way, shape, or form. The instances in which this right is debated today can be split in two large categories:

Partial restraint on alienation 

The most common and reasonable kind of restraint on alienation as it is considered valid if it limits transfer for a specific period of time and for a reasonable purpose. This can be applied when sister A sells half of the family land to sister B and limits sister B’s right of alienation to not sell to someone outside of the family without consent. This can be applied as long as they live. The reason being that sister A doesn’t want to share the land with anyone not in the family.

Right of first refusal on alienation

This type of restraint on alienation underlines the original owner’s right to buy back the property if the new owner decides to sell before they sell to a third party. While this limits an owner’s ability to sell their property, it doesn’t limit the commercial opportunities as the previous owner has to match the market price or offered price of a third party.