Legal Definitions - disabling restraints

A disabling restraint refers to a legal condition or clause that attempts to prevent or severely limit an owner's ability to transfer, sell, or give away their property. These restraints are often included in wills, deeds, or trust documents. However, courts frequently find such restrictions to be unenforceable (or "void") because they go against the fundamental legal principle that property owners should generally have the freedom to manage and dispose of their assets as they see fit. This principle is known as "public policy."

Here are some examples to illustrate disabling restraints:

• Real Estate Inheritance: Imagine a will where a parent leaves their family home to their child, but includes a specific clause stating, "My child shall never sell this property; it must remain in the family and be passed down only to direct descendants." This clause is a disabling restraint because it attempts to strip the child of the fundamental right to sell or transfer their inherited property. A court would likely deem this restriction void, allowing the child to sell the house if they choose, as the law generally favors the free transferability of property.

• Business Ownership Shares: Consider a startup founder who sells a minority stake in their company to an early investor. The share purchase agreement contains a provision that says, "The investor may never sell or transfer these shares to any third party, under any circumstances." This absolute prohibition on selling the shares is a disabling restraint. While some reasonable restrictions on share transfers (like rights of first refusal) are common and permissible, an outright ban on alienation would likely be challenged and found unenforceable by a court, as it unfairly restricts the investor's ability to realize the value of their investment.

• Gifted Art Collection: A wealthy art collector donates a valuable collection of paintings to a museum, with a condition in the deed of gift stating, "The museum is forbidden from ever selling, trading, or otherwise disposing of any piece within this collection, even if a piece is damaged, becomes redundant, or is too costly to maintain." This condition acts as a disabling restraint on the museum's ability to manage its assets. While the donor's intent to preserve the collection is understandable, an absolute and perpetual ban on deaccessioning (selling off) could be deemed void by a court, as it could hinder the museum's operational flexibility and financial health over time, going against the public interest in efficient charitable operations.