Legal Definitions - fettering of property

Fettering of property describes a situation where the control, management, or transfer of an asset becomes more complicated because its ownership or use rights are divided among multiple parties or into different types of legal interests. This division means that no single party can fully control or dispose of the property without the agreement or cooperation of the others, effectively "tying up" the property and restricting unilateral action.

• Imagine two siblings, Sarah and Tom, inherit their parents' house together. They both hold an equal ownership interest. If Sarah decides she wants to sell the house, she cannot do so without Tom's consent and cooperation. Similarly, if Tom wants to take out a large loan using the house as collateral, he would need Sarah's agreement. This scenario illustrates fettering of property because the house's ownership is split between Sarah and Tom, requiring both to agree on significant decisions regarding its disposition or encumbrance.

• Consider a will where a father leaves his beach house to his wife for her lifetime, and upon her death, the house is to pass to their children. The wife has a "life estate," meaning she can live in and use the house during her life. However, she cannot sell the full ownership of the house outright, because the children hold a "remainder interest" – the right to own the house after her death. To sell the entire property, the wife would need the children's agreement, as their future interest fetters her ability to freely dispose of the complete ownership now.

• A wealthy individual places a commercial building into a trust for the benefit of their three adult children. A professional trustee is appointed to manage the building, collect rent, and distribute profits. While the trustee has management duties, the terms of the trust might stipulate that the building cannot be sold for a certain period, or that any sale requires the unanimous consent of all three beneficiaries. This arrangement fetters the property because the ultimate control and disposition are not solely with the trustee or any single beneficiary, but are constrained by the trust's terms and the collective interests of the beneficiaries.