Legal Definitions - Restraint on alienation

A restraint on alienation refers to a legal provision, typically found within a property deed or a will, that attempts to limit or prevent the future transfer of real estate by its subsequent owners. Essentially, it is an effort by a current property owner to control who can own, sell, or otherwise dispose of the property long after they have passed it on.

Courts generally view restraints on alienation with skepticism. The underlying principle is that property owners should have the freedom to sell or transfer their property as they see fit, and previous owners should not be able to indefinitely dictate the future of the land. Such restrictions are often seen as hindering the free flow of commerce and tying the hands of future generations. Therefore, a restraint on alienation will typically only be enforced if it is deemed reasonable and serves a legitimate purpose, without being overly restrictive or discriminatory.

• Example 1: Absolute Ban on Sale

  Imagine a will dictates that a large family estate "shall never be sold or mortgaged, but must always remain in the direct lineage of the family." This provision attempts to impose a permanent and absolute ban on the sale or encumbrance of the property. A court would likely strike this down as an unreasonable restraint on alienation because it completely prevents future owners from exercising fundamental property rights, such as selling the property to meet financial needs or adapt to changing circumstances.

• Example 2: Homeowners' Association Membership

  A developer creates a new residential community with shared amenities like a private park and swimming pool. The deed for each home includes a clause stating that "any future purchaser of this property must agree to become a member of the community's Homeowners' Association (HOA) and abide by its covenants and bylaws." This is a common type of restraint. While it restricts who can buy the property (they must accept HOA membership), it is generally considered reasonable because it serves a legitimate purpose: maintaining the shared amenities and property values for the entire community.

• Example 3: Restricting Sales to a Niche Business Type

  A deed for a commercial building states that "the property may only be sold or leased to businesses operating within the organic food industry." While the original owner might have intended to foster a particular type of commerce, this could be challenged as an unreasonable restraint on alienation. It severely limits the pool of potential buyers and the property's marketability without a clear, overriding public policy reason, potentially making it very difficult for future owners to sell the property at a fair market value.