/dih-REKT ri-STRAYNT on ay-lee-uh-NAY-shuhn/·phrase
Also known as:direct restraints on alienation
Written by attorneys · grounded in primary & secondary sources — see below
A provision in a deed, will, contract, or other instrument that by its express terms or by implication of fact prohibits or penalizes the exercise of the power of alienation of the burdened estate. The provision is invalid if unreasonable. Reasonableness is determined by weighing the utility of the restraint against the injurious consequences of enforcing it.
Sources & Authorities
How it applies
Common Examples
2
Deed Prohibition Before Death
Demetrius Douglas conveyed Blackacre to his daughter Dolores Diaz by deed containing a clause that Diaz could not transfer or encumber the property before Douglas's death. When Diaz later sought to mortgage the land to finance improvements, the clause operated as a direct restraint. A court weighed the limited utility of keeping the land unencumbered during Douglas's lifetime against the injurious effect of blocking Diaz from using her ownership rights and found the restraint unreasonable and invalid.
Lease Covenant Barring Discount Retailer
Federal Market LLC owned a parcel subject to a recorded covenant prohibiting conveyance to any discount retail chain. When a severe retail downturn left Federal Market with no buyer other than Bridge Shop Corporation, which offered well above appraised value for permitted uses, the covenant blocked the only realistic sale. Weighing the covenant's utility in preserving an upscale tenant mix against the injurious consequence of rendering the parcel essentially unmarketable, a court held the direct restraint unreasonable and unenforceable.
How does a court determine whether a direct restraint on alienation is reasonable?+
A court balances the utility served by the restraint against the injurious consequences that would flow from its enforcement. Utility may include preserving family land, affordable housing, or a development's character. Injurious consequences include impeding marketability, limiting development, and frustrating owners' expectations of free transferability.
Supporting sources
What distinguishes a direct restraint from an indirect restraint on alienation?+
A direct restraint expressly prohibits or penalizes the power to alienate by its terms or necessary implication. An indirect restraint arises from other servitudes, such as use limitations, that merely affect marketability without directly barring transfer.
Supporting sources
Can changed market conditions render a once-reasonable direct restraint unreasonable?+
Yes. A restraint reasonable when created may become unreasonable when market shifts eliminate all permitted buyers, leaving the owner with no realistic ability to alienate despite good-faith marketing efforts. Courts then weigh the new injurious consequences against any remaining utility.
Supporting sources
269 S.E.2d 608 (N.C. 1980)Property
…possibility of reverter or to a condition subsequent. Furthermore, while the rationale underlying the common law prohibition of direct restraints on alienation has been traced to the necessity of maintaining a society controlled primarily by its living members and the desirability of facilitating the utilization of wealth, 4 Restatement of the…
Trusts and Estates Decedents EstatesWills · Execution requirementsUBEFoundational