Also known as: disabling restraints on alienation · disabling restraint
Written by attorneys · grounded in primary & secondary sources — see below
A restraint imposed in a donative transfer on an interest in property that purports to strip the transferee of the legal power to transfer that interest. The restraint is invalid if it would render transfer impossible for any period of time from the date of the transfer. A restraint that does not fall within that absolute prohibition is valid only when the purpose, nature, and duration of the restraint show that the policy favoring freedom of alienation does not reasonably apply under all the circumstances.
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Dominic Drake conveyed Blackacre to his daughter by deed containing a clause that neither she nor her heirs could ever transfer any interest in the land by any means. The daughter later received an offer from a developer. Because the clause would make transfer impossible from the moment of the gift, the restraint is invalid and the daughter may convey the property.
Dorothy Daniels devised downtown land to the City of Brookfield as a public park forever and barred any transfer to a private party. Years later the city faced a budget crisis and sought to sell. The court must weigh the purpose of preserving open space, the narrow scope of the bar, and the duration against the policy favoring alienation to decide whether the restraint remains enforceable.
A disabling restraint purports to nullify any attempted transfer by the owner and any attempted attachment by creditors. Other restraints may merely impose forfeiture or promissory consequences without stripping the power to transfer.
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A disabling restraint is invalid if it would make transfer impossible for any period of time from the date of the donative transfer. Courts apply this rule even when the restraint is limited to a term of years.
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A disabling restraint that does not render transfer impossible for any period is valid only when the purpose, nature, and duration of the restraint demonstrate that the policy favoring freedom of alienation does not reasonably apply under all the circumstances of the case.
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No. Acceptance of the gift does not validate an otherwise invalid disabling restraint. The controlling question remains whether the restraint conflicts with the policy favoring free alienation under the applicable standard.
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Changed circumstances after the donative transfer are relevant to the balancing required under the rule. When market shifts or technological developments render the original purpose obsolete, the policy favoring alienation is more likely to apply and invalidate the restraint.
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