Also known as: restraints against alienation · restraint on alienation · restraints on alienation
Written by attorneys · grounded in primary & secondary sources — see below
A provision that limits a transferee's legal power to sell, gift, mortgage, or otherwise convey an interest in property. The doctrine distinguishes such limits from mere use restrictions that regulate activities on the land after a valid transfer occurs. Courts invalidate absolute or unreasonable restraints because they impair the free circulation of property titles.
Rajesh Rao leased warehouse space to Ridgeway Partners under a lease requiring Rao's consent before any assignment by the tenant. Ridgeway Partners located a financially sound assignee and requested consent. Rao withheld approval without any commercial justification. The court enforced the assignment because the consent could not be withheld unreasonably under the governing standard.
Rosa Ruiz conveyed land to Reliance Insurance subject to a recorded covenant permitting sale only to entities operating galleries. Reliance Insurance later received an offer from an office developer at fair market value. The company sought to accept the offer. The court struck the covenant after balancing its limited utility against the substantial reduction in marketability it imposed.
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Rita Russell subleased her retail space to a national chain after obtaining landlord approval. The lease contained a clause requiring the landlord's consent to any further sublease. Russell identified a creditworthy subtenant but the landlord refused without stating a business reason. The court permitted the sublease because the landlord could not withhold consent unreasonably.
Ricardo Rojas operated a printing business under a lease that conditioned assignment on the landlord's consent. Rojas found a buyer willing to assume the lease and pay higher rent. The landlord rejected the assignment citing only a personal preference for the current tenant. The court ordered the landlord to consent because the refusal lacked a reasonable commercial basis.
Rhapsody Entertainment granted an option to purchase theater property exercisable only after ninety-nine years. The option holder attempted to exercise the right early when market conditions changed. The grantor resisted on the ground that the option itself restrained alienation. The court held the remote option invalid because it suspended the power to sell for an unreasonable period.
Riley Rivera received shares in a family corporation under a will containing an absolute prohibition on any sale or pledge during the beneficiary's lifetime. Rivera sought to pledge the shares to obtain financing for a new venture. The court invalidated the prohibition because it created a disabling restraint that prevented all alienation from the moment of the gift.
A restraint on alienation limits the legal power to transfer title or an interest in property. A use restriction merely regulates the activities that may occur on the land after a valid transfer. Courts treat only the former as subject to invalidation under the doctrine.
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A consent requirement is valid if the lease permits the landlord or tenant to withhold consent only for a commercially reasonable purpose. An absolute right to withhold consent without reason is enforceable only when the lease expressly grants that right after free negotiation.
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A direct restraint imposed by a servitude is invalid if unreasonable. Reasonableness is assessed by weighing the utility served by the restraint against the harm it causes to alienability of the burdened estate.
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An absolute disabling restraint that prevents any transfer for any period after the donative transfer is invalid. Partial restraints may survive if, under all circumstances, the policy favoring alienation does not reasonably apply.
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…(1980) § 8:15, at pp. 578-579. See also 2 Powell on Real Property, ¶ 246[1], at p. 372.97.) The common law's hostility toward restraints on alienation has caused such restraints on leasehold interests to be strictly construed against the lessor. (See Schoshinski, supra , § 8.16, at pp. 583-588; 2 Powell, supra , ¶ 246[1], at pp. 372.97,…