§ 1.7 - Restraints on Alienation

• Jurisdiction: Washington

§1.7 RESTRAINTS ON ALIENATION

Traditionally, restraints on alienation have been treated with future interests. Future interests themselves have some impact on the alienability of property; for instance, the existence of a contingent remainder may prevent the sale of realty. Defeasible fees frequently involve limitations or conditions that may limit alienability. The mere fact that interests in land are divided among several owners affects the costs of a transaction. As noted in the introduction, a significant part of the history of property law involves the conflict between those who wish to restrain the use and alienability of land and those who wish to free it. Historically, Washington has been on the side of freedom of use and alienability, but as will be seen, there are exceptions to that approach.

(1) Generally

Restraints can be direct or indirect. A direct restraint speaks explicitly of alienability: "O to A for life, but A may not convey." An indirect restraint affects alienability obliquely: "O to A for so long as used as a residence, then to revert." A can sell to those who will use as residences. Restraints also may be divided by how they operate.

(a)	Disabling: "O to A, A may not sell"
(b)	Forfeiture: "O to A, but if A sells O may terminate"
(c)	Promissory: "O to A, A promises not to sell"

Restraints may be limited or broad in scope as to potential transfers or as to time. Restraints also may produce invidious discriminations contrary to public policy. Such restraints cannot be judicially enforced. Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948). See RCW 49.60.224, which voids restraints based on race, creed, color, national origin, or sensory, mental, or physical handicaps. See also Riste v. E. Wash. Bible Camp, Inc., 25 Wn. App. 299, 300, 605 P.2d 1294 (1980) (provision in a deed requiring residents to "conduct themselves in such a manner as not to be in conflict with the general practices and principles of the...Assemblies of God" held void under Shelley v. Kraemer, 334 U.S. at 19-21, and RCW 49.60.224, which deals with religious and other discrimination); Newman v. Vaughan Cmty. Church, 154 Wn.2d 65, 113 P.3d 463 (2005).

Washington's earlier cases seem to stand for the proposition that direct restraints on alienation are presumptively invalid. In Richardson v. Danson, 44 Wn.2d 760, 270 P.2d 802 (1954), an absolute forfeiture restraint on a fee, but limited to 20 years, was held invalid. The court was not clear on the reason for invalidating the restraint. A simple direct restraint that forbade resale to any person without the grantor's written approval was held invalid as repugnant to the nature of an estate in fee in Riste v. Eastern Washington Bible Camp, Inc., 25 Wn. App. 299, 605 P.2d 1294 (1980). See RESTATEMENT (FIRST) OF PROPERTY §§ 404-13 (2008 Supp.) for an exposition of that view. With regard to other than direct restraints, there is more flexibility.

In Alby v. Banc One Financial, 156 Wn.2d 367, 128 P.3d 81 (2006), a forfeiture restraint disallowing mortgage or encumbrance that was limited to the life of the grantors and occurred in a bargain sale to family members was upheld as a reasonable restraint. The case should be reviewed by any attorney dealing with restraints on alienation.

(2) Types of restraints

The various types of restraints are discussed below.

Landlord-tenant. Although not especially favored by the law, provisions against assignment and subleasing will be given effect. Shoemaker v. Shaug, 5 Wn. App. 700, 490 P.2d 439 (1971); see also William B. Stoebuck, The Law Between Landlord and Tenant in Washington: Part II, 149 WASH. L. REV. 1013, 1046-59 (1974). See Volume 2, Chapter 17 (Landlord and Tenant), of this deskbook.

Life Estates. There is some limited authority that restraints on alienation of a life estate may be valid. In Fowler v. Wyman, 169 Wash. 307, 13 P.2d 501 (1932), the court seems flatly to deny this, though there the rule in Shelley's Case converted the life estate to a fee. The court in In re Murphy's Estate, 191 Wash. 180, 71 P.2d 6 (1937), suggested that such a restraint might be valid if for a good reason, but that opinion was reversed on rehearing on other grounds. In re Murphy's Estate, 193 Wash. 400, 75 P.2d 916 (1938), adhered to, 195 Wash. 695, 81 P.2d 779 (1938).

Partition. The normal right of a co-tenant to partition may be waived by an...