Rules Against Restraint of Alienation
This article first appeared on ZamzowFabian.com in 2014.
Michigan, like most other states in the country, view legal restraints on alienation (transfer of property) as void. Thus, (i) disabling restraints; (ii) forfeiture restraints; and (iii) promissory restraints are all void. Please keep in mind when reading this article that this is a very delicate area of law and is subject to several exceptions. Like all legal articles, be sure to read this one for broad-view purposes only.
Disabling restraints are created by a transferor (seller) preventing future transfers by the transferee (buyer / future seller).
Forfeiture restraints, whereby the transferor (seller) attempts to cause a forfeiture of the transferee, if the transferee ever attempts a sale themselves.
Promissory restraints, represents a clever method, whereby the transferor attaches a covenant preventing sale by the transferee in the future.
Nonetheless, all restraints will be rendered void. Public policy dictates that if you (or a group) are the full owner of a property, you should be able to sell it when and how you please. This allows a transferee to ignore restraints on transferability when they decide to sell. Restraints in time are however, when reasonable, enforceable.
Under the Fair Housing Act and the Fourteenth Amendment (XIV) of the constitution all restraints that are discriminatory are void.
Some examples of valid restraints on transfer of real property are those restrictions that are reasonable in (i) commercial transactions, (ii) first refusal, and (iii) on assignment or sublease of renters (landlord consent).
