Northwest Real Estate Co. v. Serio

Court of Appeals of Maryland · Property

PropertyRestraints on AlienationFee Simplerestraint on alienationfee simplerepugnant conditiongrantor consentsale restriction

Facts

The Northwest Real Estate Company conveyed a building lot in fee simple to Carl M. Einbrod and wife by deed containing various restrictions, including a covenant that until January 1, 1932, no owner could sell or rent the land without the grantor's written consent. The deed stated that the grantor could pass on the character, desirability, and other qualifications of any proposed purchaser or occupant. The grantees later contracted in writing to sell the lot to Charles Serio and wife, but the company refused to consent to the transfer. Serio then sought specific performance, arguing that the consent covenant was void or, alternatively, that the refusal of consent should be judicially controlled.

Issue

Is a deed covenant in a fee simple conveyance that forbids the owner from selling or renting the property until a stated date without the grantor's written consent valid, or is it void as a restraint on alienation repugnant to the fee simple estate?

Rule

Conditions or limitations that restrain alienation or the essential enjoyment of an estate in fee simple cannot validly be annexed to the deed or devise creating the estate, because they are repugnant to the inherent nature of the estate and contrary to policy. The fact that the restraint lasts only for a limited time does not make it valid.

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In Columbus, Ohio, Cedar Vale Development conveyed a townhouse lot to Nina Patel by deed "in fee simple," subject to setback and exterior-material restrictions. The deed also provided that for four years Nina could not sell or lease the lot without Cedar Vale's written consent, and Cedar Vale could deny consent after considering the proposed transferee's suitability for the neighborhood.

If Nina later signs a contract to sell the lot and Cedar Vale refuses consent, how should a court most likely rule on the consent clause?

Explanation. A direct restraint on alienation attached to a fee simple estate is void as repugnant to the estate granted. A clause making any sale or lease depend on the grantor's consent gives the grantor practical control over disposition of the property and is incompatible with fee simple ownership. The limited duration and stated neighborhood purpose do not save it. (Derived from Northwest Real Estate Co. v. Serio (n.d.).)