[ISBA RealEstate] Sale Restriction --restraint on alienation
<realestate@iabar.org>
Friday May 11, 2018 20:46


Bottom line up front, Miss Finn:  IMHO Party A suffers an impermissible restraint upon his alienation of the land devised to him.

In order to void the restraint upon alienation you most likely will have to reopen the estate and secure a court order officially voiding the alienation.
See Trecker v. Langel, 298 N.W.2d 289 (Iowa 1980).


By your description Party A's property clearly suffers a 'restraint on alienation'.  
Ordinarily those are disfavored in law--particularly where they are "general" in nature, and not fixed as to time.
See, e.g.:

Crecelius v. Smith, 255 Iowa 1249, 125 N.W.2d 786 (1964):
"The general rule is thus stated in 31 C.J.S. Estates § 8, pages 20–21: ‘* * * the right of alienation has been considered an inseparable incident to an estate in fee, and it is repugnant to the estate conveyed and against the policy of the law to allow restraints to be imposed on the alienation of such an estate * * *.
     ‘A general restraint on alienation, whether by deed or will, is undoubtedly void.’
"The question was discussed at some length, with citation of authorities, in Graham v. Johnston, 243 Iowa 112, 116, 117, 49 N.W.2d 540, 542, 543. We there said: ‘The conditions set forth in the deeds in question are certainly repugnant to the granting clause and we think the court correctly held that under the record such were invalid.’ Also in point is McCleary v. Ellis, 54 Iowa 311, 313, 317, 6 N.W. 571, 574, 37 Am.Rep. 205. There in the conveyance was this condition: “It is expressly understood that he (a son) shall not part with it nor sell it nor shall any person sell it for him, or for debts, whatsoever.” We then said: ‘We have no hesitancy in holding, in view of the authorities above quoted, and others that might be referred to, that the conditions in this deed against alienage and liability for debts are void.’ We quoted this with approval in Graham v. Johnston, supra. Several other authorities to the same effect are cited."

See also:
Davidson v. Auwerda, 192 Iowa 1338, 186 N.W. 406 (1922)(citing cases)
Goldsmith v. Peterson, 159 Iowa 692, 141 N.W. 60 (1913)(citing cases)


But not all restraints on alienation, when tested, have been held unenforceable.
Some restraints complicate the picture by being (apparently) allowed.
Such restraints usually are limited to a fixed time, or to a party's death or equivalent.

Case law suggests that wills may allowably impose reasonable periods delaying sale or disposal of land, where multiple parties may have some interests in said land.

Guenther v. Roche, 238 Iowa 134, 829 N.W.2d 222 (1947):
"I. The courts generally will not give effect to a testamentary provision to the effect that a devisee shall not for a period of time sell the property devised. See 41 Am.Jur., Perpetuities and Restraints on Alienation and Use, sec. 66; McCleary v. Ellis et al., 54 Iowa 311, 6 N.W. 571, 37 Am.Rep. 205; Kepler v. Larson, 131 Iowa 438, 108 N.W. 1033, 7 L.R.A.,N.S., 1109; Ogle v. Burmister, 146 Iowa 33, 124 N.W. 758; *1352 Davidson v. Auwerda, 192 Iowa 1338, 186 N.W. 406; Bogenrief v. Law, 222 Iowa 1303, 271 N.W. 229. But it is also the law that testamentary restrictions on the right to partition will be upheld. The rule is thus stated in 47 C.J. Partition (sec. 127) 4:
     ‘Where, by the terms of a will or deed, the property devised or conveyed is not to be divided or distributed before a date therein fixed, or before the happening of a designated contingency, no partition will lie before the date so fixed, or the happening of the contingency named, and general provisions of a statute authorizing property to be partitioned do not justify a court in disregarding provisions of this character. Such provisions in a will or deed do not constitute a void restraint or (on) alienation or limitation repugnant to the fee. The prohibition against partition so provided for may be either express or implied. The general rule applies whether or not a trust is created.’
In Re Tomb's Estate, 155 Pa.Super. 605, 39 A.2d 367, 370, the court pointed out a restriction against partition ‘takes nothing from the right of the tenants to convey or devise their undivided interest in the estate’ and hence it is not void as in violation of the rule against restraints on alienation. See also Peterson et al. v. Damoude et al., 98 Neb. 370, 152 N.W. 786, 14 A.L.R. 1238; and Note in 85 A.L.R. 1321. In Elberts v. Elberts, 159 Iowa 332, 141 N.W. 57, we upheld the provisions of a will which in one paragraph devised a fee simple title to several children and in a subsequent paragraph directed the property devised ‘be held intact and not disposed of, sold or divided’ until the youngest son became of age. The holding was that partition would be denied until the youngest son became of age.
...
"The plain intention of the will is that the property could be disposed of when the title reached the remaindermen. We do not wish to depart from the testator's plan any more than necessary. There is no indication in the will that disposal or partition was to await any event other than the death of the wife. In law the equivalent of that event has occurred. We but carry out the testator's approximate intention when we hold partition can now be had without waiting for other deaths, upon which substitutionary rights depend, and this is especially true where it is apparent the one objecting to the partition could not under any circumstances receive an increased interest if partition is delayed. We know it is not testator's literal intention but his scheme failed by reason of the exercise of an intervening right and when applying the doctrine of acceleration ‘the courts will attempt to follow the testamentary scheme as much as possible.’ 33 Am.Jur., Life Estate Remainders, etc., sec. 154."

See also:
Porter v. Tracey, 179 Iowa 1295, 162 N.W. 800 (1917)(small amount of land going to 70+ descendants; five-year sale delay approved--apparently in order to obtain better sale price than if conveyed at death)
DeJong v. Huyser, 233 Iowa 1315, 11 N.W.2d 566 (1943)(contractual will provision passing real estate title to deceased husband's children construed as legitimate restraint upon widow's alienation of real estate)
In re Hogan's Estate, 259 Iowa 887, 146 N.W.2d 257 (1966)(citing and explaining Porter v. Tracey):
"Porter v. Tracey holds a temporary restraint of five years on enforced sale and partition of devised real estate is not so repugnant to the estate devised that it must be held void. ‘Such a provision in a will is not in restraint of alienation in the true sense of the word, for each tenant in common may convey his share at pleasure. Nor does it prevent a beneficial enjoyment of its profits' (page 1300 of 179 Iowa, page 802 of 162 N.W.).
...
"The principal question Porter v. Tracey considers is exhaustively discussed in the annotation to Andrews v. Hall, 156 Neb. 817, 58 N.W.2d 201, 42 A.L.R.2d 1239, commencing at 1243. Porter v. Tracey is discussed at 1255 and many other Iowa decisions dealing with the question are cited at 1291."
Holtkamp v. State University of Iowa Foundation, 690 N.W.2d 696 (Iowa App. 2004)(Table)(sale of 413 acres of farmland in trust delayed until ten years after testator's death, no reason given but the restraint was not directly at issue in the case) 

I don't see that these exceptional situations exist in Party A's situation.
The land was devised to A, alone. No other parties have interest in it.


David Hanson
Hofmeyer & Hanson PC
Fayette, Iowa



----- Original Message -----
From: realestate@iabar.org
To: realestate@iabar.org
Sent: Thursday, May 10, 2018 2:17:16 PM
Subject: [ISBA RealEstate]  Sale Restriction 

Decedent dies with a Will that says house goes to Party A, but then the Will
states that the real estate shall not be mortgaged or sold until 2019. The
Estate transferred the property to Party A and the estate was closed. Now
Party A wants to sell. Will this create an objection to title? If so, does
the Estate need to be reopened to clean it up. 

Thanks very much. 

Jennifer Bennett Finn 
Pelzer Law Firm, LLC