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Law School Case Brief

Alby v. Banc One Fin. - 156 Wash. 2d 367, 128 P.3d 81 (2006)

Rule:

A "fee simple determinable" is an estate that will automatically end and revert to the grantor if some specified event occurs. Fee simple determinable estates are subject to the rule against restraints on alienation, which prohibits undue or unreasonable restraints on alienation. A "restraint on alienation" is defined as a restriction, usually in a deed of conveyance, on a grantee's ability to sell or transfer real property; a provision that conveys an interest and that, even after the interest has become vested, prevents or discourages the owner from disposing of it at all or from disposing of it in particular ways or to particular persons.

Facts:

A seller filed a quiet title action against a bank, arguing that the title to the property in question had a clause that the property automatically reverted to her when the purchasers encumbered the property. The trial court quieted title in favor of the bank and declared the clause void against public policy as an unreasonable restraint on alienation. On appeal, the appellate court reversed, concluding that the clause was valid because it was not a restraint on alienation and even if it were, the restraint was reasonable.

Issue:

Was the clause for automatic reversion of the property valid?

Answer:

Yes

Conclusion:

The supreme court affirmed the appellate court's judgment, stating that the restraint had a limited scope of preventing only mortgaging or encumbering, a limited duration of the sellers' lifetimes, and a legitimate purpose of keeping the property in the family. The restraint was also supported by the consideration apparent in the significantly reduced purchase price for the property. The potentially injurious consequences of not mortgaging or encumbering the property and reducing its marketability were outweighed by the utility of enforcing the limited restraint to keep the property in the family for the seller's lifetimes.

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