Northwest Real Estate Co. v. Serio

Brief Fact Summary. A grantee’s fee simple deed restricted the future sale of land without consent of the grantor.

Synopsis of Rule of Law. When title to land is given in fee simple, the grantor cannot restrict the grantee from selling the land to third parties.

Facts. Northwest Real Estate Company (Plaintiff) granted a deed in fee simple to its grantees, which contained a provision that the land should not be subsequently sold or rented, prior to a designated date, without the consent of the grantor. The grantee contracted to sell the land to Charles Serio (Defendant), but Plaintiff refused to consent to the sale. This suit was brought to compel specific performance of the sale.

Issue. When a grantor transfer a fee simple deed to a grantee, can the grantor place a clause in the deed that requires the grantee to obtain permission of the grantor before conveying the property to a third party?

Held. No.
The restriction by the deed on sales is repugnant to the fee-simple title which the deed conveyed. The object of the restriction was to deprive the grantee of the unrestrained power of alienation incident to the absolute ownership that a fee simple creates.

Dissent. The restraint on alienation merely gives the developer the power to control the character of the development. This is not against public interest. These types of restraints will open the area and provide houses on convenient terms, which will be a public benefit rather than a detriment.

Discussion. A grantor consent clause in a deed for a fee simple interest in property will be invalid as a restraint on alienation.