Alienation in Real Estate is the ability for a property holder to transfer ownership to someone else. In a sense, it is very straightforward. You can sell or gift your land to someone else without a third party’s consent. However, there are some limits to this right.
- Alienate title means to convey the title to someone else.
- Alienation rights include disposition, enjoyment, exclusion, possession, and control.
- Mortgages include an alienation clause which makes the balance of the loan due upon sale.
- Conveyance is the process of alienating property.
While the right of alienation real estate may be easy to understand, its application may get complicated because it may restrict others’ rights and it still may be subject to the government’s control.
What Does Alienate Title Mean?
To alienate a title means to hand over (convey) the title to someone else. The legal vehicle for this to happen is called a deed. For the owner to legally convey the property to someone else he must prepare a deed and sign it. The owner, or grantor, signs the title over to the buyer, or grantee, using this document. This can be voluntary or involuntary.1
Voluntary alienation of real estate usually happens in one of two ways. If the owner is alive, they sell or gift the property and sign over the title using a deed. If the owner died, then the title is conveyed through a will.
Involuntary alienation of real estate happens without the owner’s consent. There are four types of involuntary alienation:
- Eminent domain
- Adverse possession
Banks foreclose when the owner does not pay their mortgage. Eminent domain happens through a process call condemnation. The government sanctions this to use the land for the public good. A squatter may claim adverse possession by occupying someone else’s property for a period. Escheat happens when a landowner dies without a will or any heirs. In this case, the property reverts to the state.
What Are Alienation Rights?
Ownership of real estate carries rights associated with the property. There are many, and they represent the benefits of ownership. Common rights include:
- Disposition is the right to sell or gift property to someone else.
- Enjoyment is the right to possess the land without outside interference.
- Exclusion is the right to keep other people from using your property.
- Possession is the right to occupy the land.
- Control is the right to use your real estate as you see fit.
This makes an acronym DEEPC. Alienation rights fall under disposition. It is straightforward to see that you have the right to sell or gift your land, but you have other alienation rights as well.
Alienation rights get murky because there is tension between the rights of the grantor (seller or gift giver) and the grantee (buyer/recipient). This is because the grantor generally retains some rights to restrict the use of the property. Some legal experts believe that there should be no restrictions on the buyer regarding land use, others contend that there are reasonable restrictions that are acceptable if both parties agree.2
Rule Against Restraints on Alienation
While a grantor may put restraints on the grantee’s use of the property, there are some restrictions that are always void. These three are always prohibited:
- Disabling restraint – This prohibits the new owner from transferring the property to someone else.
- Forfeiture restraint – the grantee will forfeit ownership if he attempts to transfer the property to someone else.
- Promissory restraint – The grantor makes the grantee promise not to transfer the land.
All of these deny the right of alienation to the new owner. That is why the restrictions are always prohibited. However, other restrictions may be acceptable.3
Valid Restrictions on Alienation Real Estate
A grantor may put some restrictions on the use of the property as part of alienation, but the validity depends on how much it negatively impacts the grantee’s use of the land. There are two guidelines the restraint must meet. It must be for a:
- Limited time
- Reasonable purpose
This is ambiguous because different people have different ideas about what constitutes a reasonable time limit and purpose. Law Shelf has an excellent video explaining examples of reasonable alienation constraints.
Alienation Real Estate and Mortgages
A mortgage is an important deed restriction, and your bank includes an alienation clause. This clause does not constitute a novation, and it does not limit time or purpose, so it does not infringe on your rights. This clause makes your loan due upon your alienation of the property. Selling or gifting the land triggers the clause and forces you to pay the entire remaining balance of your mortgage. As part of your due diligence, you should make sure you read and understand the langue of this clause.
Difference Between Alienation and Conveyance
Alienation and conveyance are linked together, but they are not the same thing. Alienation is the act of forfeiting your rights to real property, and conveyance is the process of forfeiting that real estate. We discussed the four types of involuntary alienation earlier, but there are also two ways to voluntarily convey real estate. The grantor may:
- Sell or gift the property.
- Leave the property in a will.
Put simply, conveyance is the process of alienation, and there are several methods to accomplish this.
Final Thoughts on Alienation Real Estate
Alienation is an important real estate right, and in a way, it is very straightforward. You have the right to sell or gift your land to whoever you want. However, there are important limitations to this right. The government may force you to sell your land for the public good, or your mortgage company may foreclose and force you out of your home if you don’t keep up on your payments. Also, you may only impose limited restrictions on the use of the land after you sell or gift it to someone else.