Restatement (Third) of Property: Servitudes
§ 3.2 Validity: Servitudes That Violate Public Policy
Summary
Section 3.2 identifies categories of servitudes that are invalid because they violate public policy. A servitude is invalid if it is arbitrary, spiteful, or capricious; unreasonably burdens a fundamental constitutional right; imposes an unreasonable restraint on alienation; imposes an unreasonable restraint on trade or competition; or is unconscionable.
This section serves as the primary limitation on the freedom to create servitudes established in § 3.1. It balances the parties’ freedom of contract against broader societal interests, recognizing that some restrictions on land use are harmful regardless of the parties’ consent. The most historically significant application is the invalidation of racially restrictive covenants.
The unreasonable restraint on alienation provision is particularly important in modern practice. It applies to excessive transfer fees, consent-to-transfer requirements, and other restrictions that unduly limit an owner’s ability to sell or transfer their property. Courts balance the utility of the restraint against its impact on alienability.
Key Elements
- 1Invalid if arbitrary, spiteful, or capricious
- 2Invalid if unreasonably burdening fundamental constitutional rights
- 3Invalid if imposing unreasonable restraint on alienation
- 4Invalid if imposing unreasonable restraint on trade or competition
- 5Invalid if unconscionable
Practical Application
Section 3.2 is invoked in challenges to homeowners association restrictions, deed restrictions, and subdivision covenants. Courts apply it to strike down restrictions that are discriminatory, anti-competitive, or that unreasonably prevent property transfers. It is also relevant to commercial lease restrictions and franchise agreements that limit how property can be used after the relationship ends.
Exam Relevance
When a fact pattern presents a questionable servitude, always analyze § 3.2 validity. Common exam issues: a covenant that restricts sales to members of a particular group (constitutional rights), a covenant that prohibits any future sale without the developer’s consent (restraint on alienation), or a covenant that prevents the property from being used for any competing business indefinitely (restraint on trade).