In a property dispute, the Supreme Court of Idaho adopted § 3.4 of the Restatement of the Law Third, Property (Servitudes), as the standard for determining the reasonableness of a restraint on alienation.
Smallwood v. Little, 583 P.3d 149 (Idaho 2026), dealt with a dispute between the owners of three adjacent parcels of property that originally shared a common owner. The original owner divided the single parcel into three parcels, which she transferred to her three children pursuant to grant deeds that contained nearly identical restrictions on alienation. The restrictions provided that the grantees could only convey the properties to or encumber them in favor of their siblings, nephews, and nieces who were alive at the time of the grant, and prohibited the grantees from conveying the properties to or encumbering them in favor of anyone else, including their own spouses and lineal descendants.
The owners of two of the properties sued, among others, the owners of the third property, seeking to quiet title to the properties and to obtain a declaratory judgment that the restrictions in the grant deeds were unreasonable restraints on alienation that were void as against public policy. The trial court granted summary judgment for the defendants, holding that the language in the grant deeds was unambiguous, and that the common-law rule against unreasonable restraints on alienation had recently been abrogated by the passage of a state statute that replaced the rule against perpetuities and provided a durational limitation for how long the alienation of property could be limited or conditioned.
The Supreme Court of Idaho vacated, holding that the statute did not abrogate the common-law rule against unreasonable restraints on alienation, which was therefore still in effect in Idaho, and that, as a matter of law, the restrictions on the grant deeds at issue were unreasonable restraints on alienation. In making its decision, the court adopted the modern formulation of the common-law rule against unreasonable restraints on alienation found in Restatement Third of Property (Servitudes) § 3.4, which provided that “[r]easonableness is determined by weighing the utility of the restraint against the injurious consequences of enforcing the restraint.” This approach, the court noted, reflected the historic practice in Idaho as well as longstanding common-law principles.
Applying the Restatement’s standard, the court concluded that the restrictions on the parties’ grant deeds were unreasonable; among other things, any utility in the apparent purpose of the restrictions— namely, keeping the properties in the family—was not fully effectuated by the language of the restrictions, and the restrictions, as written, were counterproductive in that they unreasonably prevented the grantees from realizing the full enjoyment and economic benefit of their properties, contrary to Idaho’s public policy favoring the full use of lands.