Aggregate Alienability

Villanova Law Review, Jan 2016

By Luke Meier and Rory Ryan, Published on 01/01/16

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Aggregate Alienability

Aggregate Alienability Luke Meier 0 Rory Ryan 0 Recommended Citation 0 This Article is brought to you for free and open access by Villanova University Charles Widger School of Law Digital Repository. It has been accepted for inclusion in Villanova Law Review by an authorized editor of Villanova University Charles Widger School of Law Digital Repository Meier and Ryan: Aggregate Alienability LUKE MEIER* AND RORY RYAN** Tlens by which to understand the complicated law regarding the valid HIS Article proposes a new concept—“aggregate alienability”—as a ity of privately-imposed restraints on the alienability of real property. Modern scholars have tended to explain this law—which sometimes invalidates restraints and sometimes upholds and enforces restraints—as simply a “naked preference.” In those instances in which the restraint is upheld and enforced, the law is said to prefer the alienation rights of the grantor (the party imposing the restraint). When the restraint is stricken, the law is said to prefer the alienation rights of the grantee (the party on whom the restraint is imposed). This Article rejects the notion that the nuanced law regarding the validity of restraints on alienability is best explained as simply a naked preference in favor of some parties over others. Instead, this Article argues that the rules regarding the validity of restraints on alienation are actually based on a rough prediction as to how to maximize property alienability. In some instances, maximum alienability is best achieved by invalidating the attempted alienability restraint. In other instances, however (and somewhat counter-intuitively), maximum alienability is best achieved by upholding and enforcing an alienability restraint. In either instance, the legal rules about the validity of a particular restraint are not a preference for either the grantor or the grantee, but an attempt to maximize efficiency by facilitating the alienation of property. I. INTRODUCTION The legal concept of private property is fundamental to the workings of a capitalist market.1 In a capitalist system, decisions regarding resource allocation are primarily made at the individual level.2 Government creates * Professor of Law, Baylor Law School. ** Professor of Law, Baylor Law School. 1. See AYN RAND WITH NATHANIEL BRANDEN, ALAN GREENSPAN & ROBERT HESSEN, CAPITALISM: THE UNKNOWN IDEAL 19 (New Am. Library 2d ed. 1967) (“Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.”); Paul H. Rubin & Tilman Klumpp, Property Rights and Capitalism, in THE OXFORD HANDBOOK OF CAPITALISM 204, 204 (Dennis C. Mueller ed., 2012) (“Property rights are a necessary but not sufficient condition for capitalism.”). 2. See GARY WOLFRAM, A CAPITALIST MANIFESTO: UNDERSTANDING THE MARKET ECONOMY AND DEFENDING LIBERTY 1 (2012) (“The genius of capitalism is that it is . . . a fluid system with millions of individual exchanges, resulting in the most efficient allocation of resources.”); see also MILTON FRIEDMAN, CAPITALISM AND FREEDOM 15 (1962) (“[A] major source of objection to a free economy is precisely that it . . . . gives people what they want instead of what a particular group thinks they ought to want.”); LUDWIG VON MISES, SOCIALISM: AN ECONOMIC AND SOCIOLOGICAL (1013) 1014 [Vol. 60: p. 1013 and enforces entitlements to “property,” which allows individual users to decide what to do with “their” property.3 By enforcing private agreements to trade these rights, resources flow to the party in the best position to do something beneficial with that resource. This result is in society’s interest as a whole.4 Indeed, one of the “sticks” in the “bundle of rights” associated with property is the right to alienate that property according to the user’s perception of what is in his best interest.5 In order for this flow to the “best” user to occur, the resource must remain free of legal impediments to transfer. As such, the common law has generally strived to keep property freely alienable, particularly real property.6 In some instances, such as with the rule against perpetuities, common law rules have developed to deal with private decisions that might indirectly inhibit the transfer of real property.7 The most obvious example of the common law’s effort to keep property alienable, though, is the set of rules invalidating attempts by individuANALYSIS 537 (J. Kahane trans., Ludwig von Mises Inst. new ed. 2009) (1951) (“The issue is always the same: the government or the market. There is no third solution.”). 3. See Richard A. Epstein, All Quiet on the Eastern Front, 58 U. CHI. L. REV. 555, 560 (1991) (“The first mission of the legal system is to determine an initial set of property rights from which subsequent bargains can go forward at reasonably low cost. . . . The third mission of the law is to facilitate the voluntary exchanges of property rights—the law of contracts.”). 4. See II (...truncated)


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Luke Meier, Rory Ryan. Aggregate Alienability, Villanova Law Review, 2016, Volume 60, Issue 5,