Question of the week

Fair Housing

Real Property · NextGen Bar Exam single best answer

A title examiner is reviewing the chain of title for Blackacre for a client who wants to buy it. One deed in the chain grants Blackacre 'to the grantee and her heirs, provided that the property shall never be conveyed to a person of Korean ancestry.' The client is uneasy and asks the examiner to explain how this provision affects the title she would receive and whether it exposes her to any future claim by the grantor or the grantor's successors down the line.

What is the best advice the examiner can give about the provision?

Option A. Incorrect answer. It is a valid condition subsequent, so the grantor's successors could reclaim Blackacre on a future breach.
Option B. Incorrect answer. It creates an executory interest in the grantor's successors that permanently clouds the buyer's title.
Option C. Correct answer. It is an unenforceable discriminatory restraint, so the buyer takes a freely alienable, unclouded title.Correct
Option D. Incorrect answer. It is enforceable as a reasonable, limited restraint because it excludes only a single group of buyers.

Why

A condition barring conveyance based on national origin or ancestry is a discriminatory restraint on alienation. It is void — both as an unreasonable restraint offending public policy and as unlawful discrimination that no court may enforce — so it drops out and the buyer receives a title she can freely convey to anyone (C). A and B assume the void condition nonetheless spins off a valid future interest, a right of reentry or an executory interest; it cannot, because a court will not enforce it in any form, so nothing clouds the title. D states the most tempting misconception: that a restraint is acceptable if it is 'limited' to one group. The opposite is true — targeting a protected group is exactly what makes the restraint void.

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