Is the Clause in the Settlement Agreement Enforceable and Not an Invalid Restraint on Alienation?

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Submitted By tinteardrop
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Anna and Mark, a married couple living in Tennessee, purchase a condominium together as a vacation home in Tennessee. At the time of their divorce in 2004, they both agreed in their settlement to jointly maintain ownership of the property and further agreed that as long as they are living they cannot sell, encumber or partition the condominium without the consent of the other party. 12 years elapse and Mark is in financial trouble and wants to sell his interest in the property. Anna refuses because she wants to continue to use the condo and she cannot afford to buy him out. Mark brings an action to partition the condo claiming that the clause in the settlement agreement is unenforceable because it is an invalid restraint on alienation.

Is the clause in the settlement agreement enforceable and not an invalid restraint on alienation?

The Tennessee Code states: “Any person having an estate of inheritance, or for life, or for years, in lands, and holding or being in possession thereof, as tenant in common or otherwise, with others, is entitled to partition thereof, or sale for partition, under this chapter.” Tenn. Code Ann. § 29-27-101

McGahey v. Wilson: Acreage and a residence were owned by the parties as tenants in common. Upon dissolution of the marriage, the parties entered into a settlement agreement wherein they agreed to retain co-ownership of the property. It was agreed that the parties could not sell the property unless they both agreed. 15 years later, the wife sought a partition sale to which the husband objected. The trial court referred the case to a special master who found that the settlement provision was unenforceable as “it violated public policy by restraining the free alienation of property. “ The trial court found that a bar on the sale could only be “enforced for a reasonable time, and that a reasonable time had passed.” The appellate…...

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