## Facts

- Eugene and Susan Alby sold a portion of their family farm to their niece, Lorri Alby Brashler (and her husband), for $15,000 although the parcel was worth about $100,000.
- The real estate contract and warranty deed included an “automatic reverter” providing that the property would revert to the grantors if it was “mortgaged or encumbered” during the lifetime of either grantor.
- The purpose of the condition was to keep the land in the Alby family for as long as the grantors lived.
- In 1999, the grantees executed two deeds of trust on the property: a $92,000 loan and a $17,250 loan later assigned to Banc One Financial.
- After default on the first loan, a trustee’s sale occurred in October 2000; Banc One was the high bidder and received a trustee’s deed in November 2000.
- In 2002, Susan Alby sued to quiet title, alleging title automatically reverted to her when the property was first encumbered.

## Issues

1. Whether a deed condition providing for automatic reverter if the property is mortgaged or encumbered during the grantors’ lifetimes is an invalid restraint on alienation.
2. Whether, under Washington law, such a condition is reasonable when balanced against public policy favoring free alienability and marketability of title.

## Decision

- The Washington Supreme Court affirmed the Court of Appeals and rejected the trial court’s ruling that the clause was void as against public policy.
- The court treated the conveyance as a fee simple determinable with an automatic reverter triggered by mortgaging or encumbering the property during the grantors’ lifetimes.
- Applying a reasonableness analysis, the court held the restraint valid because its legitimate purposes outweighed its likely harmful consequences.
- Because the encumbrance occurred during the grantors’ lifetimes, the reverter was triggered before the trustee’s sale, supporting judgment for Alby in the quiet title action.

## Legal Principles

- Restraints on alienation are not automatically void; they are invalid only if undue or unreasonable.
- A restraint is unreasonable when the purpose served by the restraint is outweighed by the harmful consequences likely to flow from it.
- A deed condition limiting only mortgaging or encumbering (as opposed to barring all transfers) may be reasonable, especially when narrowly tailored and time-limited.
- Temporal limits tied to the lifetime of the grantor support reasonableness compared to perpetual restrictions.
- Recording of the deed and related instruments provides notice to subsequent purchasers and lenders and reduces the weight of marketability objections in the reasonableness balance.

## Conclusion

The Washington Supreme Court held that an automatic reverter triggered by mortgaging or encumbering the property during the grantors’ lifetimes was a reasonable and enforceable restraint on alienation, and it affirmed judgment for the grantor’s successor in the quiet title dispute.


Alby v. Banc One Fin., 156 Wash. 2d 367, 128 P.3d 81 (Wash. 2006)