Land Use Restrictions

To make land more attractive to buyers, a developer could draft land use restrictions which limit how the buyer is supposed to use the property. These include covenant’s, conditions, and restrictions, also abbreviated and known as the CC&Rs. The purpose of which is to make the property more attractive to a buyer. For instance, if the seller wants to develop a residential area and writes a restriction that no lot can be used for commercial development, the area will be more attractive to a large group of residential buyers. If a person attempts to violate the land use restriction, then the other residents could enforce the restriction against them. This article focuses more on enforcement, rather than creation, of these restrictions.

Traditional Approach

A covenant is a promise to do something or not do something with the land. An affirmative covenant is agreeing to do something (e.g. I promise to plant a garden, grow trees, etc.). On the other hand, a negative covenant is the promise to not do something (e.g. I promise not to paint my house red).

Real Covenants

Definitions:

• Real covenant – promise about how the land will with benefit and burden both original parties and successors (covenant running at law).
• Burden – the duty to perform the promise.
• Benefit – the right to enforce the promise.

Elements to show a burden exists for future successors:

1. Compliance with the Statute of Frauds
2. Intent to bind successors.
3. “Touch and concern” land: The executed document must be related to the enjoyment, occupation, or use of the property.
4. Notice of the covenant to the successor.
5. Horizontal privity: Focuses on the relationship between original parties. There are three potential ways to prove this relationship, depending on the jurisdiction.
   1. When the parties have a similar mutual interest in the affected land (e.g. landlord and tenant).
   2. When the parties have a grantor-grantee relationship (successive interest).
   3. Some jurisdictions have no requirement to prove horizontal privity.
6. Vertical privity refers to the relationship between the original party and the successor. To prove this relationship, all that needs to be shown is that the successor received all the estate. This is rarely required in most jurisdictions.

Some of the elements above must also be shown for the benefit to pass to successors. These include, compliance with the statute of frauds, intent to bind successors, and touch and concern.

Deep Water Brewing, LLC. v. Fairway Resources Ltd.

215 P.3d 990 (Wash. App. 2009).

Deep Water Brewing is the plaintiff who won at trial.

Question

Does the benefit run to future successors?

Rule

This jurisdiction is fairly unique where it requires all six elements for the benefit to run to successors. Thus, the plaintiff’s who are the beneficiaries need to show that the benefit was:

1. In compliance with the Statute of Frauds
2. Had the intent to bind successors.
3. “Touch and concerned” land.
4. Notice of the benefit
5. The existence of horizontal privity.
6. The existence of vertical privity.

Holding

All the elements for a benefit to run are present. Consequently, the trial’s court’s ruling is affirmed.

Facts

The Ahlquist’s owned a restaurant that overlooked an apple orchard and a lake. A developer, Key Developing, wished to purchase the orchard for residential development. However, to access the property, he would need to pass through Ahlquist’s property. So, the two parties executed two agreements. First, was an easement to cross Ahlquist’s property. Second, was a right-of-way agreement which authorized development so long as Key Development promised to not impede the restaurant’s view of the lake (homes were to be built no higher than 16 feet). As part of the agreement, Key Development was to organize a HOA to enforce the restriction.

Later, the Ahlquist’s sold the restaurant to the Kenagy’s who opened Deep Water Brewing (knowing about both agreements). Shortly thereafter, Key Development altered the HOA covenant and authorized homes to be built up to 26 feet high. Thus, the Kenagy’s sued to enforce the restriction.

So, the question is, did the benefit of the high restriction pass to the Kenagy’s when they purchased the restaurant?

Analysis

In Washington all the elements must be met.

First, this agreement was clearly in compliance with the statute of frauds. The address of the restaurant, although not named, was provided and clearly outlined who was to benefit from what.

Second, the height restriction touched and concerned the developer’s land and benefited the restaurant (height restrictions are very common restrictions for the use and enjoyment of another’s land).

Third, the Kenagy’s had notice of the benefit when they purchased the restaurant (the agreement’s being recorded).

Fourth, the contract had the intent to bind successors. Although there was no express intent to bind, the nature of the contract and other elements show that the parties had that intention.

Finally, there was both horizontal and vertical privity between the parties. There was horizontal privity between Key Development and the Ahlquists, being the parties who executed an agreement over land which they had an interest in. Second there was vertical privity between the Ahlquists and Kenagy’s, who purchased all interest in the land.

The traditional remedy for a breach of a real covenant restriction is damages.

Additional Notes

Steps for analysis:

1. Determine who got what and when for future privity analysis.
2. Figure out who has the benefit and who has the burden.
   • Determine what is trying to run to successors (Here, the benefit because Deep Water is a future party who wants to utilize the benefit).
3. Work through the required elements.
   • Although this is only a benefit and does not need to do a full analysis, Washington requires horizontal privity to exist (not required analysis for the bar exam). Here, there was horizontal privity because of the easement.
4. Provide a remedy of damages if the elements are satisfied.

Equitable Servitudes

These are agreements which are often easier to prove than real covenants. As such, they are more commonly used in practice than real covenants. In essence they are the same as a real covenant, but with fewer elements to show. There is still a promise, a benefit, and a burden. However, the main difference comes in the remedy. While a remedy for a real covenant breach is damages, the traditional remedy for an equitable servitude is an injunction.

Gambrell v. Nivens

275 S.W.3d 429 (Tenn. App. 2008).

Gambrell is the plaintiff who won in trial court.

Question

Does the burden run?

Rule

A servitude is created when:

1. It satisfies the statute of frauds or common plan (a common plan is where several people purchase the land with a restriction but others do not. The plan is enforced if enough people understand that a restriction is in place despite the lack of written restrictions).
2. Touch and concern is present
3. Intent to run
4. Notice of the covenant

Holding

All the elements here are satisfied. Thus, the trial court’s determination of an injunction is merited.

Facts

Gambrell owned 69 acres which he subdivided into four lots and began to sell. One of these lots was sold to Foshee who understood that there were restrictions on the land. Although there was no encumbrances written into the deed, there was an attachment to the back of the deed saying that the land will not be used for commercial purposes for 30 years. This attachment was recorded with the deed.

Foshee then sold the land (21 acres) to the Nivens. They then began to develop the land into a large wedding venue and associated parking lot. Soon afterwards, Gambrell sued for the Nivens for violating the servitude and sought an injunction against continued weddings on the property.

Analysis

All the elements of a servitude are satisfied. This was in writing, there is no doubt about that. The covenant also touched to the nature, and enjoyment of the property, burdening it from commercial development. Additionally, the document provided clear intent that the burden was to last for 30 years, regardless of who maintained ownership.

However, the largest dispute comes over the notice of the document. Although the parties knew of the deed and associated covenants, the document was not an executed part of the deed. However, the court finds this inconsequential. Foshee knew of the covenants and was completely aware that the attached document was enforceable.

Additional Notes

Equitable Servitudes always examine whether the benefit or burden runs to the successor (does not examine a breach between the original parties).

Below is a summary of which elements are required for both Real Covenants and Equitable Servitudes.

Restatement Approach

The Restatement simply combines real covenants and the equitable servitude into one doctrine called “the covenant that runs at law.” The Restatement creates a servitude which has the following elements:

1. First, the property owner intends to create a servitude which burdens the property.
2. Second, the conveyance satisfies the statute of frauds
3. Finally, the servitude is not “arbitrary, unconstitutional, unconscionable, or violative of certain public policies.”

This approach removes the requirements of horizontal privity and “touch and concern.” Vertical privity is only required for affirmative covenants under certain situations outlined in § 5.2. Finally notice is not required to create the servitude, but may be required if a party wishes to enforce it.

Common Interest Communities

A common interest community (CIC) is a group of residential housing that is subject to 1) restrictions and 2) regulated by a homeowners association (HOA).

There CICs are created by declaration. The declaration has four parts:

1. The establishment of a HOA.
2. List of CC&Rs.
3. Financial dues to the HOA.
4. Outlining ownership rights of residents (homeowners have a fee simple and an undivided interest in a common area such as a swimming pool or community center).

Enforcing Restrictions

Although it is reasonably easy to create a CIC, in this section we will talk about the three defenses to enforcing the CC&Rs.

1. Unreasonableness
2. Abandonment
3. Changed conditions

In addition to these defenses, individuals can be released from restrictions the same way they overcome easements (e.g. merger, condemnation, release, etc.).

Nahrstedt v. Lakeside Village Condominium Association, Inc.

878 P.2d 1275 (Cal. 1994).

Nahrstedt is the plaintiff who lost in trial but won on appeal.

Question

Is the pet ban unreasonable?

Rule

The CC&Rs are to be enforced unless unreasonable. A restriction is unreasonable if “it is wholly arbitrary, violate a fundamental public policy, or impose a burden . . . that far outweighs any benefit.”

Holding

Here, the ban is reasonable for health and safety, noise, and other concerns. Reversed and remanded.

Facts

Nahrstedt purchased a condominium in LA and moved in with her three cats. However, the HOA had a list of restrictions, which were recorded. Included with these restrictions was a ban on keeping certain pets, including cats and dogs, within a unit. Nahrstedt was discovered by the HOA with her three cats and were thus subject to additional monthly assessments unless she removed the animals. Upset, she sued the HOA arguing that the pet restriction was unreasonable.

First, the trial court said that the ban was reasonable and dismissed the claims.

However, the appellate court reversed and argued that each restriction is to be examined on a case by case basis for reasonableness. In the case of Nahrstedt, the restriction was unreasonable because her cats did not make any noise or nuisance.

Analysis

The court discusses the statute which says that there is a presumption of enforcement unless unreasonable. Therefore, there must be very good reasons to not enforce the CC&Rs. the court is averse to ruling against these restrictions because they want to ensure uniformity within a community. Everyone should be subject to the same rules. Otherwise, HOAs will always be getting sued and will have to raise their monthly dues to cover the additional costs associated with litigation. Here, the pet restriction is reasonable because there are general health and safety concerns, as well as noise and nuisance concerns associated with pet ownership. In a large condo complex, the concerns of others should not go unnoticed.

However, the dissent argues that the pet restriction is unreasonable because it affects the privacy of what people do within their homes, not just the common areas. Additionally, pets are a large comfort to millions of Americans to the point where pet ownership is viewed as a part of normal day life. To restrict such a common and good activity would be unreasonable. Therefore, these restrictions should be viewed on a case-by-case basis following the ruling of the Appellate court.

Additional Notes

Unreasonableness factors:

1. Arbitrary (no rational relationship to the purpose or preservation of the properties).
2. Harm outweighs the benefit.
3. Violates public policy.

Fink v. Miller

896 P.2d 649 (Utah App. 1995).

Fink is the plaintiff who lost at the trial court.

Question

Did the HOA abandon the restriction?

Rule

When the average person can look around while knowing the provision, and see that it has been substantially violated, the provision is abandoned. To determine this analysis, the court first considers whether a substantial number has violated the provision. However, if the substantial number is in doubt, then the court will also consider 1) previous enforcement efforts and 2) the benefits to be preserved.

Holding

The restriction was abandoned, affirmed.

Facts

The restriction in place called for new homeowners to have approval of plans before building. In these plans, homes were to have roofs made of wood shingles and the color of the home was to be earth-toned, to match the beauty of the surroundings. However, due to fire concerns, those involved in the community sought to amend the restriction to include bar shingles. Despite approval for the change, no amendment ever occurred. Additionally, despite the failure to amend, HOA officials approved several plans with homes that did not have the wood shingles but had fiberglass or asphalt instead. By 1985, of the several homes built that year, the majority did not have wood shingles. In the whole community about 25 in 80 violated the covenant.

The Millers sought to move into the neighborhood and proposed plans to begin building. These plans initially called for the wood shingles and was approved. Later, the Millers sought to amend their plans for a fiberglass roof, but these plans were denied. Notwithstanding the denial, the Millers began construction with the fiberglass roof. As such, Fink sued for an injunction to stop the use.

Analysis

Applying the rule to the present restriction, the restriction has been abandoned. Looking at the numbers alone is sufficient to determine abandonment, 25 out of 80 being a large proportion. However, even if that weren’t enough, the court looks at the other two related factors. First, the restriction was no longer being universally applied, the majority of homes in 1985 being approved without a wood roof. Second, the benefit of the restriction was only design, not safety or any other beneficial purpose. The other restrictions based on design remain in effect. Therefore, the restriction was abandoned.

Additional Notes

Standard:

“Violation so great as to lead the mind of an average person to conclude the restriction is abandoned.” The court considers the number who violate, the nature and the severity of the violation.

Vernon Township Volunteer Fire Department, Inc. v. Connor

855 A.2d 873 (Penn. 2004).

Connor and other homeowners are the defendants who won at trial, lost on appeal, and made this final appeal.

Question

Did the circumstances of the area change insomuch that it renders the restriction useless (no longer meets the benefit).

Rule

If the restriction no longer meets the intended benefit, then the court may invalidate it. However, if the intended benefit still exists, the restriction may be enforced.

Holding

The benefit still exists, the restriction may be enforced, affirmed.

Facts

Long ago, the homeowners of this subdivision got together and agreed that no alcohol would be sold on any parcel within the subdivision.

A private fire department purchased the lot without actual, but with constructive, notice of the restriction. Then the department began construction on the truck room and a social hall. The social hall would be to sell alcohol to members of the hall to help finance the business. However, when informed of the alcohol restriction, the Fire department ceased construction and sought permission from all the other lots to waive the restriction on the department’s behalf. All but 6 signed who sought to enforce the restriction.

Thus, the fire department sued, arguing that the circumstances had changed sufficiently enough to invalidate the restriction. Among these changed conditions included the development of two liquor stores within 2 miles of the subdivision, the agreement of those to waive the restriction, and the failure of those who had issue to purchase because of the restriction.

Analysis

Despite the conditions outside of the area, the fact remains that the intended benefit still exists. Here, the intended benefit was to protect individuals from the vices and potential dangers of public intoxication. Even though there are stores nearby, those locations are not within the subdivision. Thus, the subdivision is still protected from those fears, even if the majority agreed to waive the restriction.

Additional Notes

Standard:

The changed circumstances have altered the events so much that there is no longer a substantial benefit that extends to the owners through enforcement of the restriction.

Governing the Development

The HOA is the governing organization within a CIC. Some of their responsibilities include:

1. Maintain common areas
2. Enforce CC&Rs
3. Amend and supplement CC&Rs
4. Collect assessments
5. Any other necessary administrative actions

Often times, these decisions are made by an HOA board which is elected by owners within the development. The question then becomes, how much authority does a homeowner have to challenge a board decision? Jurisdictions are split where some adopt the business judgment rule (good faith on the part of the board is all that matters) while the majority adopt a reasonableness standard (board decisions must be reasonable).

Schaefer v. Eastman Community Association

836 A.2d 752 (N.H. 2003).

Schaefer is the plaintiff who won in trial and ECA appealed.

Question

What is the scope of the agreement?

Rule

Decisions made by the board must be within the scope and reasonable. When reasonableness is not attacked, the court only needs to focus on the scope.

This scope is broad. As long as a board’s action “does not contravene either an express provision of the declaration or a right reasonably inferable therefrom, it will be found valid, within the scope of the board’s authority.”

Holding

The provisions are within the scope of the declaration. As such, reversed and remanded.

Facts

Eastman was a developed community that provided a wide variety of community areas. These areas included tennis courts, a golf course, indoor swimming pool, cross country skiing, and (at issue here) downhill skiing. All of these benefits were advertised to potential buyers and was mentioned as a general provision that the ECA would maintain these amenities.

However, there was much dispute about whether it was worth continuing to maintain the downhill skiing area. Surveys were done which showed that 60 percent of owners had never used the downhill ski area. Thus, the board decided to close down the area and sell the associated ski lift. This decision was made by relying on the declaration which stated that the board had the ability to protect the Associations assets, and sell property when it is in the best interest of the Association.

Analysis

Because the scope of authority is to be interpreted broadly, the only things that may be outside the authority are decisions that go directly against an express provision or a right reasonably inferred therefrom. Here, there was nothing in the provisions that expressly said that the ECA was not allowed to close a community amenity. Consequently, closing down the ski hill does not violate a provision in the declaration.

Additional Notes

Application of the business judgment rule. The courts often do not want to get involved in business decisions if the HOA acted in good faith for the benefit of the community.

Fountain Valley Chateau Blanc Homeowner’s Association v. Department of Veterans Affairs

79 Cal. Rptr. 2d 248 (App. 1998).

Fountain Valley is the plaintiff while Cunningham countersued. Cunningham won a jury verdict and the judge granted a new trial. As such, Cunningham appealed.

Question

Did the Association act reasonably?

Rule

An Association is not allowed to dictate how a homeowner lives the minor details of their life.

Holding

The actions of the HOA are unreasonable. Reversed with an order granting judgment based on jury findings.

Facts

Cunningham was an elderly gentleman who was assisted by the Veterans Affairs in securing this home. However, there were complaints about clutter from neighbors and the HOA came to investigate. In addition to telling Cunningham to clean up the back porch, they went inside telling him how to clean up the inside of his home. This included telling him to pick up books around his bed, outlining which books he was allowed to read, and to dispose of old clothes.

Included with this letter was a threat of litigation if Cunningham failed to comply with the letter. Additional investigations ensued, followed by litigation.

Cunningham won at trial, but the trial court found the actions of the HOA “totally reasonable’ and ordered a new trial.

Analysis

The Appellate court holds that the actions of the HOA are completely unreasonable. Ultimately, the HOA is acting as a “nanny state,” telling Cunningham how to live his life. In other words, the Court pictures the HOA as a “nagging parent” telling an “errant teenager” to clean up their room.

Additional Notes

Compare this case to Nahrstedt where both cases talk about reasonableness. In Nahrstedt, the pet standard was reasonable while the requirement to clean here was unreasonable.

Nuisance

Restatement 2d Torts § 821D defines private nuisance as “a nontrespassory invasion of another’s interest in the private use and enjoyment of land.” To prove nuisance, five elements must be met:

1. Intentional – Acts with the purpose or has knowledge (or is certain to know) that the acts will have a harmful result.
2. Nontrespassory – No physical entry into the land.
3. Unreasonable – Two options: gravity of harm, or weighing gravity of harm v. utility of the conduct.
4. Substantial interference – Real invasion of plaintiff’s interests.
5. Use and enjoyment of land – Use must interfere.

Boomer v. Atlantic Cement Co., Inc.

257 N.E.2d 870 (N.Y. App. 1970).

Cement is the defendant. At trial, temporary damages were awarded to the plaintiffs but an injunction against continued use was denied.

Question

What should be the remedy for the nuisance?

Rule

First, when a nuisance occurs, the courts do not consider the balance of harm caused to the benefit of the nuisance (applying the gravity of harm test instead of the balancing test).

Second, traditionally, an injunction was the remedy for a nuisance. However, the court adopts a new program where there is an injunction, but permanent damages may be paid instead of the injunction being enforced.

Holding

The case is reversed and remanded for the court to determine the amount of permanent damages and to order an injunction if those damages are not paid.

Facts

The Atlantic Cement Company was passing a lot of cement dust into the air. Unfortunately, the dust was causing a lot of damage to people’s homes, vehicles, and other property. Additionally, the cement plant would vibrate which caused several cracks in homes. As such, the plaintiff’s sued the cement company for damages and for an injunction against continued production. Although temporary damages were awarded, the court was sympathetic to the company (who was a large economic powerhouse and employed over 300 individuals). Consequently, the injunction was denied.

Analysis

New York does not balance the harm caused by the good made. Instead, the State only cares if a harm was caused. As such, if the other elements of a nuisance are present, the remedy must be afforded. An injunction is the traditional remedy and must not be denied.

All that remains is to decide how to implement the injunction. There are two options. First, the court could set the injunction to take effect at a future time if the nuisance is not remedied (e.g. 18 months to solve the dust issue). Second, the court could issue an injunction automatically, which may be waived if the defendant pays the plaintiff for permanent damages caused (to be calculated by the courts). Here, the court adopts the second approach, arguing that the first is impractical. However, the dissent argues that the first approach should be adopted, recognizing the harm of having the dust traveling through the air.

Thomsen v. Greve

550 N.W.2d 49 (Neb. App. 1996).

Thomsen’s are the plaintiffs seeking an injunction and damages. The trial court told the Greves’ to extend their fireplace three feet higher, but issued no damages to the Thomsens’.

This case is an example of the court applying the balancing test: gravity of harm v. utility of the conduct.

Question

Could, and did, the Greve’s conduct create a nuisance?

Rule

The court sets out the elements of nuisance as outlined earlier. For the unreasonable element, the court is to evaluate whether the gravity of the harm outweighs the utility of the conduct. Factors that are considered for the harm include:

1. “the extent of the harm involved;
2. the character of the harm involved;
3. the social value that the law attaches to the type of use or enjoyment invaded;
4. the suitability of the particular use or enjoyment invaded to the character of the locality; and
5. the burden on the person harmed of avoiding the harm.”

As for the utility, considered factors include:

1. “the social value that the law attaches to the primary purpose of the conduct;
2. the suitability of the conduct to the character of the locality; and
3. the impracticability of preventing or avoiding the invasion.

Holding

The holding from the district court is amended to provide damages to the Thomsen family. Additionally, the Greve family is ordered to stop the nuisance of smoke and odor coming from their home.

Facts

The Thomsens and Greves were next door neighbors who got along alright for a couple of years. However, they had disputes which ultimately destroyed their friendship. Among these disputes was a complaint of smoke coming from the Greve home. The smoke would move into the Thomsen’s home which created complaints of the smell and how much was gaining entry. Several people testified for both parties about the extent of how bad the smoke was.

Analysis

All the elements were easily met except for the question about reasonableness. Applying the rule from above, the actions here are unreasonable. The harm from the smoke is serious enough to take action. Additionally, the utility of using the wood burning stove does not rise above the harm. This is because there are several easy ways to heat a home (without adding to societal pollution).

Consequently, a nuisance could be created by the Greve’s use of the wood burning stove. Following the findings of the trial court, and finding no serious error, the Greve’s use did create said nuisance.

Additional Notes

The result? An injunction plus damages.

Disclaimer

The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.