Posted in Blog, Commercial Litigation, Real Estate Law by

By Joseph G. Ballstaedt
801-365-1021
[email protected]

A property owner cannot build on and use his property in any way that he chooses. He must follow any applicable state and city laws and ordinances and obtain the required permits and approvals, of course. He must also be mindful of—and follow—any restrictive covenants that pertain to the property. Restrictive covenants (also known as “covenants, conditions, and restrictions” or “CC&Rs”) are additional rules that apply to real property, generally in a specific neighborhood or community. They are usually drafted and implemented by the first developer or owners of the neighborhood or community, and they are often associated with homeowners’ associations (HOAs). Restrictive covenants are a common method of letting homeowners and landowners govern how their community will be developed and used. They address a wide variety of issues, including the purposes for which a property can be used (e.g. whether business is permitted), what buildings must look like (e.g. color and building materials), what approvals are needed before building (e.g. a committee might approve new construction, additions, or remodels), and what types of leases are permitted (e.g. six-month leases, short-term rentals, etc.).

Restrictive covenants are generally recorded with the county recorder’s office, so any person who buys land subject to the restrictive covenant is on notice that the land is bound by the restrictive covenants, whatever they may be. The restrictive covenants are a contract between all landowners, and each landowner can enforce the restrictions against other owners who violate the restrictions. Sometimes courts are asked to enforce—and will enforce—restrictive covenants. This blog post discusses how courts enforce restrictive covenants and some potential defenses to claims that a person must correct a violation of a restrictive covenant.

Injunctions

An injunction is an order from a court that orders a person or entity to do something or to not do something. It is often seen as an extraordinary remedy, so judges may be hesitant to grant requests for injunctions. However, a person who violates a restrictive covenant should do so with his eyes wide open to the reality that a court could crack down on him through an injunction. For example, if a person builds a garage in a backyard of a community where the restrictive covenants prohibit non-residential buildings, a judge—in response to a complaint by another member of the community—may require the person to take down the garage. Or if the restrictive covenants require that all buildings be at least 10 feet from a neighbor’s property, a judge may require the that a newly constructed shed be taken down if it is 5 feet from the property line. In short, violate restrictive covenants with extreme caution, especially if the violation entails making a costly improvement (such as building a new garage or shed).

Exception to Compliance: Abandonment

Because injunctions are an extraordinary remedy (or because tearing down a new garage or shed is a harsh result), a judge may be inclined to conclude that, based on an exception to compliance with the restrictive covenants, the non-compliant structure of violation does not need to be fixed. (Or the judge might not make this conclusion.)

One reason not to enforce a restrictive covenant is that it has been abandoned, which occurs when there is substantial and general noncompliance with that specific covenant. Abandonment does not occur if the noncompliance is slight, unimportant, or unsubstantial. Factors a judge will consider are the number and severity of existing violations, whether there have been prior efforts to enforce the restriction, and whether the restriction can still yield benefits. If a restrictive covenant requires all buildings to be built at least 10 feet from property lines, and more than half of the community has built a garage within 3 feet of the property line without any complaints over the past several years, there is a good argument that the restriction has been abandoned and cannot be enforced now. But if all these garages had been built 9 feet from the property line, and now somebody complains of a garage built within 3 feet of the property line, the case for abandonment is much weaker. The idea behind abandonment is that it must reasonably appear that the property owners nether adhere to nor enforce the specific covenant or restriction.

Also, just because one restriction isn’t followed doesn’t necessarily mean that all restrictions are thrown out the window. Abandonment is generally considered on a provision-by-provision basis. So, if people no longer follow a restriction that requires buildings to be build 10 feet from properly lines, it does not mean that a different restriction requiring all buildings to be built of red bricks is also abandoned.

Exception to Compliance: No Longer Serves a Valid Purpose

Another exception to enforcement of a restrictive covenant is when a change in circumstances in the surrounding neighborhood has rendered the covenant or restriction useless—to the point of defeating the object or purpose of the restrictive covenant. For example, a restrictive covenant may require a portion of community or personal land to be dedicated to a certain purpose, such as parking. So long as cars are used and parking is needed, the purposes of the restrictive covenant remains a valid one, but if—for some unexpected and unlikely reason—cars and vehicles were prohibited under a new city ordinance, perhaps the restrictive covenant would serve no useful purposes since no parking would be needed, and land dedicated to parking could be used for some other purposes. Sometimes the change in circumstance might be that everyone has abandoned the restrictive covenant, as discussed above, which may make the restrictive covenant purposeless.

Exception to Compliance: Enforcement Would Be Unfair

Even if a person clearly violates a restrictive covenant, a court will not automatically grant an injunction and order that the violation be cured. Courts use what is called a “balancing of equities test” in order to decide whether it would be fair or unfair to correct the violation. What one judge sees as unfair may not be seen as unfair by another judge. Judges have discretion and have different opinions, but a few principles guide the “balancing of equities test.” First, the violation must be innocent. If somebody willfully violates a restrictive covenant, he will probably be out of luck. The judge will most likely order an unwinding of the violation, regardless of how harsh this will be. On the other hand, if the violation is innocent, the judge will likely consider whether it will be unfair to require compliance. The judge will consider whether undoing the violation will be expensive and whether undoing the violation will greatly benefit the community. The judge will also consider whether the complaining landowner can be compensated through payment of money damages or if the violation will cause other non-monetary and irreparable harm.

But again, these and other fairness considerations are not available to parties who knowingly violate a restrictive covenant—or “roll the dice”—and wait to see if somebody complains. Innocent parties are those who did not know they were violating a restrictive covenant or believed that their conduct did not violate a specific restriction. For example, if a restrictive covenant requires all “buildings” to be made of red brick, and a landowner believes that “buildings” only applies to structures where people live, perhaps a court may not require the landowner to take down a non-compliant shed made of wood.

Help with Restrictive Covenant Issues

Restrictive covenants can create many problems. If you are attempting to interpret a restrictive covenant, deciding whether to enforce a restrictive covenant against somebody else, or defending against a claim that you have violated a restrictive covenant, let me help you solve the problem. I offer free consultations so that you can get an idea of what your options and risks are. Give me a call. My direct dial is 801-365-1021, and you can e-mail me at [email protected].

joseph-g-ballstaedt

Joseph G. Ballstaedt
801.365.1021
[email protected]

About

This author hasn't yet written their biography.
Still we are proud contributed 26 great entries.