HOMEOWNERS ASSOCIATIONS AND AN ANALYSIS OF
THE PERMISSIBLE SCOPE OF RESTRICTIVE COVENANTS AND CONDITIONS UNDER REAL PROPERTY LAW
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(A) ENFORCEABILITY OF RESTRICTIVE COVENANTS GENERALLY:
As a general rule, real property owners who have bought land within a
subdivision that is subject to restrictive covenants and conditions may enforce
those restrictions through equitable relief against other property owners found
to be in violation of those restrictions. Fink v. Miller, 896 P.2d
649,652 (Utah App. 1995). The creation of restrictive covenants is a common
means of effectuating a private residential developmental scheme.
Swenson v.
Erickson, 998 P.2d 807, 813 (Utah 2000). Every purchaser in a restricted
subdivision is simultaneously subjected to the burden and entitled to the
benefit of a restrictive covenant. Town & Country Estates Assn v. Slater,
227 Mont. 489, 492 (1987). If the enforcement of a restrictive covenant will
harm a defendant without substantially benefiting a plaintiffs land it will not
be enforced. 9-60 Powell On Real Property 60.10 [3]. The Restatement of
Property also takes the position that a disproportion between the harm and the
benefit can itself constitute sufficient grounds for denial of injunctive
relief. Restatement of the Law of Property 563 (1944). As a general rule,
covenants are more likely to be valid if they tend to maintain or enhance the
character of a particular residential subdivision. Town & Country Estates
Assn v. Slater, 227 Mont. 489, 492. However, restrictive covenants will not
be enforced when they are not used in connection with some general plan or
scheme. Id. While architectural committees are generally permitted through
covenant to require its prior approval of prospective house plans or other
specifications, such decision must be reasonable and made in good faith and must
not be arbitrary or capricious. Rhue v. Cheyenne Homes, Inc., 449 P.2d
361, 363 (Colo. 1969) ; See also Fink v. Miller, 896 P.2d 649 at 655.
Courts have found rejections of proposed land use to be unreasonable in a
variety of circumstances. In Leonard v. Stoebling, 728 P.2d 1358, 102
Nev. 543 (1986), the court found that it was unreasonable for an architectural
control committee to reject a proposed addition without taking into
consideration the neighbors views, as required. In Oakbrook Civic Ass.n, 481
So.2d 1008, the court found an architectural control committees rejection of a
proposal unreasonable where such rejection was based solely on the conclusory
statements of the committee chairman that the proposed land use was not
harmonious with surrounding structures. In Young v. Tortoise Island
Homeowners, the Florida court firmly stated: In the absence of an existing
pattern or scheme of type of architecture which puts a prospective purchaser on
notice that only one kind of style will be allowed, either in the recorded
restrictions or de facto from the unified building scheme built on the
subdivision, such a board does not have the power or discretion to impose only
one style over another, based purely on aesthetic concepts.
Young v.
Tortoise Island Homeowners, 511 So.2d 381,384 (Fla. App. 5 Dist. 1987). See
also Riss v. Angel where the Washington state Supreme Court provided
Approval standards like conformity and harmony of external design and general
quality with the existing standards of the neighborhood and location of the
building with respect to topography and finished ground elevations
will not be enforced where it has been applied so inconsistently as to result in
a wide variety of buildings. Riss v. Angel, 131 Wn.2d 612,625 (1997).
Finally, See Syrian Archdiocese of N.Y. v. Palisades Assoc., where the
New Jersey court provided:
"While we have here enunciated the proposition that the covenant requiring the
approval of the architectural committee before erection of a house in the
subdivision is enforceable, we point out that there is a corollary to that
proposition which affords protection and due process of law to a purchaser of a
lot in the subdivision, namely, that a refusal to approve plans must be
reasonable and made in good faith and must not be arbitrary or capricious.
Syrian Archdiocese of N.Y. v. Palisades Assoc., 265 A.2d 257, 110 N.J.
Super. 34, 42 (1970)."
In Town & Country Estates Assn v. Slater, the Supreme Court of Montana was
called upon to determine the enforceability of a covenant requiring a Design
Review Committee to approve of any construction on lots within a subdivision to
ensure the harmony of external design. Town & Country Estates Assn v.
Slater, 227 Mont. 489, 492 (1987). In ruling that the covenant was
unenforceable, the court held that the restrictive covenant failed to define any
real standard of approval and was thus too vague to be upheld. Id. at 493. The
court noted that the subdivision in question had a cacophony of styles which,
in effect, belied the committees implied claim that they could adhere to any
objective standard. Id. at 494. If the subdivision itself lacks consonance, the
Slaters plan cannot lack harmony. The court continued, In view of the wide
variety of designs, no one seemed burdened by the covenant except the Slaters.
Id. The court concluded, The approval or disapproval of plans by the DRC
must be based upon an objective design standard. Without a quantifiable standard
to guide them, the decision of DRC is unenforceable.
Id.
(B) ABANDONMENT OF RESTRICTIVE COVENANTS:
Traditionally, courts have held that a restrictive covenant will be deemed
abandoned and thus unenforceable if a change in circumstances so substantially
changes the character of the neighborhood, that the benefits of the covenant are
neutralized. Swenson v. Erickson, 998 P.2d 807, 813 (Utah 2000); See also
Crimmins v. Simonds, 636 P.2d 478, 479 (Utah 1981). In
Fink v. Miller,
however, the Utah court adopted a new test that made it substantially less
burdensome to prove abandonment for a certain type of covenant. The newly
adopted test was employed for purposes of determining whether a restrictive
covenant prohibiting certain building materials solely for aesthetic purposes,
had been abandoned. In order to claim abandonment in such instances, the court
held, the claiming party is only required to demonstrate that violations of the
subject covenant are substantial enough so as to indicate to the average person
that the property owners neither enforce nor comply with the covenant.
Fink
v. Miller, 896 P.2d 649,653-654 (Utah App. 1995).
In Fink v. Miller, a property owner sought to enjoin a homebuilder from
installing fiberglass shingles on her home. Id. The owner cited a covenant
applicable to all homes in the subdivision which proscribed the installation of
all roofing material on homes, except for wood shingles. Id. The court concluded
that, based on the fact that twenty-three out of eighty-one homes in the
subdivision did not comply with the covenant requiring wood shingles, the
covenant had been abandoned. Id. In coming to its conclusion, the Utah court
adopted and used a new test to be used specifically for the purpose of
determining the enforceability of restrictive covenants which restrict the
selection of certain building materials for aesthetic reasons.
Id. The
court provided:
"a more appropriate test to determine abandonment of such a covenant requires
the party opposing enforcement to prove that existing violations are so great as
to lead the mind of the average person to reasonably conclude that the
restriction in question has been abandoned. In simplest terms, this test is met
when the average person, upon inspection of a subdivision and knowing of a
certain restriction, will readily observe sufficient violations so that he or
she will logically infer that the property owners neither adhere to nor enforce
the restriction. In applying this test, courts consider the number, nature, and
severity of the then existing violation[s], any prior acts of enforcement of the
restriction, and whether it is still possible to realize to a substantial degree
the benefits intended through the covenant. Id." (Internal quotations omitted).
The court added:
"To maximize the benefits of the essentially objective quality of this test,
courts applying it should first analyze violations as to their number, nature,
and severity. If these elements alone are sufficient to lead the average person
to believe the covenant has been abandoned, it is not necessary to go further.
However, if abandonment is still in doubt, courts should then consider the other
two factors namely, prior enforcement efforts and possible realization of
benefits to resolve the abandonment question. Id."
While the court did not reject the traditional test employed in previous Utah
cases for purposes of determining the enforceability of covenants, (see for
example Crimmins v. Simonds 636 P.2d at 479) it limited the use of such
test to restrictions that are closely related to the use of the affected
property, such as a covenant that forbids commercial operations or limits land
use to agricultural activities. Id. at 652.
(C) CONSTRUCTION OF RESTRICTIVE COVENANTS:
Unambiguous restrictive covenants are generally enforced as written.
Swenson
v. Erickson, 998 P.2d 807, 811 (Utah 2000). The intent of the parties is
controlling. Id. However Utah courts adhere to the generally accepted
view that restrictive covenants are not favored and are thus to be strictly
construed in favor of the free and unrestricted use of property whenever the
validity of a covenant is at issue. Dansie v. Hi-Country Estates Homeowners,
987 P.2d 30,34 (Utah 1999) ; St. Benedicts Dev. V. St. Benedicts Hosp.,
811 P.2d 194, 198 (Utah 1991) (citing Robbins v. Finlay, 645 P.2d 623,
627 (Utah 1982) ; Freeman v. Gee, 423 P.2d 155, 159 (1967) ;
Parrish v.
Richards, 336 P.2d 122, 123 (Utah 1959). Thus, any doubt as to the validity
of a restrictive covenant should be resolved against the restriction.
Lacer
v. Navajo County, 141 Ariz. 396, 403 (App. 1983). See also George W.
Thompsons treatise on real property wherein it states:
In this country real estate is an article of commerce. The uses to which it
should be devoted are constantly changing as the business of the country
increases, and as its new wants are developed. Hence, it is contrary to the
well-recognized business policy of the country to tie up real estate where the
fee is conveyed with restrictions and prohibitions as to its use; and, hence, in
the construction of deeds containing restrictions and prohibitions as to the use
of the property by a grantee, all doubts should, as a general rule, be resolved
in favor of a free use of property and against restrictions. (quoting 4 George
W. Thompson, Thompson on Real Property 3361, at 473 (1924)).
See also Am. Jur.2d Covenants, Conditions and Restrictions:
Covenants and agreements restricting the free use of property are strictly
construed against limitations upon such use. . . . Doubt will be resolved in
favor of the unrestricted use of property, so that where the language of a
restrictive covenant is capable of two constructions, the one that limits,
rather than the one which extends it, should be adopted, and that construction
should be embraced which least restricts the free use of the land. See 20 Am.
Jur.2d Covenants, Conditions and Restrictions 187 (1965).
(D) CONCLUSION:
A homeowners association cannot enforce covenants under the guise of a
commitment to maintain a uniform or harmonious setting where none exists. This
is precisely analogous to the situation presented in Town & Country Estates
Assn v. Slater where the Montana Supreme court found unreasonable the
architectural committees attempts to arbitrarily dictate residents
architectural choices under the guise of maintaining harmony of external
design. There, the court stated in pertinent part: If the subdivision itself
lacks consonance, the Slaters plan cannot lack harmony.
Town & Country
Estates Assn v. Slater, 227 Mont. 489 at 494.
Finally, a homeowners association will fail in any attempt to argue that the
covenants it seeks to enforce are valid by virtue of the parties original
intent if it appears such covenants have been abandoned by virtue of obvious
violations. If an average person, upon inspection of a subject subdivision,
knowing of the covenants that the association seeks to enforce, would readily
observe sufficient violations so that he or she would logically infer that the
property owners neither adhere to nor enforce the restrictions, then such
restrictions may be deemed abandoned. See Fink v. Miller, 896 P.2d
649,653-54 (Utah App. 1995). Pursuant to that test, a court will consider the
number, nature, and severity of the then existing violation[s], any prior acts
of enforcement of the restriction, and whether it is still possible to realize
to a substantial degree the benefits intended through the covenant.
In short, there are reasonable limitations on how far homeowners associations
can go in pursuit conformity in a neighborhood, especially where there is a
history of inconsistent or inequitable enforcement of covenants.
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