This article discusses enforceable CC&R provisions, and reservations and restrictions in grant deeds.
The trees on a neighbor’s lot have grown so high they obstruct a homeowner’s ocean view from another lot in the subdivision.
The homeowner, concerned about the loss of his ocean view, checks the title restrictions recorded on the neighbor’s lot for any height restrictions.
The homeowner determines:
· both his lot and the neighbor’s lot are part of the same subdivision; and
· the original subdivision documents contain a restrictive provision limiting the height of structures located in the subdivision.
The homeowner requests his neighbor to comply with the title restrictions by trimming his trees to conform to the height restriction. The homeowner feels a reasonable interpretation of the subdivision height-of-structures restriction also extends to improvements in the form of trees.
The neighbor refuses to trim the trees claiming the wording of the restrictive provision applies only to structural improvements and not to the trees growing on his lot.
Can the owner force the neighbor to trim his trees under the restriction?
Yes! The neighbor must maintain his trees at a height equal to the height limitations imposed on the other surrounding structures on the property. One purpose for restrictions on the height of structures is to protect the views of all owners in the subdivision. Title restrictions are enforced according to their intent. [Ezer v. Fuchsloch (1979) 99 CA3d 849]
The subdivision provision protecting the view of lot owners is called a restrictive covenant.
Recording restrictive covenants
When developers subdivide land or airspace, they cut an existing parcel into two or more parcels, called parcels, lots or units. Having created a subdivision, the developers place restrictions on how the lots may be used by later owners, called successors.
The use restrictions are usually contained in a document called a “Declaration of Covenants, Conditions and Restrictions”. Covenants, conditions and restrictions (CC&Rs) are typically recorded with the original subdivision map.
Recorded documents in the chain of title to a parcel of real estate place a buyer on constructive notice of their contents. A buyer protects himself from unknowingly buying property subject to unwanted restrictions by reviewing and approving (or disapproving and cancelling) the preliminary title report which discloses the title company’s search of the property’s title history.
The title company doing the document search and prelim will, as a customer service, supply copies of any CC&Rs of record.
Consider CC&Rs which are recorded on a subdivision before any individual lots are sold.
Neither the initial grant deed after recording the CC&Rs nor any later grant deed transferring title of an owner’s lot in the subdivision reference the CC&Rs.
An owner who buys one of the parcels violates the CC&Rs. Neighbors in the subdivision seek to enforce the CC&Rs against the owner.
The owner claims the CC&Rs are unenforceable since they were not referenced in any grant deed transferring title to the property.
However, the CC&Rs are enforceable. The CC&Rs were recorded on the subdivision before any of the lots were sold. Thus, all purchasers of the lots are on constructive notice of the CC&Rs. [Citizens for Covenant Compliance v. Anderson (1995) 12 C4th 345]
Covenants, conditions and restrictions (CC&Rs) recorded on a subdivision before any lots are conveyed are enforceable against purchasers, regardless of whether the CC&Rs are referenced in any grant deed conveying title to any lot in the subdivision.
Requiring no more than a recording of the CC&Rs on the subdivision prior to any conveyance of a parcel fulfills the intent of the subdivider, and the expectations of the owners, as to the use of the properties within the subdivision.
Covenants limit use
A restriction can require the property to be used only for a specific purpose (e.g., a school, railroad, highway, dwelling, irrigation system, etc.). This type of restriction is called an affirmative covenant.
Another restriction, called a negative covenant, prohibits future uses of the property. A restriction prohibiting the sale of alcoholic beverages, or other legal activities otherwise allowed on the property, is an example of a typical negative covenant.
For example, a neighbor in a subdivision seeks to restrain another owner in the subdivision from violating a restriction, as in the example of the trees exceeding the height restriction on improvements.
But can an owner of one lot enforce a restrictive covenant against an owner of another lot when the only relationship existing between them is ownership within the same subdivision?
Yes! The right to enforce recorded subdivision restrictions transfers to the new owners of each lot as part of the title to the property.
The CC&Rs may provide for the property to revert to the original seller if the property is used in violation of a restriction. [Romero v. Department of Public Works (1941) 17 C2d 189]
CC&Rs and future owners
Covenants, conditions and restrictions (CC&Rs) bind later owners of the subdivided lots — a scheme picturesquely referred to as covenants running with the land.
For a covenant to run with the land, the restriction must directly benefit the property. [Calif. Civil Code §1462]
Consider a restriction limiting the use of all subdivision lots to single-family residences. The use restriction equally benefits and burdens each lot throughout the subdivision, assuring consistent and compatible use throughout the subdivision — a benefit with an advantageous effect on each property. Thus, the restriction runs with the title to each lot. [Miles v. Hollingsworth (1919) 44 CA 539]
However, consider an owner of a beachfront business property who sells an adjacent lot. The grant deed conveying the lot to the buyer states the buyer cannot conduct any business on the lot, except for the purpose of a hotel or clubhouse.
The buyer, unable to develop the facility as restricted by the covenant in the deed, sells the lot to a developer who plans to use the property for other than a hotel or clubhouse.
Can the business owner enforce the covenant and prevent the developer from using the lot for other business purposes?
No! The restriction against use did not run with the land. The restriction does not contain a benefit for the property conveyed. The restriction is a personal covenant since it is not worded to be binding on the buyer’s successors in interest or trigger a reversion for violation of the covenant.
However, the developer can be prevented from developing the property if a reasonable certainty existed that the developer’s use would materially injure, rather than benefit, the adjacent property held by the business owner. [Los Angeles Terminal Land Co. v. Muir (1902) 136 C 36]
A restriction which does not run with title is considered the grant of a personal benefit to the owner of the benefitted property, usually the seller who owns adjacent property. It is a personal burden to the owner of the restricted property. A personal restrictive covenant is enforceable only against the persons agreeing to it, not later owners of the property.
Editor’s Note — Prior to 1968, for a covenant to run with the land, a common owner of two or more parcels had to convey them with the use restrictions referenced in the grant deed. The relationship between the parcels descending from a common owner is called “privity of estate.”
Restrictive covenants between owners whose property did not descend from a common owner could not run with the land until 1968. However, those restrictions were enforced against future owners under the theory of negative easements.
A negative easement permits a person to dictate to another person how not to use his property. Although it was unenforceable as a restrictive covenant, a negative easement was enforceable under equitable theories — the new owner was entitled to the benefit fairly obtained by his prior owner for the property conveyed to him. [Bryan v. Grosse (1909) 155 C 132]
In condominiums, the prevailing party in an action to enforce CC&Rs is entitled to attorney fees. [CC §1354]
A subdivider sells “exclusive” residential lots with a deed restriction prohibiting the sale of lots to persons of a certain race or religion. Later, a member of the excluded race purchases and occupies a lot.
A neighbor attempts to invalidate the sale. The neighbor claims his rights under the subdivision plan have been violated as he purchased the lot subject to the restriction granting him the right not to live next to a person of the excluded race.
Can the neighbor enforce the race restriction?
No! Race restrictions violate federal civil rights laws and are unenforceable. Restrictions may not be imposed for illegal purposes. [Shelley v. Kraemer (1948) 334 US 1]
Editor’s Note — In accordance with federal civil rights statutes and case law, California statutes prohibit any restriction on the basis of race, national or ethnic origin, ancestry, sex, religion or disability in a conveyance of any interest in real estate. [CC §§53; 782]
Also, restrictions on the sale, leasing or encumbrance of real estate may not unreasonably restrict the marketability of the property, even if the restriction is contained in a trust deed or lease agreement. [CC §711]
However, due-on-sale clauses contained in the trust deed are enforceable on the transfer of any interest in the real estate except:
· short-term leases up to three years without purchase options; and
· intrafamily transfers of single-family, owner-occupied residential property on death of an owner or for equity financing. [12 Code of Federal Regulations §591.5(b)]
Also, assignment of a nonresidential lease may be restricted by a clause in the lease allowing the landlord to terminate the lease upon notice of the tenant’s intent to assign the lease. [Carma Developers, Inc. v. Marathon Development California, Inc. (1992) 2 C4th 342]
Covenants, conditions and restrictions on the installation or use of a solar energy system are unenforceable if the restrictions significantly increase the cost of the system or decrease its efficiency by:
· resulting in more than a 20% increase in the installation cost of the system; or
· decreasing the operating efficiency of the solar system by more than 20%. [CC §714]
Covenants restricting alienation
Government agencies are given a broader standard of reasonableness for enforcing restrictions on resales, if implemented to promote a public policy.
For example, an owner of coastal real estate obtains a coastal development permit by recombining 77 lots into two parcels and recording restrictions which prohibits the later division of the two recombined parcels.
A deed is recorded giving notice a later division of the recombined parcels will subject the owner to liability under the Coastal Act. No official map is recorded which reverts the lots into acreage consisting of two parcels.
An investor purchases 54 of the deed-restricted lots and sells them individually.
The investor is required to pay the maximum in fines allowed under the Coastal Act, including daily fines until the violations are corrected, since the sale of individual lots is a violation of the deed restrictions imposed by the coastal development permit.
Further, the owner is ordered to rescind the sales of the individual deed-restricted lots. [Ojavan Investors, Inc. v. California Coastal Commission (1997) 54 CA4th 373]
A provision for adding or removing covenants when circumstances affecting the owners have changed can be written into an amendment clause of the CC&Rs.
A condominium association’s CC&Rs usually can be amended by a majority or other percentage vote of the association members as set forth in the amendment clause. [Diamond Bar Development Corporation v. Superior Court of County of Los Angeles (1976) 60 CA3d 330]
Unlawful restrictive covenants can be removed from title under a program available through the California Department of Fair Employment and Housing (DFEH).
The DFEH’s Restrictive Covenant Identification Service (RCIS) reviews deeds, declarations and CC&Rs sent to them by owners and owner’s associations to determine if they contain unlawful restrictive covenants, such as those based on race, color, religion, sex, familial status, martial status, disability, national origin or ancestry.
Upon receiving an application with the document containing the restrictive covenant, the DFEH reviews the language in the document. The DFEH then issues a written determination as to whether the identified language violates fair housing laws.
If the DFEH determines the language constitutes an unlawful restrictive covenant, the property owner may strike out the illegal language and record the modified document with the county recorder.
However, the RCIS procedure is not available to owners of individual units in a common interest development (CID) since the CID must act on its own. The board of directors of a CID is required to act on its own to delete any unlawful restrictive covenants from its declarations and governing documents without first obtaining either the approval of their owners or the DFEH. [CC §1352.5]
Circumstances change CC&Rs
An owner sells property restricting the buyer’s use to residential purposes. Five years later, the property is bordered by a four lane highway and given commercial zoning by the city.
The new owner wants to develop the property for commercial use compatible with the surrounding area.
Can the new owner develop the property for commercial use regardless of the CC&Rs?
Yes! Due to changed circumstances in the area surrounding the restricted property, the restrictive covenant is no longer enforceable.
If conditions in the area near the property have changed so drastically that a covenant can no longer serve its intended purpose, it is unenforceable under the doctrine of changed conditions. [Key v. McCabe (1960) 54 C2d 736]
Now consider the owner of a lot subdivided and sold under CC&Rs which restrict the use of each lot to one single-family dwelling, and requires structures to be set back a minimum distance from the street.
The owner begins construction of a rental unit on his property.
A neighbor in the subdivision seeks to halt construction claiming the second house on the property violates the one-house restriction in the subdivision’s CC&Rs.
The owner claims the CC&Rs are unenforceable as many of the lots in the subdivision have second houses which already violate the set-back restriction.
Can the neighbor stop the owner from constructing the second house in violation of the CC&Rs?
No! Lack of enforcement against prior violations of the CC&Rs by other owners in the subdivision render the CC&Rs unenforceable. [Bryant v. Whitney (1918) 178 C 640]
Environmental restriction for personal benefit
A recorded covenant regarding hazardous materials made by an owner of property for the benefit of an individual, but not for the individual’s property, will run with the land provided:
· the property burdened by the covenant is described in the instrument containing the covenant;
· the covenant is necessary to protect human health and safety due to hazardous materials; and
· the instruments containing the covenant are recorded with the county recorder and include the words “Environmental Restriction” in the title. [CC §1471]