Servitudes

Homeowners’ Association sign regulations violate free speech rights under state constitution

/ Consumer Protection, Real Estate Transactions, Servitudes

The Supreme Court of New Jersey held in Mazdabrook Commons Homeowners’ Ass’n v. Khan, — A.3d —, 2012 WL 2120868 (N.J. 2012), that the free speech clause of the state constitution guarantees the right to post political signs on one’s property and that any covenants or rules of a homeowners association to the contrary are unenforceable. The owner in this case posted a sign inside the window of his townhouse and a second sign inside his door. Those signs supported his own candidacy for town council. The Association’s rules banned all signs other than “for sale signs.” The court distinguished its earlier ruling in Committee for a Better Twin Rivers v. Twin Rivers Homeowners’ Ass’n, 929 A.2d 1060 (N.J. 2007), which upheld minor restrictions on sign placement by property owners who were members of the association and did not involve an election to a state or local public office as was …

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Covenants no longer strictly construed to reduce encumbrances on land but are now interpreted to achieve the intent of the parties

/ Consumer Protection, Real Estate Transactions, Servitudes

A New Mexico Appeals Court joined the modern trend in rejecting the interpretive rule that covenants should be narrowly construed, instead adopting the modern approach of interpreting the grant to achieve the grantor’s intent. Agua Fria Save The Open Space Ass’n v. Rowe, 255 P.3d 390 (N.M. 2011). When the language of the grant is unclear, “evidence of the circumstances surrounding the making of the contract and of any relevant usage of trade, course of dealing, and course of performance” is relevant in interpreting the government documents. 255 P.2d at 395.

More states prohibit transfer fee covenants

/ Consumer Protection, Real Estate Transactions, Restraints on Alienation, Servitudes, Title Issues

Idaho, Indiana, Mississippi and Montana have all passed statutes prohibiting enforcement of any transfer fee covenants entered into after the dates the legislation goes into effect. See 2011 Idaho Sess. Laws 107; 2011 Ind. Acts 136; 2010 Miss. Gen. Laws 348; 2011 Mont. Laws 259. Transfer fee covenants are promises inserted in deeds to pay a fee to the original seller of the property any time it is sold in the future. Such fees were abolished in New York State in 1852 in the case of DePeyster v. Michael, 6 N.Y. 467 (1852) as a vestige of feudalism.

Washington Supreme Court adopts relative hardship doctrine and refuses to order a house removed when it was unwittingly built on land owned by another

/ Easements, Servitudes, Statute of Frauds, Trespass

Defendants unknowingly built their house on land that belonged to the plaintiff who also did not know that the land belonged to him. The mistake was discovered after the house was built and plaintiff sued to eject the trespassers from his land. The Washington Supreme Court denied injunctive relief, adopting the relative hardship doctrine. The court granted plaintiff damages for the value of the land encroached on by his neighbor’s structure but denied plaintiff an injunction ordering the structure removed. Proctor v. Huntington, 238 P.3d 1117 (Wash. 2010).

Private road act authorizing an easement by necessity across neighboring land deemed a taking of property and a violation of the public use requirement

/ Servitudes, Takings

The Pennsylvania Supreme Court ruled, in In re Opening Private Road ex rel. O’Reilly, 5 A.3d 246 (Pa. 2010), that a statute authorizing an owner to construct a road across neighboring property to get to a public road effected an unconstitutional taking of property. Read minority opinion. The court distinguished the common law doctrine of easement by necessity that grants owners rights of way by necessity over remaining land of a common grantor, finding that doctrine to be constitutional. The court further ruled that such a taking was for a private purpose unless the predominant beneficiary of the taking would be the public.

Increasing regulation of transfer fee covenants

/ Estates and Future Interests, Servitudes

More and more states are passing statutes prohibiting “transfer fee covenants” which purport to require owners of property to pay a portion of the sales price (or a fixed amount) to the original developer whenever the property is sold. Such provisions were held to be unenforceable restraints on alienation in the 1852 New York Court of Appeals case De Peyster v. Michael, 6 N.Y. 467 (1852), a case that is apparently not well known to those peddling these covenants today. De Peyster involved a “quarter sale” clause that required one-fourth of the sale price to go to the heirs of the van Rensselaer family. The court found the arrangement to be a vestige of feudalism akin to quitrents paid to a lord and held that such property relationships had been outlawed in New York by both statute and common law. Recent statutes prohibiting transfer fee covenants (at least prospectively) were …

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Court affirms that restrictive covenants are not enforceable if held in gross

/ Servitudes

A Washington appeals court has affirmed the traditional rule that the benefit of a covenant cannot be held in gross. In Lakewood Racquet Club, Inc. v. Jensen, 232 P.3d 1147 (Wash. Ct. App. 2010), a donor sold 10 acres of land for use as a tennis, swimming, and squash club and prohibited the land from being used for residential purposes without the consent of the grantor or his heirs. But after all the grantor’s remaining land was sold and the grantor died, the owner of the servient estate sought to build single-family homes on the land. When the heirs of the grantor objected, the servient estate owner sued to have the covenant declared void. Although the trial court held for the heirs, enforcing the covenant, the appeals court reversed on the ground the land should be free for development unless restrictive covenants benefit nearby land. It is unclear whether the court …

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Court reaffirms that appurtenant easements cannot be severed from the dominant estate

/ Servitudes

A court reaffirmed a traditional rule of property law in a little litigated issue, holding that an appurtenant easement attached to a dominant estate and intended to benefit the owner of that land cannot be severed and transferred to someone who is not an owner of property intended to be benefited by the easement. Rosen v. Keeler, 2010 WL 288997  (N.J. Super. Ct. App. Div. 2010). The case is significant because recent changes in real property law have increased the powers of owners to invent new kinds of property rights and to  disentangle the strands in the bundle of rights that goes along with ownership. This ruling reaffirms the traditional view that certain packages of rights must go together and cannot be disaggregated among multiple  owners. See article.

Restraints on alienation

/ Restraints on Alienation, Servitudes

A Connecticut trial court held a right of first refusal invalid as an unreasonable restraint on alienation when it could be exercised either by the homeowners association or by any individual homeowner when there was no mechanism to determine who could exercise the right if more than one person sought to buy the property. Gilbert v. Beaver Dam Ass’n of Stratford, 2002 Conn. Super. LEXIS 2765 (Super Ct. 2002).

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