Texas joins states prohibiting real estate transfer fees
Texas joined the other states that have passed statutes prohibiting real estate private transfer fees. 2011 Tex. Gen. Laws 211.
Servitudes
More states prohibit transfer fee covenants
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
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
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
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 …
Court affirms that restrictive covenants are not enforceable if held in gross
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
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
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).
Limitations placed on developer’s power to alter covenants
The Restatement (Third), § 6.21 provides: “A developer may not exercise a power to amend or modify the declaration in a way that would materially change the character of the development or the burdens on the existing community members unless the declaration fairly apprises purchasers that the power could be used for the kind of change proposed.” In North Country Villas Homeowners Ass’n v. Kokenge, 163 P.3d 1247 (Kan. Ct. App. 2007), the court adopted this Restatement rule, holding that a developer’s power to “amend” the covenants limiting land to single-family or duplex homes did not include the power to “revoke” them entirely by building four-unit housing.
Designation of land as “park” or “plaza” in recorded plat creates appurtenant easement in neighbors
A developer sold properties in a subdivision on the island of Martha’s Vineyard in Massachusetts, after recording a map of the area showing the lots and the streets. Three irregularly-shaped areas that wereabout five times the size of the lots on the map were labeled as”parks” and one was called a “plaza.” Those properties were never developed and remained wooded over the years. The lots were all sold but not in the manner envisioned on the map; many lots were grouped together so that the average parcel is now about the size of the parklots. Fifty years later, an owner of the “plaza” lot sought to sell it to an buyer who wanted to build a single-family home on it. The neighbors sued, arguing that the designation of the property as a plaza meant that they owned an negative easement prohibiting development of the lot for residential purposes and an …