Property Law Developments—Joseph William Singer

Massachusetts statutes limit covenants to 30 years unless they provide for renewal for new periods of up to 20 years at a time. Mass. Gen. Laws ch. 184, §27. Because the language in the original grant did not provide for the possibility of renewal, the land use restriction in Berger v. 2 Wyndcliff, LLC, 2015 WL 1775527 (Mass. Land Ct. 2015), ceased to exist 30 years after the date of its creation. Although the covenants were amended to allow renewal, the court interpreted  the statute to prevent renewal if it was not provided for in the original document creating the covenant. Mass. Gen. Laws ch. 184, §27(b)(1).

The District of Columbia  passed legislation designed to prevent a grocery store owner from selling the property with a covenant that would have prevented the property from being used for grocery store purposes because this would deny residents in the neighborhood easy access to a grocery store. read article  The legislation is similar to the ruling of the New Jersey court in Davidson Bros, Inc. v. D. Katz & Sons, Inc., 643 A.2d 642 (N.J. Super. Ct. App. Div. 1994).

The Vermont Supreme Court has adopted the rule promoted by the Restatement (Third) of Property (Servitudes), §4.8(3), allowing the owner of a servient estate to relocate an easement if this does not reduce the utility of the easement to the owner of the dominant estate. Roy v. Woodstock Cmty. Trust, Inc., 94 A.3d 530 (Vt. 2014). The case concerned an underground easement for water lines.

The court also held that the dominant estate owner was entitled to build a housing complex and that this development did not exceed the scope of a right-of-way easement even though it had been originally used only by a church.

When a taking of property by eminent domain to build a highway bifurcated a parcel, one part became landlocked but obtained access to a public road by permission over neighboring property. When that permission ended many years later and the parcel became landlocked the owner sought an easement by necessity over the neighbor’s land but the court found the traditional requirements for such an easement to be lacking. Since the parcel had not become landlocked when severed from the neighboring land there was no basis for imposing an obligation on that neighbor to create an easement for access to the roads. Nor did the owner obtain a prescriptive easement because access to the land had been by permission. No claim was made for a constructive trust or easement by estoppel, alternative theories that might have been relevant if the owner of the servient estate had induced the owner of the landlocked parcel to invest in reliance on the easement. The implication of the case may be that the owner should have received a greater amount of just compensation at the time of the exercise of the eminent domain power given the landlocked nature of the property. Clifton v. Wilkinson, 748 S.E.2d 372 (Va. 2013).

The Massachusetts Land Court has held that no prescriptive easement can arise no matter how long a sewer pipe has traversed a neighbor’s property because the non permissive use was not “open and notorious” and there were no other indications that the pipe was there. 143-145 Nahant Rd, LLC v. Mastoras, (Mass. Land Ct. 2014), 2014 WL 2548094, 42 Mass. Lawyers Weekly 1879 (July 7, 2014). With no easement, the use was likely a trespass although that was a question on remand.

The Seventh Circuit found no deceptive conduct within the meaning of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) when a condo developer substantially changed the governing documents after the condo sales. Goldberg v. 401 North Wabash Venture LLC, 2014 WL 2579939 (7th Cir. 2014). The case concerned Trump Tower in Chicago which contains hundreds of residential condominium units and hundreds of hotel condominium units as well as substantial retail space and other facilities. The purchase agreement gave TrumpOrg the “right, in its sole and absolute discretion, to modify the Condominium Documents.” Writing for the three-judge panel and applying Illinois law, Judge Posner held that this clause was sufficient to immunize TrumpOrg from any claim of deceptive conduct. Thus the hotel condo owners had no rights when TrumpOrg “greatly curtailed the owners’ rights in the hotel facilities.” Nor did the conduct violate the statute governing condominiums.

The Massachusetts Supreme Judicial Court ruled in Martin v. Simmons Props., Inc., 2014 WL 128537 (Mass. 2014), that the servient estate owner is entitled to narrow an easement as long as this does not interfere with the uses for which the easement was initially created. The court applied the traditional rule that easements are encumbrances on land and to be construed narrowly. At the same time, the touchstone was the intention of the parties that created the easement, determined both by the language in the easement and the circumstances at the time of creation of the easement. Because the documents and plan creating the easement did not specify an exact width of the easement or require that it be kept open through its full extent, the easement owner was entitled only to such use as was needed to afford access to the dominant estate. The court also reaffirmed the traditional rule that nonuse of an easement is not sufficient to establish abandonment of it.

South Carolina joins the growing list of jurisdictions that bans transfer fee covenants. 2012 S.C. Acts 106, codified at S.C. Code §27-1-70.

The Rhode Island Supreme Court has held that an injunction can be granted to stop an owner from deliberately and knowingly violating a restrictive covenant. The traditional balancing of interests used to determine whether an injunction is appropriate need not be done when violation of a covenant is not inadvertent or unknowing. Cullen v. Tarini, 15 A.2d 968 (R.I. 2011). The court found that defendant knowingly violated a covenant that protected plaintiff’s view of the ocean. In such a case, plaintiff was entitled to an injunction to remove the offending structure despite the fact that defendant had already invested $1 million in the project.

In effect, the court treated servitudes as important property rights owned by the servitude beneficiary and found they cannot be violated simply by paying damages. The beneficiary has a right to enforcement without any need to show that the benefits of enforcement outweigh the costs. The court limited the relative hardship doctrine that balances the equities between the parties to situations where an innocent party proceeds without knowledge or notice that he is encroaching on another’s rights.

When a government took 14 units from a homeowners association by eminent domain, the remaining owners lost the dues and assessments that those owners would have contributed to the homeowners association. However, the Fifth Circuit has ruled that those lost assessments represent mere “contractual rights” that are not compensable under the takings clause as lost property rights even though they ran with the land. United States v. 0.073 Acres of Land, — F.3d —, 2013 WL 322242 (5th Cir. 2013). The court looked to Louisiana law to determine whether the assessments should be considered to be “property” rights and found that they were. However, it interpreted the case of United States v. General Motors Corp., 323 U.S. 373 (1945) to mean that loss of future profits from land is not compensable. The court acknowledged that it was adopting a minority view and that most courts have held that covenants are property within the meaning of the takings clause.

A Massachusetts court has held that owners of lots near the ocean had an implied easement of access to the beach because recorded plans drafted in 1892 showed an unenumerated lot with access to the ocean and the developer had advertised the lots as “Shore Lots” with a “Cool breeze all the time, good bathing, boating and fishing, nice beach, no undertow, shade trees on several of the lots.” Leahy v. Graveline, 82 Mass.App.Ct. 144, — N.E.2d —, 2012 WL 2819395 (Mass. Land Ct. 2012). The case represents an application of the recent decision in Reagan v. Brissey, 844 N.E.2d 672 (Mass. 2006) that similarly found implied rights to use open land depicted on a subdivision map.

The Supreme Judicial Court of the Commonwealth of Massachusetts has reaffirmed that even longstanding non-use of an easement will not extinguish it or cause it to lapse because of prescription. Cater v. Bednarek, — N.E.2d —, 462 Mass. 523 (Mass. 2012). To extinguish an easement by prescription requires acts inconsistent with the easement that put the easement owner on notice that its uses are being disrupted. Moreover, if the servient estate owner makes only part of an easement inaccessible, it is extinguished only as to that part but not the rest. In addition, the court held that, where a deed does not specify the dimensions of the easement, it must be interpreted to establish dimensions that are reasonably necessary for the enjoyment of the dominant estate; the easement is not limited to the purposes for which the dominant estate was used at the time the easement was created. Moreover, if the easement is for access to a public road, it must be interpreted to be wide enough to comply with applicable local regulations on minimum width of roads. Compare the result in this case to the ruling in Cox v. Glenbrook Co., 371 P.2d 647 (Nev. 1962), which interpreted an easement to be limited to one lane when that was the physical layout of the road at the time the easement was created even though such an easement was insufficient as an access road to the dominant estate which consisted of 80 acres.

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 the the case in Mazdabrook. Conversely, because the sign was on Khan’s own property, and not common property managed by the association, his interests were stronger. The ruling was premised on prior cases interpreting New Jersey’s free speech clause to apply to private actors on private property in at least some instances, a ruling at odds with the First Amendment which only applies to the federal government or “state actors” through the Fourteenth Amendment.

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.

Texas joined the other states that have passed statutes prohibiting real estate private transfer fees. 2011 Tex. Gen. Laws 211.

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.

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).

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.

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 passed in Arizona, Minnesota and Utah. 2010 Ariz. Sess. Laws 40; 2010 Minn. Laws 371; Utah Code § 57-1-46.

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 would have come to the same conclusion if the restriction were intended to preserve land for environmental purposes and the benefit of the covenant were held by a nonprofit environmental trust.

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 transfered 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.

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 affirmative easement to use the lot for park purposes. The plaza owner argued that the writing of the word “plaza” on the map was not sufficient to constitute an express oran implied easement limiting the uses to which the property could be put. In addition, the subdivision was created before it was common to create homeowner’s associations, so if the park lots are privately owned but subject to an appurtenant easement in all the neighbors, itis not clear how the parks will be maintained, who would pay for  that maintenance, or how disputes about their use would be resolved. The Appeals Court held that the writing on the map was insufficient to impose an easement on the property but the Supreme Judicial Court reversed.

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 limitingland to single-family or  duplex homes did not include the power to “revoke” them entirely by building four-unit housing.

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).