Adjacency and Common Conveyor Insufficient to Imply Inclusion in a Restrictive Covenant

by Eric Christianson

Walters v. Colford
Nebraska Supreme Court, July 28, 2017

The Adamy subdivision was platted and dedicated in 1976. It contains 14 lots created from a 16.5 acre section of Daniel Adamy’s much larger property. When the founding documents were filed with the Butler County register of deeds, the plat and dedication included restrictive covenants. These covenants, among other things, limited the structures on the lots to one single-family, two-story house and one two- or three-car garage.

In 2013, the Colfords purchased 5 acres of property from Adamy adjacent to the pre-existing subdivision. When Adamy sold the property to the Colfords, the property was not subject to any restrictive covenants. After the sale, Adamy and Colford negotiated and agreed to new restrictions, which were different from those in place on the Adamy subdivision.

The Colfords constructed a large metal building on the property to store building materials to build a house on the property. Residents of the Adamy subdivision brought suit against the Colfords claiming that they had violated the subdivisions restrictive covenants.

They argue that the Colford property is subject to the subdivision’s covenant restrictions through the doctrine of implied reciprocal negative servitudes. This doctrine allows for restrictive covenants (i. e. reciprocal negative servitudes) to be applied to a specific piece of property in certain cases, even if the covenant was not recorded on that property. This principle has generally been used by the courts to apply covenant restrictions when all parties understood there to be a covenant in place, but it was not properly recorded.

The Court summarized the six factors that must be present for an implied restrictive negative servitude:

(1) There is a common grantor of property who has a general plan or scheme of development for the property; (2) the common grantor conveys a significant number of parcels or lots in the development subject to servitudes (restrictive covenants) designed to mutually benefit the properties in the development and advance the plan of development; (3) it can be reasonably inferred, based on the common grantor’s conduct, representations, and implied representations, that the grantor intended the property against which the servitude is implied to be subject to the same servitudes imposed on all of the properties within the plan of development; (4) the property owner against whom the restriction is enforced has actual or constructive notice of the implied servitude; (5) the party seeking to enforce the restriction possesses an interest in property in the development that is subject to the servitude and has reasonably relied upon the representations or implied representations of the common grantor that other properties within the general scheme of development will be subject to the servitude; and (6) injustice can be avoided only by implying the servitude.

In this case, the Court found that the Colfords are not subject to the restrictive covenants in force in the Adamy subdivision. There is a common grantor of the property, and the property is adjacent to a number of properties subject to covenants; however, the grantor’s conduct did not indicate that he intended the property to be subject to the same covenant. In fact, he had negotiated a different set of restrictions to apply to the land. Further, although the Colfords were aware that a covenant was in place on the adjacent properties, they never had any reason to believe they would be subject to the same covenant. Finally, the residents of the subdivision have no reasonable expectation that adjacent property outside the subdivision will be restricted in the same way that their properties are.

The purpose of the doctrine of implied reciprocal negative servitudes is not to guarantee that additional land can be made to comply with restrictive covenants. Instead the doctrine has long functioned to remedy a procedural error by the conveyor of the property:

The doctrine of implied reciprocal negative servitudes functions as a gap-filler […] Where a property owner purchases a lot from a developer that is subject to a restrictive covenant in the individual lot deed, but where the developer subsequently conveys a lot within the development without a restriction in the deed, the doctrine steps in to fill the gap. It fills the gap in order to protect the other property owners’ reasonable expectations that all of the lots within the plan of development will be similarly restricted.

The Court explains further that this doctrine may be less commonly applied in the future. Today developers generally place restrictions on an entire development at once through executing and recording a declaration of restrictions. That was the case with the Adamy Subdivision. It is rarer today for properties to be restricted on a deed-by-deed bases as they are sold. This leaves less room for errors to be corrected or gaps to be filled.

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