Phillips v. Hatfield
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The Supreme Court reversed the decision of the court of appeals affirming the decision of the trial court enjoining Defendant's proposal to build a structure for the operation of a retail business, holding that restrictive covenants executed and recorded by the developers of a subdivision after they had sold the parties' lots did not apply to Defendant's property.
The developers in this case platted a subdivision and sold the majority of lots with time-limited restrictions against non-residential use stated in the deeds that conveyed the lots. The developers then recorded a declaration of non-time-limited restrictive covenants, including a restriction against non-residential use, purporting to apply to all lots in the subdivision. Years later, Defendant purchased lots and proposed a commercial use of the property. Plaintiffs brought a declaratory judgment action seeking to enforce the restriction against non-residential use. The trial court enjoined Defendant from constructing any retail business or commercial enterprise on his property. The Supreme Court reversed, holding (1) the developers lacked the authority to impose the declaration's restrictions as a servitude upon Defendant's property because they did not own the property when they executed and recorded those restrictive covenants; and (2) the developers' re-acquisition and re-sale of some of Defendant's lots after the recording of the declaration did not retroactively restrict Defendant's property through the declaration.
Court Description:
Authoring Judge: Chief Justice Jeffrey S. Bivins
Trial Court Judge: Chancellor E. G. Moody
The issue in this case is whether restrictive covenants executed and recorded by the developers of a subdivision after they had sold the parties’ lots apply to the Defendant’s property. The developers platted a subdivision and sold the vast majority of lots with time-limited restrictions against non-residential use expressly stated in the deeds that conveyed the lots. Thereafter, the developers recorded a declaration of more fulsome, non-time-limited restrictive covenants—including a restriction against non-residential use—that purported to apply to all lots in the subdivision. Decades later, well after the expiration of the time-limited deed restrictions, the Defendant purchased lots and proposed to build a structure for the operation of a retail business. The Plaintiffs, who reside in a home on lots adjacent to the Defendant’s property, brought a declaratory judgment action to enforce the non-time-limited restriction against non-residential use contained in the recorded declaration. The trial court enjoined the Defendant’s proposed commercial use, concluding that the Defendant’s property was—through the declaration—subject to an implied negative reciprocal easement that prohibited non-residential use. The Court of Appeals affirmed. We hold that the developers lacked the authority to impose the declaration’s restrictions upon the Defendant’s property because they did not own those lots when they executed and recorded the declaration. We further hold that the developers’ mere re-acquisition and re-sale of some of the Defendant’s lots after the recording of the declaration did not retroactively restrict the Defendant’s property through the declaration. Accordingly, we reverse the decision of the Court of Appeals.
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