Daily Development for Friday, February 18, 2005
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

SERVITUDES; COVENANTS; RESRICTIVE COVENANTS; “RESIDENTIAL USE ONLY:”  A restrictive covenant prohibiting “manufactory, trade or business of any kind” did not prohibit a property owner from engaging in certain business activities on his premises.

9394 LLC v. Farris, 782 N.Y.S.2d 281 (A.D. 2 Dept. 2004).

Plaintiffs alleged that by using and listing his property as a corporate headquarters for his business, the defendant violated a restrictive covenant affecting the property.  The defendant argued that the premises was only for telphone, fax, e-mail and office administration.

Held: Despite the literal indisputable fact that the use in question was for a business, the court found no violation of the covenant.  As the defendant pointed out, the uses in question did not create or cause any traffic whatsoever.  All activity occurred within the privacy of the home and would not be readily discernible to the other residents in the area.

 In looking to the original intent of the covenant, the court held that it would be unreasonable to preclude the defendant from engaging in these types of incidental business activities that occur within the privacy of his own home and are not readily discernible to the other residents.

Comment 1: On the question of construing uses under “residential use only” clauses consistent with the probable impact on neighbors, see, Turudic v. Susan Estates Homeowners Association, 31 P.3d 465 (Or.App. 2001). (the DIRT DD for 2/18/05) Keeping of pet cougars was a "residential use" within meaning of covenants; and discretionary authority of association review for construction of cougar pen  was limited to aesthetic or design requirements; (Persson-Mokvist v. Anderson, 942 P.2d 1154 (Alaska 1997) (the DIRT DD for 3//25/98) Use of property as bed and breakfast is permitted under a "residential only" restriction, as such use is  incidental to residential use.

Comment 2: On the question of homespun businesses, see Gabriel v. Cazier, 938 P.2d 1209 (Idaho 1997) (the DIRT DD for 12/21/97). (A covenant prohibiting "business or trade" activity in a subdivision does not prohibit swimming lessons conducted by a homeowner's children for profit during the summer months.)

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