Daily Development for Wednesday, September 29, 2004
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri firstname.lastname@example.org
SERVITUDES; RESTRICTIVE COVENANTS; AMENDMENT: Amendment of restrictive covenant must apply uniformly to all properties affected by the covenant unless approval of the amendment is unanimous.
Maatta v. Dead River Campers, Inc., 2004 WL 2098466 (Mich App. 9/21/04) http://www.michbar.org/opinions/appeals/2004/092104/24542.pdf
Plaintiffs owned several lots in a subdivision of recreational property. Most of the lots were developed with campsites or cabins. A provision of the CC&R’s restricted the lots to “single-family residential purposes and incidental recreational uses.” For almost 30 years, however, one of the lots had been used as a public access site, and was equipped with a concrete boat launch ramp, pit toilets and a parking lot. Apparently this “access lot” belonged to the owners’ association and the other lot owners welcomed the use, although the plaintiffs had had some bad experiences from the activity on this lot. When the plaintiffs attempted to get a resolution closing the access lot, the resolution failed in a shareholder vote.
Plaintiffs then sought to enforce the “single family” restriction against the lot, but the other owners responded by voting to amend the CC&R’s exempting the access lot from this restriction. The CC&R’s permitted amendments by a “supermajority,” (not unanimous) vote. Plaintiff, however, pressed on with its suit, claiming that an amendment to a restrictive covenant that did not apply uniformly to all affected lots required a unanimous vote of the owners affected by the CC&R’s, and that the “supermajority amendment” procedure provided for in the bylaws could not be used for this type of amendment.
The trial court found in favor of the amendment, but the Michigan Court of Appeals reversed, concluding that the established precedent (citing numerous cases from around the country, apparently collected in an ALR annotation) clearly held that parties holding lots in restricted subdivisions were entitled to expect that all burdened properties would be treated in the same way. Otherwise, the court pointed out, 51% of the owners (or whatever majority the Declaration required) could exempt themselves from any restrictions while leaving the rest of the owners still bound.
The court noted that the principle remained true even in subdivisions where not every lot was restricted in the same way. Even in this case, those bound by a given restriction were entitled to expect that no other lot similarly bound would get any special favors by vote of the association.
Comment 1: This is a very useful case making an important point. Note that the trial court had found that the “fairest” resolution here was to permit the community to continue to use the “public access” lot as it always had, concluding that, in context, the impact of the activity on the lot was not so awful as to amount to a nuisance or otherwise violate another covenant prohibiting “offensive” or “annoying” activities. The case clearly adopts a “property rights” vs. “communitarian” view of the situation, and in doing so, it appears to be on solid ground in the precedent.
Comment 2: The editor is somewhat puzzled as to why the defendants did not raise some sort of waiver notion or even a prescriptive use claim, as the use in question apparently had been going on since the mid-1970's.
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