Daily Development for
Tuesday, April 15, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

SERVITUDES; COVENANTS; ARCHITECTURAL CONTROL: Failure to form an architectural review committee may bar residential subdivision residents from enforcing restriction requiring that new construction must be "harmonious" with balance of homes developed in subdivision.

Stuart v. Flemming, Dock. No. 104957 (Mich. Sup. Ct. 4/1/97)

In 1967, Developer built Lincoln Green, a twelve lot subdivision. The subdivision restrictions provided that any construction in the subdivision must meet the approval of an architectural committee, and that this committee consisted of the developer until the developer transferred its authority to an association, provided that the lot owners could require the developer to transfer its rights to an association when all the lots had been sold. In discussing the power of the committee, the declaration provided:

"The committee shall have the right to refuse to approve any . . . plans which are not suitable or desirable in its opinion for aesthetic or other reasons. In so passing upon such plans . . . it shall have the right to take into consideration suitability of the proposed buildings . . . upon [sic] the site upon which it is proposed to erect the same, the harmony thereof with the surroundings and the effect of the building . . . on the outlook from adjacent or neighboring property. It is understood that the purpose of this paragraph is to cause the subdivision to develop into a beautifully, harmonious, private residence section and that the Architectural Control committee shall not be arbitrary in its decisions."

The subdivision built out in seven years, and all the home were a traditional colonial design, with horizontal siding, pitched roofs, brick facades and double hung windows. No architectural review committee was ever appointed (other than the developer), although it is not clear from the case whether an association ever was formed.

In the late 1980's, another developer proposed a condominium project for a site abutting the Lincoln Green subdivision, and in the political wrangling associated with that proposal, the developer of the condominium agreed to "split off" a building lot from his proposal, apparently to provide a "buffer" for Lincoln Green. The developer agreed that this lot would be zoned single family and would be subject to the Lincoln Green declaration. At a public meeting discussing the compromise, the developer announced that he had a buyer and designer for the house on this property. Some Lincoln Green homeowners attended that meeting.

In fact, the owners of the new parcel did have notice of the restriction, but did not introduce their building plans until 1991, when they sought to identify the relevant homes association for approval of a plan. The proposed home was starkly modern, with no roof overhang, vertical siding, and curved corners with glass block features. The city planning department had no record of a homes association for Lincoln Green, and referred the lot owners to another nearby association, which did approve the plan. The lot owners never contacted the original Lincoln Green developer, apparently under the assumption that he had transferred his rights to this other association.

Shortly after the owners began clearing the site, however, they heard from a lawyer representing landowners in Lincoln Green, who objected to the clashing architectural style. Eventually the Lincoln Green owners sought an injunction barring the construction.

The trial court refused to grant the injunction, primarily because the standards of "beautifully, harmonious" was too vague to be enforced. The Court of Appeals reversed and remanded, with a dissenter who agreed that the standard was not too vague, but who nevertheless felt that only an architectural committee could enforce the standard, and that none had been formed. The other member of the Court of Appeals panel felt that individual homeowners had the right to enforce the standards.

On appeal to the Michigan Supreme Court: held: Reversed: The Supreme Court did not comment on the clarity of the standards, but appeared to hold that the only way the standard could be enforced was through review by an architectural review committee. It did not comment upon the fact that the lot owners had never contacted the developer, but appeared to hold the homeowners responsible for the fact that the lot owner had been unable to identify the proper committee. Some of the homeowners were aware of the fact that a new house was proposed for construction on the new lot, and nevertheless took no action to contact the lot owners until the lot owner had already proceeded with plans.

Comment 1: Although the court does not actually use the terms "laches" or "estoppel," these seem to be the real basis for the decision. But the express basis is different - it is that the homeowners had no power to enforce the architectural rights here because they had not formed an association. The editor has problems with both conclusions.

Comment 2: The concept of laches is that someone has suffered an equitable injury due to an unjustified delay by another in asserting rights. There is no strong evidence of significant equitable injury. Remember that it took four years for the landowner to get around to revealing his building plans. Prior to that, the landowner sufferred no disadvantage, and the landowners made their interest known during the lot clearing stage, before the landowner actually had begun construction.

Although it is true that some landowners had some knowledge as to the probability of construction on the new lot, clearly this knowledge was somewhat indefinite. Further, it is unclear why the failure to form either an association or a committee was an equitable wrong. The declaration permitted the landowners as a whole to function as the "committee." The requirement that there be a separate entity to whom the developer had to transfer the review rights may have had a marginal impact on the proponent of the new home, but since the proponent in fact never contacted anyone in the neighborhood at all, it is difficult to say that the mere failure to form the association or the committee really injured the proponent.

The real equitable injury lay in the fact that the city, without any real foundation, told the landowner that some other association had the say over architectural issues. In the editor's experience, it is common for neighborhood planning offices to be very sloppy about such matters as jurisdiction and even existence of neighborhood groups. They tend to be focussed on funded "neighborhood action" groups, rather than associations created by declaration. In any event, the landowner in question, or his lawyer, should have been able to identify that the declaration in question created special rights in the owners of twelve lots, and minimal care would have dictated contacted one of those owners.

The other homeowners were not careless. The proponent probably was. The delay was short. Where is the basis for laches?

Comment 3: As indicated above, where twelve homeowners have the right as a group to form an architectural committee "of the whole," the editor cannot understand why a court would conclude that these same homeowners would lack the right to enjoin building before the builder has sought their review and approval. And if they already have had the opportunity to review, and have concluded that the propose building lacks merit, then why should a court ignore that judgment, under the special circumstances here? Remember that a comporomise of an earlier land use dispute, remember, created an anomalous situation.

Comment 4: It is true that one might argue that the original developer had the sole right of architectural approval prior to a formal "handover" to the homeowners. But the proponent landowner never sought out the developer either, apparently, so it is difficult to argue that it had a strong equitable case.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Walter at the ABA. (312) 988 5260 or stacywalter@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.