Thursday, July 14, 2011

Challenging Restrictive Covenant prohibiting non-residental use of property


When does restrictive covenant governing land-use become unenforceable or can otherwise be avoided?

It has long been the law in this State that a court may nullify or void a restrictive covenant limiting property use to residential only when the party seeking to nullify or modify the restriction proves either: (1) the property owners have acquiesced in violations of the residential restriction so as to amount to an abandonment of the covenant or a waiver of the right to enforce it; or (2) as is pertinent in this case, there has been “such a change of conditions in the restricted area or surrounding it that it is no longer possible to secure in a substantial degree the benefits sought to be realized through the covenant.”  Cowling v. Colligan, 158 Tex. 458, 312 S.W.2d 943, 945 (1958).  
To justify voiding a residential restriction based on changed circumstances or conditions, the courts, including this one, have held the changed conditions must be “radical.”  Simon v. Henrichson, 394 S.W.2d 249, 254 (Tex. Civ. App.—Corpus Christi 1965, writ ref’d n.r.e.); Lebo v. Johnson, 349 S.W.2d 744, 749-750 (Tex. Civ. App.—San Antonio 1961, writ ref’d n.r.e.); Hemphill v. Cayce, 197 S.W.2d 137, 141 (Tex. Civ. App.—Fort Worth 1946, no writ); see Cowling, 321 S.W.2d at 945 (change of conditions must be “great”).  
In considering whether such a “radical” change has occurred, courts look to: (1) the size of the restricted area; (2) the location of the restricted area with respect to where the change has occurred; (3) the type of change or changes that have occurred; (4) the character and conduct of the parties or their predecessors in title; (5) the purpose of the restrictions; and (6) to some extent, the unexpired term of the restrictions.  Id.  Greater weight is given to changes that occur within the subdivision than those occurring outside the restricted area.  Simon, 394 S.W.2d at 255 (citing Lebo, 349 S.W.2d at 750). 
Moreover, a court may not void or modify a residential restriction as to a particular lot solely on the ground that a change of conditions has rendered that particular lot unsuitable for residential purposes and it would be unfair to the lot owner to enforce the restriction. Cowling, 312 S.W.2d at 945.  Rather, the fairness to the owner of the particular lot is just “one facet of the judicial inquiry.”  Id.  The fairness to the lot owner must be weighed against the fairness to the other lot owners who bought the property in reliance on the restriction and wish to preserve the character of the area.  Id. 
As stated by this court in Lebo
In every growing city it is inevitable that sooner or later commercial and business areas must come face to face with residential areas, and it is then that the restrictions are most valuable to the interior lot owners.  It is when the outer tier of lots becomes more valuable for commercial and business purposes that the restrictions come into play and prevent the residential area from being taken over by commercial establishments. 
*    *     *
The front tier lots must bear the brunt of the onslaughts of business and commerce, otherwise there would be started a system of gradual encroachment that might swallow up the entire residential area.  The other tiers of lots might fall like ten pins, once the encroachment of commerce and business was begun.  One of the best places to hold the encroachment of business and commerce upon a restricted residential area is at a highway or street. 
349 S.W.2d at 751; see also Scaling v. Sutton, 167 S.W.2d 275, 281 (Tex. Civ. App.—Fort Worth 1942, writ ref’d w.o.m.) (recognizing domino effect if single lot owner allowed to violate residential restriction); Bethea v. Lockhart, 127 S.W.2d 1029, 1033 (Tex. App.—San Antonio 1939, writ ref’d) (same). 
Additionally, Texas courts have recognized a landowner cannot rely on “changed conditions” that have already occurred by the time he acquires the property.  Seee.g.Oldfield v. City of Houston, 15 S.W.3d 219, 228 (Tex. App.—Houston [14th Dist.] 2000, pet. denied), superseded by statute on other grounds as recognized in Truong v. City of Houston, 99 S.W.3d 204 (Tex. App.—Houston [1st Dist.] 2002, no pet.); Traeger v. Lorenz, 749 S.W.2d 249, 250 (Tex. App.—San Antonio 1988, no writ) (citing Lebo, 349 S.W.2d at 750); Ortiz v. Jeter, 479 S.W.2d 752, 758 (Tex. App.—San Antonio 1972, writ ref’d n.r.e.); Davis v. Hinton, 374 S.W.2d 723, 728 (Tex. Civ. App.—Tyler 1964, writ ref’d n.r.e.). 
SOURCE: San Antonio Court of Appeals - 04-10-00725-CV – 7/13/11  

RELATED LEGAL TERMS: land use regulations, deed restrictions, zoning, enforceability of restrictive covenants

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