Appel v. Presley Companies

Brief Fact Summary. Homeowners in a subdivision sue the developer, alleging he broke restrictive covenants.

Synopsis of Rule of Law. Provisions allowing for the amendment of restrictive covenants will be allowed, as long as the amendments are reasonable so as not to destroy the general plan or scheme of the development.

Facts. Presley Companies (Defendants) recorded restrictive covenants concerning a subdivision. The covenants regulated the land use, building type, quality and size of the residential single-family dwellings. The Appels (Plaintiffs) bought a home in a subdivision after representations were made about the subdivision and the purpose of the restrictive covenants, and they relied on these representations when they purchased the lot. After their purchase, the subdivision committee made amendments to the covenants, and townhouses were constructed on the lots. The restrictive covenants contained a provision that allowed for amendment of the covenants.

Issue. Can a subdivision committee make changes to restrictive covenants without the consent of landowners, if those changes are reasonable?

Held. Yes. Judgment reversed and remanded.
Provisions allowing amendment of subdivision restrictions are subject to a requirement of reasonableness. A clause in a restrictive covenant that allows a subdivision developer to make amendments to the restrictions is a valid clause as longs as it is exercised in a reasonable manner so as not to destroy the general scheme or plan of development.
Reasonableness includes a regard for the property rights of the people who bought the land in reliance on the restrictive covenants which applied at the time of their purchase.
Here, the clause in the restrictive covenants allowing for amendment is permissible. The trial court must decide if the amendments are reasonable.

Discussion. Even after real property is purchased, restrictive covenants may be changed by the seller, provided that those changes are reasonable and fit into the development scheme.