Riley v. Bear Creek Planning Committee

Brief Fact Summary. A couple attempted to make improvements to their property in violation of a development restriction that was made after the couple purchased their land.

Synopsis of Rule of Law. A restriction that is not recorded at the time of the purchase will not be enforceable against the purchaser, even if the purchaser orally promised to be bound by the restrictions.

Facts. The Rileys (Plaintiffs) bought real property in a subdivision on February 26, 1964. The deed contained no restrictions on the use of the property. Nine months after the purchase, the grantor, Bear Creek Planning Committee (Defendants) recorded a document that declared covenants, conditions and restrictions on all the lots in the subdivision. One of the restrictions prohibited adding new structures without approval of Defendants. Plaintiffs constructed a snow tunnel on their lot and Defendants claimed it to be a violation.

Issue. When a lot is purchased with an unrestricted deed and there are no references to restrictions in the chain of title, can the doctrine of implied reciprocal negative servitudes be applied to the unrestricted lot?

Held. No. Judgment affirmed.
There is no privity of contract between Defendants and Plaintiffs. Defendants, then, are trying to enforce the use restrictions on mutual equitable servitudes. But, the deed does not refer to a common plan of restrictions and does not indicate any agreement between the grantor and grantee that the lot conveyed is subject to such a plan.
The intent of both the grantor and grantee in the deed will govern. A deed is construed at the time that it is given. If, after the deed is created, the grantor attempts to create a common scheme, the rights in the deed will not be varied. It does not matter that the grantee may have understood the restrictions because they were not incorporated into the deed, which evidences the final understanding of the parties.
Extrinsic evidence will not be allowed to show the intent of either party.

Dissent. Plaintiffs took their deed with the understanding that the lot was subject to valid restrictions. Plaintiffs thus purchased the land with actual knowledge of the restrictions, and those restrictions increased the value of Plaintiffs lot because all the other property owners in the subdivision are bound by them. Plaintiffs should not be allowed to ignore the restrictions, and the extrinsic evidence should be admitted to establish the existence of the restrictions.

Discussion. If restrictions to a subdivision are recorded after a deed has already been given to a purchaser, those restrictions will not be enforceable against the purchaser, even if the purchaser may have had notice of them.