In Coyne et al. v. Grigg Family et al., lot owners within a subdivision in Richland, Washington, sued other lot owners, including the City of West Richland, for violations of restrictive covenants applicable to the subdivision. Specifically, the lot owners challenged the commercial uses of lots within the subdivision—one for a hardware store and another for a community park and garden and storm drainage—which violated the restrictive covenants that provided that “all lots in said plat…shall be known and be described as residential lots.” The restrictive covenants also provided specific rules regulating residential structures in the subdivision.
None of the parties disputed that the covenant was clearly intended to require that all lots within the subdivision be fairly described as residential. The City and the other landowner proposing a hardware store, however, argued that their uses were consistent with the covenant because the residential nature of the lots were not undermined.
With respect to the hardware store, the owner argued that the lots are still capable of supporting future residential structures when the commercial buildings are taken down. From their perspective, the covenant should be construed in favor of the free use of land, consistent with the modern standard of covenant interpretation.
The court first clarified that the “free use of land” interpretation is no longer applicable. Today, when interpreting application of a restrictive covenant to a successor in interest, the court applies a “liberal interpretation” that would “protect all property owners’ interests.” Under this interpretative scheme, the court could not construe the covenant to allow for commercial buildings such as a hardware store and parking. Under the owner’s proposed interpretation, the “residential” restriction in the covenant could theoretically allow for any type of building or lot, so long as that site could be remediated in the future and allow for residential use. Effectively, the “residential” covenant would provide little to no value to homeowners that purchased lots within the subdivision expecting purely residential lots. Moreover, the court noted that the residential structure regulations within the covenants would unfairly regulate residential structures while permitting commercial structures without limitation.
With respect to the City’s lot, the court found that the activities—storm drainage, community park, and community garden—were consistent with a residential character designation. Although the City charges a fee for use of its community garden, the residential character of the lot is not changed. In the court’s view, “nothing about the City’s current use of [the lot] causes a strained reading of the covenant or runs counter to the collective interests of the other lot owners.”
The case clarifies the standard of review for a court interpreting a covenant as applied to a specific subdivision. Though, admittedly, the facts in this case are relatively straightforward, and thus, the result is fairly reasonable and somewhat obvious.
Consider, however, that in the next case regarding covenants, with a more difficult set of circumstances, it isn’t entirely clear how this court would construe this restrictive covenant. For instance, notwithstanding development concerns, had the City installed a stormwater facility on the lot, which involved some additional noise, maybe odors, but definitely not a residential structure—would that preserve the residential character of the neighborhood? Under the court’s reasoning, a stormwater facility is not entirely inconsistent with a residential character designation, but that use is certainly more intensive than a garden and park.
Moreover, whether it’s a park, a garden, a stormwater facility, or maybe a library drop-off center–by construing these things as “residential in character,” the court is still permitting uses that are clearly not “residential structures” and with the covenant’s regulations on “residential structures” alone, they are allowing for non-residential uses and structures to the detriment of residential ones. That is precisely the reason they did not permit the commercial hardware store.
As with many interpretative models, the restrictive covenant review is not full-proof. But we know that restrictive covenants will start from the perspective of interpreting in favor of the lot owners’ interests, not just the specific lot at issue. The interpretative standard mirrors the purpose of the covenant: to protect the rights and interests of all lot owners in a subdivision.
Armand Resto-Spotts is an attorney at Jordan Ramis PC who focuses his practice on land use, real estate, and environmental law. If you have questions regarding covenants, easements, or other land use controls on property, please contact Armand at email@example.com or (360) 567-3900.
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