Citizens for Covenant Compliance v. Anderson
12 Cal. 4th 345, 906 P.2d 1314, 47 Cal.Rptr.2d 898 (1995)
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Rule of Law:
If a declaration establishing a common plan for a subdivision, containing use restrictions, is recorded before the sale of any parcel, subsequent purchasers with constructive notice are bound by those restrictions even if they are not explicitly referenced in the property's deed.
Facts:
- In 1958, the developers of the Skywood Acres subdivision recorded a declaration of covenants, conditions, and restrictions (CC&Rs) limiting lots to residential use.
- Following the recordation, a lot in Skywood Acres was sold and, after several conveyances, was acquired by Jared and Anne Anderson.
- In 1977, the developer of the adjacent Friars subdivision recorded a similar declaration of CC&Rs limiting lots to single-family residential use and prohibiting commercial activities.
- Two days after the Friars declaration was recorded, a lot was sold that was eventually acquired by the Andersons at a foreclosure sale.
- No deed in the chain of title for either of the Andersons' properties made any reference to the recorded CC&Rs.
- The title insurance reports for both of the Andersons' properties identified the existence of the respective recorded CC&Rs.
- After purchasing the properties, the Andersons began operating a commercial winery and kept seven llamas on the land.
- Citizens for Covenant Compliance, an association of neighbors from both subdivisions, objected to the Andersons' activities as violations of the CC&Rs.
Procedural Posture:
- Citizens for Covenant Compliance sued Jared and Anne Anderson in the superior court (trial court) to enforce the CC&Rs.
- The superior court granted summary judgment for the Andersons, finding the CC&Rs unenforceable.
- Citizens (as appellants) appealed the judgment.
- The Court of Appeal (intermediate appellate court) affirmed the trial court's decision, holding that the restrictions were not enforceable because they were not referenced in any deed.
- The Supreme Court of California granted Citizens' petition for review.
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Issue:
Is a restrictive covenant contained in a declaration establishing a common plan for a subdivision enforceable against a subsequent purchaser whose deed does not reference the covenant, if the declaration was recorded prior to the sale of the property?
Opinions:
Majority - Arabian, J.
Yes. If a declaration establishing a common plan is recorded before the sale of any property, subsequent purchasers with constructive notice are deemed to agree to be bound by the restrictions, making them enforceable even if not cited in the deed. The court's reasoning departs from previous cases that required restrictions to be included in the written instruments exchanged between buyer and seller. The court held that the prior recordation of a uniform plan provides constructive notice to all subsequent purchasers. The act of purchasing the property with this knowledge is sufficient to imply the buyer's intent to accept the burdens and benefits of the common plan. This rule avoids the "crazy-quilt pattern of uses" that could result from inconsistent deeds and simplifies title searches by allowing purchasers to rely on a single recorded declaration. The court reasoned that this approach better serves public policy by promoting orderly development and fulfilling the reasonable expectations of the parties and the community.
Dissenting - Kennard, J.
No. A restrictive covenant cannot be enforced against a purchaser who receives an unrestricted grant deed, regardless of a previously recorded declaration. The majority's holding creates a "gaping hole" in established real property law by creating an agreement based on constructive intent rather than actual, mutual intent. California statutes, specifically Civil Code § 1105, presume that a grant deed conveys the grantor's entire fee simple interest unless the grant itself expresses a lesser estate. By allowing a prior declaration to encumber a property conveyed by an unrestricted deed, the majority's rule contravenes this statute and also forces subdividers to breach the implied covenant against encumbrances under Civil Code § 1113. Furthermore, a recorded declaration is not a "conveyance" or an "instrument" that creates a property interest under the recording statutes, and therefore cannot provide constructive notice. The new rule is a judicial usurpation of legislative power and its retroactive application unfairly impairs vested property rights.
Analysis:
This decision marked a significant shift in California property law by simplifying the creation of enforceable subdivision restrictions. It overruled a line of cases requiring a reference to restrictions within the deed, prioritizing the public policy of uniform and predictable planned communities over older, more formalistic requirements. By establishing that prior recordation of a common plan is sufficient to bind subsequent purchasers, the court made it easier for developers to create and for homeowners to enforce mutual servitudes. This ruling reduces the risk of inconsistent restrictions within a single development and streamlines the title-search process for prospective buyers.
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