Riley v. Bear Creek Planning Committee
17 Cal.3d 500, 551 P.2d 1213, 131 Cal. Rptr. 381 (1976)
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Rule of Law:
For an equitable servitude to be enforceable against a grantee, the restriction must be contained in the deed of conveyance or in a prior recorded instrument expressly referenced in the deed. A developer cannot retroactively burden a property with restrictions by recording a declaration after the conveyance is complete.
Facts:
- On February 26, 1964, Alpine Slopes Development Company conveyed Lot 101 to Ernest and Jewel Riley.
- The grant deed for Lot 101 contained no restrictions on the use of the property and made no reference to any other document containing restrictions.
- At the time of the conveyance to the Rileys, no document imposing restrictions on Lot 101 had been recorded.
- Nine months after the sale, on November 25, 1964, Alpine Slopes Development Company recorded a 'Declaration of Covenants, Conditions, Restrictions and Reservations' that purported to cover Lot 101.
- This Declaration required property owners to get approval from the Bear Creek Planning Committee before making any structural additions or alterations.
- At a later date, the Rileys constructed a snow tunnel on their lot without seeking or obtaining approval from the Bear Creek Planning Committee.
Procedural Posture:
- The Bear Creek Planning Committee recorded a 'Notice of Violation' against the Rileys' property.
- The Rileys filed a complaint in a California trial court to quiet title and for slander of title.
- The Bear Creek Planning Committee filed a cross-complaint for declaratory relief, seeking to enforce the restrictions.
- The trial court entered judgment for the Rileys, quieting title to their property and ruling that the extrinsic evidence of their knowledge was inadmissible.
- The Bear Creek Planning Committee, as appellant, appealed to the California Court of Appeal, Third Appellate District.
- The Court of Appeal affirmed the trial court's judgment in favor of the Rileys, who were the appellees.
- The Supreme Court of California granted a hearing to review the decision.
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Issue:
Does an equitable servitude burden a parcel of land when the restrictions are not contained in the purchaser's deed or any other recorded instrument at the time of conveyance, even if the developer subsequently records a declaration of restrictions for the subdivision?
Opinions:
Majority - The Court
No. An equitable servitude does not burden a property where the restrictions are neither in the grantee's deed nor in a recorded instrument at the time of conveyance. For mutual equitable servitudes to be created, they must be memorialized in the written instrument exchanged between the grantor and grantee at the time of the sale. The court reaffirmed the rule from Werner v. Graham, stating that the deed constitutes the final and exclusive memorial of the parties' intent regarding such restrictions. The court reasoned that this rule is supported not only by the parol evidence rule but also by the policies underlying the Statute of Frauds, which demands written evidence for real property agreements to ensure certainty of title and prevent fraud. Allowing extrinsic evidence of the parties' intent would introduce uncertainty and create a 'crazy-quilt pattern' of land uses, frustrating the expectations of property owners who rely on the public record. Therefore, a grantor loses the power to encumber land once it is sold, and a subsequently recorded declaration is ineffective against a prior grantee.
Dissenting - Tobriner, J.
Yes. An equitable servitude should be enforceable when a buyer takes a deed with actual knowledge of a general plan of restrictions and acts in conformity with those restrictions for years. The majority's rigid adherence to the outdated rule in Werner v. Graham produces an inequitable result and ignores modern contract interpretation principles established in cases like Masterson v. Sine. The dissent argues that the Werner rule was based on a strict application of the parol evidence rule that has since been abandoned in favor of ascertaining the true intent of the parties. The extrinsic evidence showing the Rileys' knowledge and their subsequent compliance with the restrictions (part performance) should be admissible to prove their agreement to be bound. Enforcing the restrictions would prevent fraud, not cause it, and would uphold the bargain that was understood by both the buyer and the seller.
Analysis:
This case solidifies a formalistic, bright-line rule for the creation of equitable servitudes in California, prioritizing the certainty of recorded land titles over evidence of the parties' actual intent. By upholding Werner v. Graham and grounding its rationale in the Statute of Frauds, the court insulates the creation of servitudes from the modern, more flexible parol evidence rule. This decision serves as a critical warning to subdivision developers to ensure that a declaration of restrictions is properly recorded before conveying the first lot. For subsequent purchasers and title insurers, it reinforces the primacy of the official written record in determining the encumbrances on a property.
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