Ritchie Phillips v. Mark Hatfield
E2019-00628-SC-R11-CV (Tenn. 2021) (2021)
Rule of Law:
A grantor cannot impose restrictive covenants on land they no longer own simply by recording a declaration purporting to cover that land. The doctrine of implied negative reciprocal easements does not apply retroactively to impose restrictions on property that a common grantor no longer owned at the time the restrictions were created, nor does subsequent re-acquisition by the grantor trigger such a retroactive imposition.
Facts:
- J.C. and Mary Virginia Chambers (the Chambers) platted the Sunnybrook Addition subdivision in 1953.
- Over the course of 1953 and 1954, the Chambers sold sixty-seven of the seventy-nine lots in Sunnybrook Addition, including all of the lots eventually purchased by Mark Hatfield and Ritchie and Roma Phillips.
- The deeds conveying the vast majority of these lots, including those for the parties' lots, contained "Original Restrictive Covenants" that limited property use to residential purposes for a period of twenty years.
- On May 3, 1955, the Chambers recorded "1955 Restrictive Covenants" that purported to cover all lots in Sunnybrook Addition, designated all lots as residential, and contained no time limit for renewal.
- In 1956, the Chambers reacquired two of the lots (lots one and two) that would eventually be owned by Mark Hatfield, after having initially sold them in 1953.
- Mark Hatfield purchased his lots (lots one, two, three, and a portion of lot four) in late 2016 and early 2017.
- Mark Hatfield proposed to raze an existing structure, construct a new building and parking lot, and open a retail business (Intimate Treasures) on his property.
- Ritchie and Roma Phillips own adjacent property in Sunnybrook Addition, sharing a property line with a portion of Mark Hatfield's property, and reside in a home on their property.
Procedural Posture:
- Ritchie and Roma Phillips (Plaintiffs) filed a declaratory judgment action in the Chancery Court for Sullivan County, seeking an injunction to prohibit Mark Hatfield's (Defendant) proposed commercial use, arguing the 1955 Restrictive Covenants applied.
- The Chancery Court (trial court) enjoined Mark Hatfield's proposed commercial use, concluding his property was subject to an implied negative reciprocal easement through the 1955 Restrictive Covenants.
- Mark Hatfield appealed the Chancery Court's decision to the Court of Appeals.
- The Court of Appeals affirmed the trial court's finding, concluding that an implied reciprocal negative easement existed and the Defendant’s lots were subject to the residential-use restriction.
- Mark Hatfield (Appellant) filed an application for permission to appeal to the Supreme Court of Tennessee, which was granted.
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Issue:
Does a declaration of restrictive covenants, recorded by developers after they have sold the lots in question, apply to those lots, either directly or through the doctrine of implied negative reciprocal easements, thereby restricting the property's use?
Opinions:
Majority - Jeffrey S. Bivins, C.J.
No, a declaration of restrictive covenants recorded by developers after they sold the lots in question does not apply to those lots, either directly or through an implied negative reciprocal easement, because the developers lacked ownership authority at the time of recording, and subsequent re-acquisition does not retroactively impose restrictions. Tennessee law disfavors restrictive covenants as they derogate the fundamental right to free use and enjoyment of property, requiring strict construction and resolution of any doubt against the restriction. To effectively create a servitude that runs with the land, the grantor must own the servient estate at the time the covenant is imposed. Here, the Chambers did not own Mark Hatfield's lots when they recorded the 1955 Restrictive Covenants, therefore lacking the authority to burden them. General language in subsequent deeds (including the Defendant's) making the conveyance "subject to valid restrictive covenants . . . appearing of record" is insufficient to establish intent to apply the unnamed 1955 Restrictive Covenants, which did not appear in the property's chain of title. Furthermore, the doctrine of implied negative reciprocal easements is not retroactive; it must attach while the property is held by a common grantor selling other lots with beneficial restrictions. By the time the Chambers recorded the 1955 Covenants, they were no longer acting as the common grantor for the parties' properties, having already conveyed those lots. Applying the 1955 Covenants under this doctrine would constitute a retroactive imposition, contrary to established principles (citing Sanborn v. McLean and E. Sevier Cnty. Util. Dist. v. Wachovia Bank & Trust Co.). The Chambers' reacquisition of lots one and two in 1956, after recording the 1955 Covenants, did not retroactively trigger the imposition of these restrictions, as they acquired the lots as any other purchaser, and no new restrictions were placed on record at that time. Therefore, the 1955 Restrictive Covenants do not apply to Mark Hatfield’s property.
Analysis:
This case significantly reinforces the foundational principle that a grantor must possess ownership of a property to validly impose restrictive covenants upon it, emphasizing that such restrictions are strictly construed against encumbrance. It clarifies the non-retroactive nature of implied negative reciprocal easements, stressing that a general plan of development must be in effect and enforced at the time of conveyance from the common grantor. The ruling limits the ability of developers to impose new restrictions on previously sold lots, even if those lots are later reacquired, absent explicit new covenants, thereby promoting clarity in land titles and the free use of property, making it more challenging to retroactively burden land.
