Schovee v. Mikolasko
356 Md. 93, 119 A.L.R. 5th 809, 737 A.2d 578 (1999)
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Rule of Law:
When a recorded Declaration of Covenants explicitly defines the property subject to its restrictions, a strong presumption arises that any land not included in that definition is not subject to the restrictions, and this presumption is not easily rebutted by extrinsic evidence such as oral representations by a sales agent.
Facts:
- J.J.M. Partnership (JJMP), a developer, recorded a subdivision plat for 'Chapel Woods II' showing 25 residential lots, including a 50-acre parcel designated as Lot 7.
- Contemporaneously, JJMP recorded a 'Declaration of Covenants, Easements, Conditions and Restrictions' for the development.
- This Declaration explicitly defined 'the Community' as 'Lot Nos. 1 through 5 (inclusive) and 8 through 25 (inclusive),' thereby excluding Lot 7 from its terms.
- The Declaration restricted lots within 'the Community' to a single detached residential structure.
- JJMP's sales agent represented to several prospective buyers, including the Schovees, that Lot 7 was part of the community, that the developer intended to build his own home there, and that it would not be further subdivided.
- The purchasers, including the Schovees, signed contracts of sale and deeds that specifically referenced the recorded Declaration, which excluded Lot 7.
- Years later, Eric Mikolasko, a principal of JJMP, initiated plans to subdivide the unrestricted Lot 7 into nine smaller lots for a new development called 'Chapel Woods III'.
Procedural Posture:
- Seven homeowners (Schovee, et al.) filed a complaint in the Circuit Court for Howard County (a trial court) against the developer, Mikolasko, seeking a declaratory judgment and injunction.
- The trial court found in favor of the homeowners, ruling that Lot 7 was subject to the development's restrictions under the doctrine of implied negative reciprocal easement.
- Mikolasko, as appellant, appealed the judgment to the Court of Special Appeals of Maryland (an intermediate appellate court).
- The Court of Special Appeals affirmed the judgment as to Lot 8 but reversed as to Lot 7, holding that the explicit exclusion of Lot 7 in the recorded Declaration was controlling.
- The homeowners, as petitioners, were granted certiorari by the Court of Appeals of Maryland (the state's highest court) to review the decision regarding Lot 7.
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Issue:
Does the doctrine of implied negative reciprocal easement subject a parcel of land to a development's restrictive covenants when that parcel was shown on the subdivision plat but was expressly excluded from the recorded Declaration of Covenants that defines the restricted community?
Opinions:
Majority - Wilner, J.
No. The doctrine of implied negative reciprocal easement does not subject Lot 7 to the development's restrictive covenants. When a developer uses a formal, recorded instrument like a Declaration to create restrictions and explicitly define the land subject to them, that instrument creates a strong presumption that only the land described is included. The Declaration, provided to all buyers and referenced in their deeds, unambiguously excluded Lot 7 by defining 'the Community' as consisting of other specific lots. While extrinsic evidence can be considered, the oral representations made by a sales agent were insufficient to rebut the clear, written terms of the governing legal documents, especially where the sales contracts contained an integration clause. The buyers had, at a minimum, constructive notice that Lot 7 was not part of the restricted community, and therefore could not have a reasonable expectation to the contrary.
Dissenting - Cathell, J.
Yes. The doctrine of implied negative reciprocal easement should apply here. The majority improperly substituted its own assessment of the evidence for that of the trial court, which found as a matter of fact that the developer intended to include Lot 7 in the common scheme. Evidence supporting this finding included showing prospective buyers a plat depicting 25 lots (which required including Lot 7) and the sales agent's consistent representations that Lot 7 was part of the community and would not be further developed. The developer's method of showing a 25-lot subdivision and then excluding one lot by omission in the fine print of a lengthy document is a 'bait and switch' tactic that the court should condemn.
Analysis:
This decision significantly strengthens the authority of explicit, recorded Declarations of Covenants in real estate development. It establishes that such a document is not merely one piece of evidence but is the primary and controlling indicator of a developer's intent, creating a strong presumption that is difficult to overcome. The ruling diminishes the legal weight of prior oral representations by sales agents, particularly when contradicted by clear written terms and integration clauses in sales contracts. This provides greater certainty and predictability for developers and purchasers by prioritizing the public record and written agreements over extrinsic evidence, thereby reinforcing the importance of due diligence by buyers in reviewing all title documents.
