8.02 Covenants, Conditions, and Restrictions

• Library: South Carolina Community Association Law: Condominiums and Homeowners Associations (SCBar) (2019 Ed.)

8.02 Covenants, Conditions, and Restrictions

A. Generally

Restrictive covenants may be created by deed,¹⁴ declaration, or by implication from a general plan or scheme of development.¹⁵ Homeowners associations are typically subject to a document containing restrictive covenants that is sometimes called a declaration,¹⁶ but is more commonly called the "Covenants, Conditions, and Restrictions" (CC&Rs).¹⁷ A restrictive covenant is described as a promise to do or refrain from doing something on, or to, real property, and restrictive covenants can be either an affirmative or negative obligation.¹⁸

Typically, the CC&Rs are drafted by the developer of the community and recorded. For a homeowners association "for which there is a declaration requiring a person, by virtue of his ownership of a separate property within the planned community or horizontal property regime, to pay assessments for a share of real estate taxes, insurance premiums, maintenance, or improvement of, or services or other expenses related to, common elements and other real estate described in that declaration," governing documents — meaning a declaration, master deed, or bylaws, or any amendments to them¹⁹ — have to be recorded to be enforceable.²⁰

One South Carolina appellate judge explained that: "[r]estrictive covenants often authorize the creation of a homeowners' association, usually in the form of a not-for-profit corporation, and grant it authority to manage common areas, make regulations, levy assessments, and other similar privileges. Homeowners' associations are contractually limited by the restrictive covenants establishing them."²¹ These covenants, says the South Carolina Supreme Court, are enforceable by a successor-in-interest,²² if the covenanting parties intended that the covenants run with the land,²³ and they "touch and concern" the land.²⁴ Generally the benefit of a covenant meets the "touch and concern" requirement if the legal interest of the covenantee in land is rendered more valuable by performance of the covenant.²⁵ A party that seeks to enforce a covenant has to show it applies to the property either by its express language or by a plain and unmistakable implication²⁶ It is not enough for any implication to be reasonable, it has to be unmistakable²⁷

A traditional single-family subdivision generally does not have CC&Rs, but often has restrictive covenants by virtue of mutual covenants or a "negative equitable easement" found in the individual deeds. The South Carolina Supreme Court explained that when a common grantor opens a tract of land to be sold in lots and blocks, and before any are sold inaugurates a general scheme of improvement, and then sells each lot subject to that scheme of improvement, mutuality of covenant and consideration exists among the various purchasers of those lots, and each has an interest in the negative equitable easement created.²⁸ Thus, under South Carolina law, a reciprocal negative easement by implication is established when four elements exist: there is a common grantor, designation of land subject to restrictions,²⁹ a general plan or scheme of restriction in existence for the designated land,³⁰ and restrictive covenants that run with the land.³¹ Where it is asserted that a restrictive covenant arises by implication, that implication has to be plain and unmistakable.³² If the four elements are met, the restrictions are enforceable against the grantor and subsequent grantees of lots in the restricted area who take with actual or constructive notice of those restrictions.³³ The key question is usually whether there is a "general scheme."³⁴ If there is none, then one lot owner usually cannot enforce a covenant against another.³⁵ Courts may find a common scheme even though not every deed to property in a subdivision contains the restrictive covenant in question.³⁶

The proper vehicle for challenging a covenant is probably a declaratory judgment,³⁷ while the best means of enforcing a covenant is a mandatory injunction because it prohibits future violations.³⁸

B. Judicial Construction of Covenants

There are certain universal principles regarding restrictive covenants. South Carolina courts have adopted those principles. First, if the language in a restrictive covenant is unambiguous, there is no room for construction and it has to be enforced in accordance with its plain meaning.³⁹ Courts say that restrictive covenants are contractual in nature.⁴⁰ The parties to them are, therefore, bound by them just as they would be bound by any contract.⁴¹ The paramount rule of construction is that the court is to give effect to the intent of the parties as determined from the whole document.⁴² Extrinsic evidence relating to conditions surrounding the parties is admissible to aid in determination of the parties' intent, but only if the language used is ambiguous.⁴³

Words in a covenant are given the common, ordinary meaning attributed to them at the time of their execution.⁴⁴ When construing any portion of restrictive covenants, the court has to consider the entire provision.⁴⁵ The circumstances surrounding the origin of a restriction may be considered in construing it.⁴⁶ A restriction on property has to be created in express terms or by plain and unmistakable implication.⁴⁷

Historically, restrictions on the use of property are disfavored.⁴⁸ The law favors free and unrestricted use of property,⁴⁹ therefore, doubts and ambiguities are resolved in favor of free use and against restrictions.⁵⁰ The determination of whether language is ambiguous is a question of law and extrinsic evidence is not admissible to create ambiguities where they do not otherwise exist.⁵¹

Restrictive covenants are construed strictly against the grantor or those seeking to enforce them,⁵² and liberally in favor of the grantee, with all doubts being resolved in favor of a free use of property and against restrictions.⁵³ Where, therefore, the language of a restrictions is equally capable of two or more different constructions, the one that least restricts the use of the property will be adopted.⁵⁴ However, the rule of strict construction should not be applied to defeat the plain and obvious purpose of an instrument.⁵⁵ An unambiguous covenant is, therefore, enforced according to its obvious meaning.⁵⁶

Moreover, the South Carolina Supreme Court emphasized long ago that the rule of strict construction does not require an "'unnatural and strained construction'" of the words in a covenant and that before giving effect to the rule the court "'will have recourse to every aid, rule, or canon of construction to ascertain the intention of the parties, since it is the duty of courts to enforce, not to make, contracts.'"⁵⁷ At the same time, a restrictive covenant is not to be enlarged or extended by construction or by implication beyond its clear meaning.⁵⁸

As can be seen, the rules for construing covenants create quite a tangle. Thus, covenant law has been described as "a quagmire of archaic, incomprehensible rules that have no consistent framework."⁵⁹ Perhaps in response, the South Carolina Supreme Court has declared that "cases involving restrictive covenants present such wide differences in circumstances that, in the main, each case must be decided on its own facts."⁶⁰ The court has also said that when it interprets a restriction, it takes into consideration the "evil it was designed to eliminate."⁶¹ In that case, a covenant designated property for only residential use. A physician practiced medicine out of his home. The question before the court was whether the doctor was in violation of the covenant. It said that the covenant was designed to eliminate encroachment of commercial activities and there could be no doubt but that the doctor was using the property for purposes other than as a residence. The home, concluded the court, was being used for the commercial purpose of earning money, and it was no "less obnoxious to the neighborhood than if he were repairing radios or shoes."

CC&Rs sometimes grant the association the power to "reasonably restrict" certain activities or uses of property. The South Carolina Supreme Court has said that "restrict" is not synonymous with "prohibit." If the intent is to utterly prevent a use, it needs to be expressed in clear and simple terms. A use subject to "reasonable restriction" is a permitted use.⁶²

Use of property for access to, or parking for, a use that is prohibited by a restrictive covenant may also be barred because those uses would represent an integral and valuable part of the proscribed use.⁶³

Finally, courts do not have the authority to rewrite restrictive covenants.⁶⁴ They may not limit a restriction or enlarge or extend it by construction or implication beyond the clear meaning of its terms, even to accomplish what may have been desired had a situation that later developed been foreseen by the parties at the time the restriction was written.⁶⁵

C. Amendment of Covenants

The Covenants, Conditions, and Restrictions (CC&Rs) of a homeowners association typically provide for amendments to the CC&Rs by the members of the association, as opposed to the governing board. It is possible that the CC&Rs can be amended by a simple majority vote, but usually a super-majority vote is required for approval of an amendment: two-thirds, three-quarters, or even 90% or 100%.⁶⁶ CC&Rs also generally set forth a procedure for their amendment. The usual procedure is for any amendment to be brought before a meeting of the members of the association and approved by the requisite percentage of members voting in person or by proxy. It is also possible that an amendment can be adopted by a document signed by the requisite number of members.⁶⁷ In any event, for an amendment to be valid, the procedure in the CC&Rs must be followed.⁶⁸ Additionally, under the South Carolina Homeowners Association Act, for covenant amendments in a declaration or bylaws to be enforceable, they have to be recorded.⁶⁹

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