Chapter 12 USE RESTRICTIONS

JurisdictionNorth Carolina

12 USE RESTRICTIONS

§ 12.01. In General

Use restrictions are limitations on the manner in which one's property may be used or the types of activities that can be conducted on one's property. Almost without exception, there are use restrictions in all modern-day declarations for planned communities and condominiums. Use restrictions are essential to a developer's establishment of a "plan and scheme of development" in that they control the conduct and improvements that may be undertaken on a lot, unit or in the common elements.1 Without use restrictions, lots can generally be used for any purpose not inconsistent with applicable state, federal and local laws and regulations.2 Without restrictions, the use of the word "planned" in planned community is inappropriate. Therefore, use restrictions are the hallmark of planned communities and condominiums. As a general rule of thumb, in North Carolina,

Restrictive covenants are not generally favored in the law; any ambiguities in the restrictions are to be resolved in favor of the free and unrestricted use of the land . . . Nevertheless, such covenants must be reasonably construed to give effect to the intention of the parties, and the rule of strict construction may not be used to defeat the plain and obvious purposes of a restriction . . . .3

In construing use restrictions, the fundamental rule is that the intention of the parties governs, and that their intention must be gathered from a study and consideration of all the covenants contained in the instrument or instruments creating the restrictions.4 Ambiguities are the death knell for restrictive covenants in North Carolina.5 Since restrictions are so important in modern-day land-use planning, developers have over time become increasingly sophisticated in limiting ambiguities and making covenants very clear and certain.

Unlike the architectural approval process and assessment obligations, use restrictions are usually firm rules that are generally not characterized by a procedure or an affirmative obligation on the part of the owners. Whereas the architectural approval process is a subjective procedure, a use restriction is normally more of an objective limitation on how a property can be used. Whereas assessments are affirmative mandatory obligations requiring owners to pay certain sums under certain prescribed procedures, use restrictions are typically negative covenants controlling or limiting certain behaviors.6 This is not to say there are no use restrictions that are affirmative in nature. For example, lot-maintenance provisions in a recorded declaration would require an owner to take affirmative steps to maintain his or her lot. Further, not all use restrictions are "black and white" or objective necessarily. For example, restrictions such as a nuisance provision would involve a level of subjectivity a board for an association must wrestle with when determining whether to enforce them.

Use restrictions are typically creatures of the recorded declaration or restrictions for the community instead of statutory obligations found in the PCA and the Condominium Act. Common practice is to place the restrictions in the main declaration for the community.7 However, occasionally use restrictions are found in a separate set of "protective covenants," which are separate and apart from the main declaration to the community.8 Other exceptions to the rule that use restrictions are creatures of the recorded declaration or restrictions for the community include the limitations of restrictions that can impact satellite dishes, solar panels, flags and political signs found in federal regulations, the PCA, the Condominium Act and Chapter 22B of the General Statutes. In these areas, statutes do get involved in imposing, regulating or limiting use restrictions. Otherwise, the nature and extent of use restrictions is a heavily fact dependent inquiry from one community to the next. In other words, the nature and extent to which communities have use restrictions depends on the original intent of the developer as manifested in the legal documents for the community. Over the years, the appellate courts in North Carolina have ruled on cases that have defined the extent to which use restrictions may be enforced in North Carolina. Today, there is a well-developed body of case law in North Carolina on many use restrictions such as pets, single-family use restrictions, parking and nuisance provisions in covenants.

§ 12.02. Animals and Pets

One of the most common use restrictions is the one prohibiting poultry, livestock and other animals other than household pets. Almost every planned community developed in the past 40 years has some sort of limitation on the type or amount of animals that may be kept on one's lot.

Section 14 - Prohibition of Livestock and Other Animals Example 12-1

No livestock or poultry of any kind shall be allowed on a Lot or in a home in the Community. The term "livestock" shall include without limitation, horses, cattle, pigs, goats, swine, sheep, deer, reindeer, yaks, camels, donkey and mule. The term "poultry" shall include, without limitation, chickens, roosters, hens, turkey, ducks, geese, swans, ostrich, pheasant and emus. The terms "poultry" and "livestock" as used herein shall have their plain and obvious meaning and shall be construed in their broadest sense to include animals other than household dogs and cats and other small domesticated animals kept primarily inside a home in the subdivision as set forth herein. Nothing herein shall be deemed or construed to prevent a reasonable number of dogs and cats from being kept on a Lot or small interior household pets such as gerbils, hamsters, ferrets, fish and similar small domesticated interior animals or aquatic creatures from being kept on a Lot.

Developers often put these restrictions in the original recorded restrictions for the purposes of preventing residential developments from becoming more akin to a ranch or farm. Cattle, sheep, chicken, turkey, horses, goats and swine are all fundamental animals usually intended to be kept out of residential planned communities. Further, since both planned communities and condominiums have the power to adopt and amend rules and regulations, it is not uncommon for boards to pass rules related to the types and numbers of animals that can be kept in the community.9 For instance, it is common, particularly after incidents, for associations to want to limit or restrict certain types of even "normal" household pets or dogs that are considered dangerous.10

Generally speaking, courts will grant more latitude to condominiums than they will grant to planned communities when it comes to restrictions on animals. As other courts have noted, "It is inherent in the condominium concept that each owner must give up a certain degree of freedom of choice he might otherwise enjoy in separate privately owned property. . . . Condominium ownership is based upon the shared ownership and shared responsibility."11

In Cornerstone Condominium Ass'n v. O'Brien, 442 S.E.2d 321 (1994), the North Carolina Supreme Court held that the failure to file an amendment to condominium bylaws that would have prohibited owners from acquiring additional pets within a 10-day period specified by the bylaws did not make the amendment ineffective. Likewise, in Board of Directors of 175 East Delaware Place Homeowners Ass'n v. Hinojosa, 287 Ill. App. 3d 886, 679 N.E.2d 407 (Ill. App. 1997), the Illinois Court of Appeals affirmed a board's rule prohibiting dogs in condominium units in a high-rise condominium tower. The Court of Appeals found the rule was reasonable in the 705-unit high-rise condominium located on floors 45 to 92 of the John Hancock building in Chicago, in part, because an owner would have to take the dog down anywhere from 45 to 92 floors to go outside.12 Other states have similarly deferred to boards of condominiums with respect to pet rules, regulations and restrictions.13

In North Carolina, courts grant slightly less deference to pet restrictions in planned communities, partly because the owners have their own land and live farther apart. In Steiner v. Windrow Estates Home Owners Ass'n, 713 S.E.2d 518 (2011), the North Carolina Court of Appeals curiously held that two male Nigerian Dwarf goats (Fred and Barney) were "household pets." The restriction in the Steiner case clearly stated, "no animals, livestock or poultry of any kind shall be raised, bred or kept on any lot except that horses, dogs, cats or other pets may be kept . . . and provided such household pets do not attack horses or horsemen."14 In an accommodating opinion to the owners, the Court of Appeals held that Nigerian Dwarf goats were indeed "household pets," even though the animals never actually went in the house.15 Importantly, the Court of Appeals did indicate that had "the drafters of the Restrictive Covenants wished to limit the definition of 'household pets' to animals more traditionally considered as pets such as dogs and cats; they certainly may have done so."16

Other courts have also decided against enforcement in cases where the pet restriction is not perfectly clear.17 Therefore, developers should be as specific as possible when limiting or restricting lots in a planned community to traditional household pets such as dogs and cats. Importantly, even if a covenant falls short under the Steiner case, if the animal is used for commercial purposes (eggs from chickens being sold, meat from other animals), this would be a violation of any limitation in the covenants that prevented animals from being kept for commercial purposes.

One issue that may arise with respect to pets and an association's attempted enforcement of a pet restriction or limitation, whether in a condominium or planned community, is fair-housing considerations where the owner claims a dog is necessary for the full enjoyment of his property.18 In Auburn Woods I Homeowners Ass'n v. Fair Employment & Housing...

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