§8.5 - Interpretation and Scope of Covenants

• Jurisdiction: Washington

§8.5 INTERPRETATION and SCOPE OF COVENANTS

This section discusses the rules for interpreting covenants as well as the scope of particular types of covenants.

(1) Interpretation of covenants

In Washington, the general rule used to be that "words in a deed of conveyance restricting the use of the property by the grantee are to be strictly construed against the grantor and those claiming the benefit of such restrictions, and will not be extended beyond the clear meaning of the language so used." Jones v. Williams, 56 Wash. 588, 591, 106 P. 166 (1910). Accordingly, when interpreting covenants, Washington courts historically abided by the principle that "all doubts should, as a general rule, be resolved in favor of a free use of property and against restrictions." Jones, 56 Wash. at 592.

As the ownership structure of land evolved over the past century with the advent of the subdivision and the condominium, so has the courts' understanding of the purpose restrictive covenants serve in modern society. In the time since Jones, Washington courts have moved increasingly away from strict construction and toward a more liberal approach that recognizes the benefit of restrictive covenants in protecting the collective interests of public and private property owners. See Riss v. Angel, 131 Wn.2d 612, 622, 934 P.2d 669 (1997).

(a) The Burton rule

In the much-cited Burton v. Douglas County, 65 Wn.2d 619, 621-22, 399 P.2d 68 (1965), the Washington Supreme Court articulated three principles to govern the interpretation of covenants:

(1)	The primary objective is to determine the intent of the parties to the agreement, and, in determining intent clear and unambiguous language will be given its manifest meaning.
(2)	Restrictions, being in derogation of the common law right to use land for all lawful purposes will not be extended by implication to include any use not clearly expressed Doubts must be resolved in favor of the free use of land.
(3)	The instrument must be considered in its entirety, and surrounding circumstances are to be taken into consideration when the meaning is doubtful.

Burton, 65 Wn.2d at 621-22 (citations omitted). Applying these principles to the case at hand, the court held that a covenant restricting the operation of a "noxious or offensive or business trade" within a residential subdivision was not intended to prohibit improvement of one of the lots as a parking lot. The court reasoned the neighboring country club, which was improving the lot to serve its members, was a "social club" and not a "business" and therefore would not be using the lot to operate a business trade. Id. at 622-23.

The Burton factors arguably established a break from the rigid Jones rule, toward a policy of liberal construction. However, as evidenced by Burton's second principle, the court did not denounce the application of strict construction. Rather, the court suggested a new interpretive framework that emphasizes the covenanting parties' intent and employs strict construction only when that intent cannot be resolved by a covenant's language or surrounding circumstances.

(b) Subdivision covenants

The Supreme Court further refined its "liberal" approach to interpreting covenants in Riss. Having begun to question the applicability of Burton's second factor to subdivision covenants, see Mains Farm Homeowners Ass'n v. Worthington, 121 Wn.2d 810, 816, 854 P.2d 1072 (1993), the court established a new rule of interpretation: "Where construction of restrictive covenants is necessitated by a dispute not involving the maker of the covenants, but rather among homeowners in a subdivision governed by the restrictive covenants, rules of strict construction against the grantor or in favor of the free use of land are inapplicable." Riss, 131 Wn.2d at 623. The court also held that "special emphasis" should be placed on "arriving at an interpretation that protects the homeowners' collective interests." Id. at 623-24 (citation omitted).

Note, however, that the court's holding in Riss is limited to the subdivision setting. When a dispute arises over a restrictive covenant unrelated to a subdivision, the three Burton factors will apply and ambiguities will be resolved in favor of the free use of land. See Bloome v. Haverly, 154 Wn.App. 129, 142-43, 225 P.3d 330 (2010) (applying the Burton factors to analyze restrictive covenants outside of subdivision context).

As a final note on "liberal" versus "strict construction," the Supreme Court has expressly rejected the argument that liberal construction of covenants applies only when covenants are "in harmony" with land use regulations. See Viking Props., Inc. v. Holm, 155 Wn.2d 112, 121‑22, 118 P.3d 322 (2005). In Mains Farm, the court concluded that the operation of an adult family home facility violated a subdivision covenant restricting use to "residential purposes only," even though the legislature had provided by statute that adult family homes were to be considered residential for zoning purposes. Mains Farm, 121 Wn.2d at 821-27.

(c) Use of extrinsic evidence

Related to covenant interpretation is the question of whether extrinsic evidence should be admissible for the purpose of identifying the covenanting parties' intent. In the context of contract interpretation, this question was resolved by the Supreme Court's rejection of the "plain meaning rule"which requires the meaning of unambiguous language to be determined from the "four corners" of a contract without resort to extrinsic evidencein favor of the "context rule"which allows courts to consider extrinsic evidence to discern the meaning or intent of words used in a contract even when the words seem unambiguous. See Berg v. Hudesman, 115 Wn.2d 657, 666-68, 801 P.2d 222...