McQuade v. Wilcox

Michigan Supreme Court · Property

PropertyRestrictive covenantsReciprocal negative easementsConstructive noticegeneral planresidential subdivisionrestrictive covenantreciprocal negative easement

Facts

Mary Wilcox platted part of her land as a high-class residential subdivision and sold lots under substantially uniform deed restrictions limiting use to residence purposes only and stating that the conditions were for the benefit of all present and future owners in the subdivision. After most lots had been sold and improved with substantial homes in reliance on that general plan, Wilcox contracted to sell her own large home on lot 2 for use as a restaurant or cafe, and the contract was assigned to the Shelbourne Company. The plaintiffs, resident owners in the subdivision, sued to enforce the restrictions. Shelbourne argued it bought without notice, and defendants also argued that nearby business development made enforcement inequitable.

Issue

Whether the residential restrictions in deeds from Wilcox created reciprocal negative easements binding Wilcox's retained lot 2, and whether the recording of those deeds gave constructive notice to the Shelbourne Company as a subsequent purchaser of lot 2. A further issue was whether changed neighborhood conditions or plaintiffs' delay made enforcement inequitable.

Rule

When a common owner adopts a general plan for a restricted residential subdivision and incorporates substantially uniform restrictions in recorded deeds stating that the restrictions benefit present and future owners, reciprocal negative easements arise on both the lots conveyed and the land retained by the grantor. The recording of those deeds gives constructive notice to subsequent purchasers of the retained land, who therefore take subject to the restrictions. Restrictions will still be enforced absent a showing of such radical change in neighborhood conditions as to make enforcement inequitable, and prompt action by plaintiffs defeats a laches defense.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In 2012, Nora Bennett owned 60 acres outside Columbus, Ohio, and recorded a plat for Maple Crest Estates as an upscale residential neighborhood. Over the next several years, she sold most of the lots by recorded deeds stating that each lot was for "residence purposes only" and that the conditions were "for the benefit of all present and future owners in this subdivision." She kept one large corner parcel with her own house and later agreed to sell it to Cedar Lantern Hospitality, which plans to open a banquet venue there.

If neighboring lot owners sue to stop the banquet venue, which is the strongest argument that the retained corner parcel is bound?

Explanation. Where a common owner adopts a general residential plan and incorporates substantially uniform restrictions in recorded deeds stating that they benefit present and future owners in the subdivision, reciprocal negative easements arise on both the lots conveyed and the land retained by the grantor. The majority reasoned that the grantor cannot take the benefit of enhanced prices from the plan and later disregard the same restriction on retained land. (Derived from McQuade v. Wilcox (n.d.).)