Vernon Township Volunteer Fire Department v. Connor

Supreme Court of Pennsylvania · Property

PropertyRestrictive covenantsChanged neighborhood conditionsQuiet titlerestrictive covenantalcohol restrictionchanged conditionsimmediate neighborhood

Facts

In 1946, all property owners in the Culbertson Subdivision signed and recorded a restrictive covenant providing that no alcoholic beverages could be sold or kept for sale on any lots in the subdivision, and stating that the covenant ran with the land. In 1997, the Fire Department bought a 3.25-acre parcel within the subdivision to build a new social hall that would sell alcohol; although it lacked actual notice, it had constructive notice of the covenant through the recorded title documents. After construction began, the Fire Department learned of the restriction, stopped construction, and obtained releases from most, but not all, parcel owners; six owners refused to release the restriction. The trial court enforced the covenant, but the Superior Court reversed based on alleged changed conditions in the neighborhood, including nearby liquor-serving establishments and releases signed by most owners.

Issue

Whether a recorded restrictive covenant prohibiting the sale of alcohol within a subdivision was discharged because changed conditions in the immediate neighborhood had materially altered or destroyed the covenant's original purpose so that it no longer conferred substantial benefit on the objecting landowners. Also, whether the Superior Court improperly displaced the trial court's supported factual findings in reaching the opposite conclusion.

Rule

A purchaser is bound by recorded restrictions in the chain of title through constructive notice even without actual notice. A restrictive covenant may be discharged only if the party seeking discharge proves that changed conditions in the immediate neighborhood have materially altered or destroyed the restriction's original purpose and that enforcement no longer confers a substantial benefit on the benefited owners; in assessing changed conditions, courts consider the immediate neighborhood, including adjoining tracts as well as the restricted tract. Changes outside the restricted tract do not automatically invalidate a covenant, and a covenant remains enforceable where the overall restrictive plan has not been abandoned and the restriction still provides substantial value.

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

Lena Ortiz bought a parcel in a residential tract outside Erie, Pennsylvania, intending to lease the building to a private supper club that would sell beer. A recorded covenant in her chain of title, dating back decades, forbids alcohol sales anywhere in the tract, but Lena never read the title report her lawyer obtained before closing.

If neighboring owners sue to enforce the covenant, which argument by Lena is strongest under the governing rule?

Explanation. A purchaser is chargeable with notice of recorded restrictions appearing in the chain of title. Lack of actual notice does not avoid the restriction where constructive notice exists through the public record. The majority treated the buyer's failure to appreciate what a title search would reveal as no defense.