Property II, Pages 658–663

Boyles v. Hausmann

Supreme Court of Nebraska, 1994

Facts:

Appellants purchased a lot in a subdivision with a number of covenants running with the land. These covenants automatically renewed every five years unless a majority of the owners agreed to change them. They were in fact changed several times, adding and removing various restrictions. One such change was in 1990, in which it said that the CCRs would run until 1995, at which point they would be again renewed unless an instrument signed by a majority of the owners agreed to change them.

Later in 1990, another covenant was modified to prohibit building buildings within 120 feet of the road that ran through the subdivision. This was added to an existing covenant, which prohibited building on any building lot smaller than the original plotted number it was built on.

Appellants did not agree to or sign the new instrument. Instead, they filed a declaratory judgment action seeking to have the district court declare it invalid because it substantially decreased the value of their lot by preventing building on the lot due to the size of the lot and a pre-existing pipeline across it.

Procedural History:

  • District court found for appellees.

  • Court of appeals found plain error in the record due to no changes being authorized until 1995 and so held that the covenant was invalid and revered the decision of the district court.

Issue:

Could the covenants be modified?

Appellee's Arguments:

  • The covenant provision allowing changes is ambiguous.

  • Appellants should be estopped from challenging the covenant because:

    1. Their previous actions estop them from challenging the "covenant which provides for amendment by majority action."
    2. Appellants waived their right to challenge it by accepting the 1984 and 1990 changes.

Rules:

  • LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 661, Paragraph 3

    Restrictive covenants are to be construed so as to give effect to the intention of the parties at the time they agreed to the covenants. If the language is unambiguous, the covenant shall be enforced according to its plain language, and the covenant shall not be subject to rules of interpretation or construction. An ambiguity exists when the instrument at issue is susceptible of two or more reasonable but conflicting interpretations or meanings. The fact that the parties have suggested opposing meanings of a disputed instrument does not necessarily compel the conclusion that the instrument is ambiguous.

  • LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 661–662

    Restrictive covenants are to be construed in connection with the surrounding circumstances at the time that the covenants were made to give effect to the intention of the parties. "covenants which restrict the use of land are not favored by the law, and, if ambiguous, they should be construed in a manner which allows the maximum unrestricted use of the property." If the language is unambiguous, the covenant should be enforced according to its plain language. If a restrictive covenant agreement also contains a provision which provides for future alteration, the language employed determines the extent of that provision. Further, under no circumstances shall restrictions on the use of land be extended by mere implication.

Reasoning:

  • While appellees contend that "unless" is ambiguous as to which part of the phrase it applies to, it is not ambiguous as it applies to the immediately preceding clause regarding the automatic extension.

  • The unambiguous language of the provision allows a majority to make changes to existing covenants but not to add new and different covenants.

  • The covenant this restriction was added to only concerned what lots a building could be built on. It did not concern where on a lot a building could be built. This means that the disputed covenant is new and different, as it is to all of the other existing covenants.

  • Appellants do not challenge the validity of the provision which permitted changes, only the the extent of the changes permitted, and unlike the previous changes they accepted, this change adds a new and different covenant.

Holding:

LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 663
  1. the provision of the February 1990 covenant agreement did not authorize changes by a majority of the lotowners until after January 1, 1995;
  2. although a majority could adopt changes to the original covenants, a majority did not have the authority to adopt new and different covenants which restricted the use of the land; and
  3. appellants were not estopped from asserting their right to challenge the validity of the disputed covenant.

Judgment:

Affirmed as modified.

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