Saturday, June 4, 2011

Of Benefits and Burdens.

Tibbetts v. Michaelides, 2011 VT 52 (mem.).

In today’s case, the SCOV interprets another deed restriction, this one found in a 1977 deed from Ms. Lydia Lowell to Mr. J. Peter Trono, for five acres on Bartlett’s Bay.  The larger parcel, 4.97 of the five acres, lays across the road from a 0.3-acre parcel.  Ms. Lowell retained substantial property surrounding the five-acre parcel and included several restrictions, including that “no more than five single-family houses shall be constructed upon the lands hereby conveyed.”  In addition to the development limit, the 1977 deed retained “certain ‘rights in favor others,’” specifically: a footpath and use of the footpath to reach Lake Champlain to swim and mess about in boats.  “Believe me, my young friend, there is nothing—absolute nothing—half so much worth doing as simply messing about in boats.”

In 1978, Trono’s construction company got its municipal subdivision permit, created five lots on one side of the street (with the 0.3-acre parcel left over and apparently forgotten), and sold them—two of them to defendant-neighbors in today’s case.

Trono failed to pay taxes on the 0.3-acre lot and it was sold at a tax sale, and then re-sold in 2002 to plaintiffs.  The plaintiffs, proud owners of an undersized 0.3-acre lot, sought and received a variance from the city’s setback requirements allowing them to build a house, which they promptly did.       

But when plaintiffs tried to sell their improved little lot in 2005, the buyers’ title search turned up the five-house restriction in the 1977 deed.  Buyers conditioned the sale on obtaining consent from the other five lot owners, which was not forthcoming.  Time to clear the title!  The angry defendant-neighbors opposed and counterclaimed, asking the trial court to (1) declare that the house on the undersized lot violated the 1977 deed and (2) order its removal. 

But unless the five-home restriction in the 1977 deed was intended to benefit the Trono estate (and consequently the five lots that were created from it), the owners of the five lots have no standing to enforce the restriction.  The trial court found that the deed restriction did not benefit the land burdened by the restriction, but rather benefitted the surrounding estate retained by Lowell.

The SCOV agrees.  A restriction relating to the use of a parcel sold by a grantor is generally presumed to benefit the land that the grantor has retained.  An exception to the general rule exists for general plan developments: the individual lots in the development are each burdened by restrictions intended to benefit the development as a whole and each lot in it.  Under this scheme, any of the individual lot owners may enforce the restrictions against any other owner.  But without evidence of such a scheme here and without a recorded declaration of covenants and restrictions applicable to the entire tract (the formal prerequisite to a general plan development) the exception fails.

Lacking standing, the defendant-neighbors lose and the plaintiffs’ house is saved!  But don’t uncork the champagne quite yet—the defendant-neighbors have their bulldozers primed on the issues of whether the 1978 State subdivision permit authorizes building on the 0.3-acre parcel and whether the owners of the undersized parcel enjoy the same rights to the footpath and lakeshore as the owners of the five lots.  The trial court and the SCOV refused to consider these issues in the present case, but they left the door open to another wild ride should defendants seek to press these claims in new litigation down the road.

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