Snow Jensen & Reece, P.C.

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RESTRICTIVE COVENANTS AS SIMPLE CONTRACTS

| Jul 6, 2016 | Real Estate Law |

The Utah Supreme Court strengthened the power of an owner’s association and a homeowner’s association governing board to enforce the restrictive covenants against individual lot owners. In Fort Pierce Industrial Park Phases II, III & IV Owners Association v. Shakespeare, 2016 UT 28, the Utah Supreme Court rejected the notion that “restrictive covenants are not favored in the law and are strictly construed in favor of the free and unrestricted use of property.” St. Benedict’s Development Co. v. St. Benedict’s Hospital, 811 P.2d 194 (Utah 1991). While not exactly overruling St. Benedict, the Utah Supreme Court made clear that in construing restrictive covenants, “the rules of construction used for contracts” applies. Fort Pierce, 2016 UT 28, ¶¶ 8, 32. As demonstrated in Fort Pierce, that puts the governing board on equal footing with the homeowner or lot owner in interpreting what the restrictive covenants mean. Further, the court held that decisions of the governing board are afforded a “presumption of reasonableness.” Id. ¶ 28. That means the lot or homeowner has the burden of overcoming that presumption before a decision of the governing board is overturned. After the Fort Pierce case, the governing board’s ability to enforce the restrictive covenants and its decisions in interpreting them are markedly strengthened.

Lewis P. Reece

Snow Jensen & Reece P.C.

St. George, Utah