Property Law: Amending Covenants
In the absence of a contrary agreement, all parties to a covenant must agree in order to amend a covenant. Every benefited party has the right to insist upon performance of the covenant; others can’t alter one party’s rights without that party’s agreement. Nor can others impose a greater burden on a burdened lot without the burdened owner’s agreement.
But covenants can include provisions allowing amendment without everyone’s consent. As long as a buyer has notice of that amendment power, the buyer is subject to it.
For example, a common owner who is subdividing and developing land may reserve the power to amend the covenants applicable to the lots in the subdivision during the course of development. Any lot buyer who has notice of that reserved power is subject to the changes the developer makes.
Uniform covenants for residential subdivisions often allow for amendments without unanimous consent of the owners. The covenants may say that a board of representative homeowners has the power to amend or create certain types of covenants for the subdivision. The covenants may authorize a majority, or a specified percentage of homeowners, to amend the covenants. Such provisions are valid and enforceable.
However, courts generally recognize certain limits on this kind of non-unanimous amendment power, even if the covenants don’t expressly limit the power. Here are some of the recognized limitations:
The covenants may not be amended in a way that destroys the purpose of the original covenants. The amendments must further the same general plan rather than fundamentally change the plan.
For example, the majority of homeowners probably couldn’t amend the covenants to allow apartment buildings if the covenants originally created a single-family residential neighborhood. Each buyer reasonably expected that the covenants were for the purpose of preserving that type of neighborhood, so the buyers didn’t agree to the power to create covenants serving a different purpose altogether.
The covenants must be amended uniformly. The covenants can’t be amended as to some specific owners’ property but not everyone else’s. Here, too, each buyer reasonably expected that the covenants were a uniform scheme applicable to the entire subdivision. However, some authorities say that if the covenants sufficiently gave notice to buyers that the covenants could be amended non-uniformly, then such amendments are permissible.
The covenants must be reasonable. Some courts, and even some state statutes, say that unreasonable covenants are unenforceable. Again, this rule may be explained as an unspoken assumption among the original parties that the covenant-making power created by the uniform covenants wouldn’t include the power to do unreasonable things; it would include only the power to make reasonable changes intended to better accomplish the goals of the covenants.
In deciding whether a change was reasonable, courts may consider both whether the process was reasonable, involving appropriate consideration of evidence, and whether the outcome was reasonable.