Property Law: Refusing to Enforce Unreasonable Covenants
By statute or judicial decision, a court may declare an unreasonable covenant to be void and unenforceable. Different courts and statutes have declared covenants void for the following reasons:
The covenant is arbitrary. In other words, there’s no rational reason for the covenant. It may be irrational because it targets particular owners for no good reason or because it serves no apparent purpose.
The covenant does much more harm than good. If the burden of the covenant is great and far outweighs any small benefit to the benefited parties, the covenant may be unreasonable and unenforceable.
When the covenant is a uniform covenant that applies to a group of properties, the court should consider the benefit of the covenant to the group generally, not just the benefit of its application to a particular party in a particular circumstance.
This same balance of burden and benefit may explain the changed circumstances doctrine. But the burden may greatly outweigh the benefit even when the imbalance doesn’t result from changed circumstances.
The covenant violates an important public policy. Covenants that restrict ownership or possession on the basis of race would be invalid and unenforceable for this reason. So might other covenants that restrict constitutionally protected activities.
For example, a covenant prohibiting political signs might be invalid because it violates an important public policy. Not only might a covenant interfere with important personal rights, it might interfere with important public interests in how land is used.
For example, although most courts have held otherwise, some courts have held that covenants prohibiting group homes in residential areas are invalid because they violate an important public policy in favor of such group homes in residential neighborhoods.
The process of adopting or applying the covenant is unreasonable. Uniform covenants may authorize a homeowners’ association or other group to amend covenants, adopt new rules for the subdivision, and make discretionary decisions about the application of covenants to particular properties.
For example, a covenant may prohibit certain types of construction or alteration of buildings without prior approval by the homeowners’ association board or other group, which is charged with determining whether the planned design is appropriate and harmonious with the neighborhood. Such discretionary decisions may be unreasonable and therefore invalid if the group makes the decision without consideration of appropriate evidence that supports their decision.