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Deed Restrictions Are Not to Be Ignored

In case there was any ambiguity as to the enforceability of deed restrictions, the Michigan Court of Appeals made clear in a recent decision that contractual agreements created by deed restrictions are enforceable. In Thom v. Palushaj, No. 301568, 2012 WL 472893 (Mich. App. 2012), the Court vacated the trial court’s order and remanded with instructions to enter an order requiring defendants to bring their home into compliance with the applicable deed restrictions.

The case involved deed restrictions that any home defendants built had to be a minimum of 100 ft from any adjacent homes and a minimum of 40 ft from the side lot line. The Defendants built their home 80 ft from the plaintiffs’ home and approximately 28 ft from the side lot line. Plaintiffs sought an injunction preventing defendants from proceeding with the construction of their home as planned. The lower court denied the requested injunction after determining that the restrictions in question were each unenforceable or inapplicable and after determining the plaintiffs had “unclean hands;” however the trial court cautioned defendants to proceed at their own risk in determining whether to build the home as planned. Defendants continued with the construction of the home and when completed, the home exceeded 9,000 sq. ft in size, constructed with special features to aid one of their children who had cerebral palsy.

In its first trip to the appellate court, the Plaintiffs appealed and the Court reversed the trial court after finding the deed restrictions were applicable and enforceable. In reversing the trial court, the Appellate Court stated there was a substantial, intentional and flagrant violation of the setback requirement. The Plaintiffs then filed a motion requesting an injunction for the demolition or reconstruction of the Defendants’ home. The trial court denied the plaintiffs’ motion and directed the parties to submit briefs regarding an appropriate remedy for defendants’ violations of deed restrictions. The trial court held an evidentiary hearing to determine the proper remedy, and to balance the equities. The Court determined that it was not feasible to bring defendants’ home into compliance with the deed restrictions without completely destroying it, and the destruction of the home would have a harsh impact on defendants’ family as the home was specially designed to accommodate their disabled charge. The Court held the proper remedy was to require defendants to pay all of the attorney fees and costs plaintiffs amounting to $183,515.34 and to require defendants and any future owners of the property to maintain the landscaping that limits the view between the properties.

The Plaintiffs appealed once again, and asserted the trial court failed to follow the Appellate Court’s instructions when it concluded it was permitted to balance the equities when crafting its remedy. Further, Plaintiffs maintained that the trial court had no discretion and was legally required to order defendants to comply with the deed restrictions. The Appellate Court agreed stating that “deed restrictions are a form of a contractual agreement and create a valuable property right.” Prior to remand, the Appellate Court determined that the deed restrictions had been violated and that those restrictions had to be enforced.

The Court found the trial court did not have the discretion to balance the equities in this case where the exceptions described in Cooper were not present. The Court vacated the trial court’s order and remanded with instructions to enter an order requiring defendants to bring their home into compliance with the applicable deed restrictions. The portions of the Court’s order relating to landscaping and attorney fees were also vacated as they were the result of the injunction not being entered. The lessons learned from Thom are that deed restrictions are contractual agreements, not to be ignored and can result in harsh remedies if not followed, including the demolition of a 9000 sq. ft home.

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