Massachusetts Appeals Court Rejects Effort to Extend Duration of Restrictive Covenant Pertaining to Real Estate

CLIENT ALERT

By John H. Perten

In a decision dated December 5, 2017 captioned Berger v. 2 Wyndcliff, LLC, the Massachusetts Appeals Court revisited the issue of whether restrictive covenants on real estate could be enforced for a period greater than 30 years. By statute, restrictive covenants of unspecified duration that run with the land are generally limited to 30 years. See M.G.L c. 183, §23. One exception to this limitation is where the restriction is part of a common scheme applicable to four or more parcels and provision is made in the instrument itself permitting extensions for additional 20 years by vote of at least 50% of the owners of the restricted areas, and the extension occurs prior to the expiration of the original 30-year period. See M.G.L. c .184, §27. In Berger, the original covenant specified that it would expire in 30 years but did not contain the statutory language allowing further extensions. It did, however, permit owners of the restricted property, by a 2/3 vote, to amend the covenant. Prior to expiration of the initial 30-year period, the property owners voted to amend the original covenant by adding language which would allow them to vote for successive 20 year extensions. Relying on that amendment, they purported to extend the restriction for an additional 20 years. The question on appeal was whether this was a valid extension.

The trial court ruled that if the parties could amend to extend the period indefinitely, functionally, that could make the covenant unlimited in duration. Because that would violate the statute that caps restrictions of unlimited duration at 30 years, the trial court refused to enforce the covenant beyond the initial 30-year period. On appeal, the Massachusetts appeals court affirmed the trial court’s decision, but on other grounds. Relying on usual rules of statutory construction, it construed the statute as requiring the extension verbiage to be contained within the original restrictive covenant itself. Because that language was absent from the original restriction, the Court determined that the subsequent amendment purporting to add the missing language simply did not comply with the statute. It noted that persons buying a property encumbered by a restrictive covenant needed to be able to determine when it would expire and, in this case, because of the missing language they had no way of predicting that years later the covenant might be amended to extend beyond 30 years. In contrast, had the verbiage allowing the extension been contained within the original instrument, all buyers would have been on notice that the restriction could last beyond the initial 30-year term. As a result, and recognizing that restrictive covenants are generally disfavored, the Appeals Court ruled that because the original restrictive covenant did not have the statutory language providing for an extension, the attempt to insert that language after the fact through an amendment was ineffective.

This case serves as a reminder that courts generally disfavor restrictive covenants. It also reinforces the recognition that owners of property need to be able to determine how long a restrictive covenant will be in effect, as that impacts potential plans for, and values of, the property. Careful practitioners must remember to include the statutory language permitting extensions beyond the statutory 30-year period when drafting restrictive covenants if their clients hope to retain the right to extend the restrictions for a longer period. Conversely, this case reinforces that any attempt to enforce a restrictive covenant beyond 30 years will likely be met with judicial skepticism absent a clear statement in the covenant itself that such extensions are permissible.