The McLeans' owned a house and
lot in a residential subdivision in Detroit. For some reason they decided
to build a gas station in their backyard.
Sunborn, who lived next door,
sued for an injunction to stop the gas station,
Sunborn argued that McLeans'
lot was subject to a negative easement that the lots can only be used for residential purposes.
Turns out that the original
owner of the land the subdivision was built on sold off 53 of the 91 lots
with a restriction that the land be solely used for residential purposes
(and that the houses cost at least $2.5k each!).
However, the McLeans' lot
was sold without such a restriction in the deed.
As part of the sale of the
first 53 lots, McLauglin entered into a reciprocal negative easement with the 53 owners, which bound his remaining
lots to the same restrictions as the lots he'd sold, so the land that
would become the McLean's was bound by this reciprocal negative
easement.
In a reciprocal negative
easement, both landowners agree to a
private zoning restriction for land use.
The term "negative
easement" is a bit antiquated.
It's better known today as a "covenant".
Since reciprocal
negative easements run with the
land, when McLaughlin sold off the final 38 lots, each of those lots was
implicitly bound by the easement, even if it wasn't spelled out in the
deed.
The negative easement in this case is implied, but it still exists. The 53 buyers relied on
the fact that the entire subdivision would be bound by the same
provisions. Each plot in the subdivision was sold as part of a
"master plan".
The negative easement only affects plots sold after the reliance began. So if the first few plots were sold
without restrictions, then those are not part of the reciprocal
negative easement.
The Trial Court found for
Sunborn, McLean appealed.
The Michigan Supreme Court
affirmed.
The Michigan Supreme Court
found that there was a reciprocal negative easement on McLean's land.
However, such and agreement
is only binding on McLean if they had constructive notice of the easement.
McLean testified that they
had no notice.
However, the Court found
that, even if no one explicitly told McLean about the restrictions, a
quick look around the neighborhood should have alerted him that this was
a residential only area. So McLean had constructive notice.
This decision goes against the
Statute of Frauds, which says that
all contracts involving the sale of land (including equitable
servitude, negative
easements, and covenants) must be in writing. In this case, the easement was implied, it was never written down in the deed to
McLean's lot.
What if the owners of the non-covenant properties argued that they paid a premium for
their land because it didn't have that covenant? The courts would hold
that they paid too much, since it is technically impossible for McLaughlin
to have sold the lots without the covenant.
McLaughlin can't sell what
he didn't have. The land was already bound by the implied reciprocal
negative easement, so he couldn't
sell it as if wasn't.
