For builders and developers, effectively navigating the complex dynamics of HOAs and restrictive covenants is a crucial component of the residential development landscape. The Supreme Court of Alabama recently confirmed that implied restrictive covenants can regulate property use.
The Property Owners Association of Ono Island, Inc. ("POA") prohibits vertical construction on an undeveloped island located within the canal system of Ono Island. F Family South, LLC ("FFS") owns an undeveloped island on Ono Island that it wished to develop. It is FFS’s position that the island was never included in any plat map recordings and therefore was not subject to the covenants and restrictions applied to individual lots recorded by plats over numerous years of development on Ono Island. The POA disagreed.
The POA maintained, however, that their long-standing administration and enforcement of covenants was an "integral component of the common scheme of the Ono Island development." It asserted that the general covenants, which existed before the construction of the canal system and its components, were intentionally created as an essential part of the subsequent subdivision development, meant to benefit all property owners on Ono Island. FFS ultimately filed suit against POA to settle the dispute.
Through the Architectural Control Committee (the "ACC"), the POA was tasked with and granted the authority to permit or approve the construction and maintenance of all structures on properties subject to the general covenants and/or adjacent waters as referenced in all related deeds. Thus, the court determined FFS’s island, created as part of and lying within the canal system, did not exist outside the bounds of the common scheme of Ono Island. Despite its omission from a specific subdivision plat, the court found that FFS’s island and other undeveloped mounds in the canal system had been consistently maintained by the POA as if they were subject to the covenants, ensuring the success of the common canal system. Therefore, the Supreme Court of Alabama determined that FFS’s island was not permissible for vertical construction.
The court noted that "restrictive covenants are to be construed according to the intent of the parties in light of the terms of the restriction and surrounding circumstances known to the parties." The Court concluded that to rule otherwise would allow a single property owner to undermine the common development plan, potentially harming other similarly-situated property owners despite clear notice of the apparent plan.
In a classic example of property owners' rights, the Court firmly supported the homeowners' association in its ruling. Given that covenants and restrictions are a common thread in all residential developments, it is crucial for builders and developers to understand and adhere to these rules.
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