So, you purchased a property or are thinking about purchasing a property with a covenant (or a deed restriction) recorded against the property, and you want to determine whether the covenant is or would be binding on you as the new owner (legally, termed “a successor in interest”). The answer depends on how the covenant (or the deed restriction) was written, because “whether a covenant binds successors of a party to it” is a “question[] of contractual intent.” (Harrison v. Domergue (1969) 274 Cal.App.2d 19, 22 (Harrison) [emphasis added].) This article will provide some guidance on how to make that determination, but, ultimately, you should consult a lawyer. At Kashfian & Kashfian, LLP, we have experience in defending actions seeking to enforce restrictive covenants, including having such covenants declared unenforceable, (see Case Results), and as your counselor, we will fight vigorously on your behalf. Contact our offices to learn more about the services that we provide.
Covenants “are interpreted according to the usual rules for the interpretation of contracts generally, with a view toward enforcing the reasonable intent of the parties.” (Harvey v. The Landing Homeowners Assn. (2008) 162 Cal.App.4th 809, 817 (Harvey); Richeson v. Helal (2007) 158 Cal.App.4th 268, 276 (Richeson) [“interpretation of a restrictive covenant is governed by contract principles”].) Moreover, “[t]he parties’ intent is to be ascertained from the writing alone if possible.” (Harvey, supra, 162 Cal.App.4th at p. 817 [emphasis added].) Furthermore, interpreting a restrictive covenant “is a question of law unless the interpretation turns upon the credibility of extrinsic evidence.” (Richeson, supra, 158 Cal.App.4th at p. 276.) However, “[i]t is a general rule that restrictive covenants are construed strictly against the person seeking to enforce them, and any doubt will be resolved in favor of the free use of land.” (White v. Dorfman (1981) 116 Cal.App.3d 892, 897 (White).)
“[T]he primary object in construing restrictive covenants, as in construing all contracts, should be to effectuate the legitimate desires of the covenanting parties.” (Hannula v. Hacienda Homes (1949) 34 Cal.2d 442, 444-45 (Hannula) [emphasis added].) Indeed, the “intent of the parties and the object of the deed or restriction should govern . . ..” (White, supra, 116 Cal.App.3d at p. 897 [emphasis added]; Ezer v. Fuchsloch (1979) 99 Cal.App.3d 849, 861 [same]; Lincoln Sav. & Loan Assn. v. Riviera Estates Assn. (1970) 7 Cal.App.3d 449, 463 (Lincoln Sav. & Loan) [same].)
Moreover “[t]he parties’ intent is to be ascertained from the writing alone if possible.” (Harvey, supra, 162 Cal.App.4th at p. 817 [emphasis added, citing WYDA Associates v. Merner (1996) 42 Cal.App.4th 1702, 1709]; Harrison, supra,274 Cal.App.2d at p. 22 [“the content of a covenant is controlled by the terms selected by the parties to give effect to their intentions”]; Civ. Code, § 1639 [“[w]hen a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible”].) Indeed, “[c]ourts will not add a term to a contract about which the agreement is silent.” (Moss Dev. Co. v. Geary (1974) 41 Cal.App.3d 1, 9 (Moss Dev.) [emphasis added].) Instead, “[a] contract extends only to those things which it appears the parties intended to contract. [A court’s] function is to determine what, in terms and substance, is contained in the contract, not to insert what has been omitted. [Courts] do not have the power to create for the parties a contract that they did not make and cannot insert language that one party now wishes were there.” (Vons Companies, Inc. v. United States Fire Ins. Co. (2000) 78 Cal.App.4th 52, 58-59 (Vons Companies).)
Monterey/Santa Cruz etc. Trades Council v. Cypress Marina Heights LP (2011) 191 Cal.App.4th 1500 (Monterey/Santa Cruz) is instructive. There, the defendants argued that the “deeds did not actually bind successors in interest.” (Id. at p. 1520) In rejecting that argument, the court reasoned:
The language in the deeds is not susceptible of such an interpretation. Besides explicitly stating that the covenants “will be deemed to run with the land in perpetuity,” the deeds also state that the grantee . . . “covenants for itself, its successors, and assigns and every successor in interest to the Property, or any part thereof, that Grantee and such successors and assigns shall comply with all provisions of the Implementation Agreement as if the Grantee were the referenced Jurisdiction under the Implementation Agreement and specifically agrees to comply with the Deed Restrictions and Covenants set forth in Exhibit F of the Implementation Agreement … .” (Boldface omitted & italics added.) This language indisputably binds [the grantee’s] successors in interest.
(Monterey/Santa Cruz, supra, 191 Cal.App.4th at p. 1520; see also, Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345, 349 (Anderson) [“adopt[ing] the . . . rule” that, for a covenant to be binding on successors, the instrument creating the covenant must, among other things, “state[] that it is to bind all purchasers and their successors.”]; Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 375 (Nahrstedt) [“[r]estrictive covenants will run with the land, and thus bind successive owners, if the deed or other instrument . . . expressly provides that successors in interest of the covenantor’s land will be bound . . ..”]; Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1378 (Alfaro), as modified on denial of reh’g (Mar. 18, 2009) [“[t]he covenant itself provides that it is binding on the assigns and successors in interest of the original owner”]; McCaffrey v. Preston (1984) 154 Cal.App.3d 422, 436 (McCaffrey) [noting that “intent [must] appear[] in the deed”]; Martin v. Ray (1946) 76 Cal.App.2d 471, 476 [noting that “intent of the parties . . . must appear in the deed”]; In re Snow (Bankr. C.D.Cal. 1996) 201 B.R. 968, 972 (Snow) [“the instrument must expressly provide that all successive owners of the servient estate are to be bound by the covenant”]; 12 Witkin, Summary 10th Real Property, § 434 (2005) [“[t]he instrument creating the covenant (e.g., a deed) must disclose the intention of the parties that the covenant run”].)
As noted above, interpreting a restrictive covenant “is a question of law unless the interpretation turns upon the credibility of extrinsic evidence,” (Richeson, supra, 158 Cal.App.4th at p. 276), and, when the interpretation does not, as matter of law, turn upon the credibility of extrinsic evidence, “the case is over.” (Id. at p. 276.)
More specifically, “[w]hen a dispute arises over the meaning of language in an instrument, the first question to be decided is whether the language is ‘reasonably susceptible’ to the interpretation urged by the party.” (Richeson, supra, 158 Cal.App.4th at p. 276.) “If the language is not, the case is over.” (Id. [emphasis added].) “If the language is reasonably susceptible to the interpretation urged, [courts] move to the second question: what did the parties intend the language to mean?” (Id.) “Whether the instrument is reasonably susceptible to a party’s interpretation can be determined either from the language of the instrument itself or from extrinsic evidence of the parties’ intent.” (Id.) “If an instrument is capable of two different reasonable interpretations, the instrument is ambiguous.” (Id.) Notably, “[c]ourts will not adopt a strained or absurd interpretation in order to create an ambiguity where none exists.” (Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 807 (Reserve Insurance).)
In sum, extrinsic “evidence cannot be admitted to show intention independent of an unambiguous written instrument.” (Hayter Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal.App.4th 1, 15 [emphasis added].) For example, in Safwenberg v. Marquez, the court held that “[t]he extrinsic evidence should not have been admitted by the trial court since the deed was not ambiguous.” (Safwenberg v. Marquez (1975) 50 Cal.App.3d 301, 306.) Thus, when “there is no ambiguity,” the “inquiry into meaning has been completed and the one reasonable interpretation applies to the facts.” (Thompson v. Asimos (2016) 6 Cal.App 5th 970, 986 (Asimos); see e.g., Lonely Maiden Productions, LLC v. GoldenTree Asset Management, LP (2011) 201 Cal.App.4th 368, 380 [“[t]he service agreements are not ambiguous, which means that extrinsic evidence cannot be considered to explain the terms”]; Estate of Wochos (1967) 256 Cal.App.2d 338, 341 [holding that “extrinsic evidence as to its meaning is inadmissible,” because “the provision under discussion is not ambiguous”]; Owens v. Geary Drive-In Corp. (1963) 212 Cal.App.2d 936, 938 [“evidence is admissible only where the language used is doubtful, uncertain or ambiguous and only then in cases where the doubt appears upon the face of the contract”].)
Additionally, “[where] subject to more than one interpretation, that construction consonant with the unencumbered use of the property will be adopted . . ..” (Smith v. North (1966) 244 Cal.App.2d 245, 248 (Smith)). Indeed, restrictive covenants are “to be strictly construed against limitations upon the free use of property and will not be extended by implication,” (Weber v. Graner (1955) 137 Cal.App.2d 771, 775 (Weber)) and “will be construed strictly against persons seeking to enforce them, and in favor of the unencumbered use of property.” (Biagini v. Hyde (1970) 3 Cal.App.3d 877, 880 (Biagini).)
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