Friday, April 13, 2018

Restrictive Covenants Must be Disclosed to Planning Commission in Rezoning Decisions

Just in case there are any City officials unaware of this, in rezoning property, any restrictive covenants, including those between two private parties, must be disclosed to the Planning Commission. 

Here is the relevant document, found on the City's website:  

Planning Commission Checklist for Rezoning Decisions 

As indicated in Alderman's Open Records Request Yields Key Forest Hill Legal Documents and Minutes from BMA Meeting Help Derail Zoning Changes, Aldermen Barzizza and Massey both had to make requests of the City just to discover 1) the mere existence of a covenant between the neighbors and Ruleman in early 2006 and 2) minutes of the 2006 BMA meeting where the covenant was discussed. 

The covenant on the Forest Hill Reaves property was deemed "theoretical" by the Director of Economic Development, apparently without asking a City attorney, and was not disclosed to the aldermen. Obviously the determination on whether a covenant is enforceable or not should be done with a thorough search of the files, and made by an attorney. 

How can anyone argue that this information should not be disclosed to the aldermen before voting on the first two readings of the rezoning? Although the enforceabilty of the covenant may be contested by the developer, that is no excuse for failure to disclose the covenant. 

And, even if the City Attorney gave an opinion that the covenant was not enforceable (and I have seen nothing that indicates that he has given such an opinion), the covenant should have been disclosed. It was a promise to the citizens, who had every reason to believe that the agreement that they were entering into eleven years ago was made in good faith. How could a promise to the citizens, read into the minutes of a BMA meeting, be deemed irrelevant? And, it really isn't the City employee that should determine the relevance in any case. The City employee should give the Planning Commission all information, and the Planning Commission and the BMA should decide its relevance.

I have seen the argument made that if a covenant is deemed to be between two private parties, it need not be disclosed to the City officials who vote on a project. As you can see by the document above, any restrictive covenant must be disclosed to the Planning Commission. Obviously, the elected officials who vote on the rezoning should have been informed of the covenant.


  1. The checklist you linked is a submission checklist for developers. It helps developers (or landowners) to make sure they have all the necessary paperwork submitted and other required items in place. It is NOT a guideline checklist for use by the Planning Commission. A restrictive covenant only needs to be disclosed if it is valid. Since the one in question was never filed, it's not valid and it's treated as though it never existed.

    Understand, too, that the covenant is only between private parties -- it doesn't involve the city. The covenant doesn't say that City of Germantown can not rezone the property. It only says that Ruleman (or heirs) will not seek rezoning. If the signatories to the covenant think it's being violated, their remedy is to take the applicant to court. Since this covenant wasn't filed, it's not likely to be upheld by a court.

  2. Thank you for your perspective. I don't know if the covenant is enforceable or not, but the attorneys for the residents seem to think it is. In any case, it is disputed. I cannot make an informed decision about that, and, my point is, no other person can who is not an attorney. Even if it was deemed to be not enforceable, it is part of the history of the property--so much so that it was read into the minutes in 2006. If the owner didn't include the covenant in the application, I feel it is the duty of the City staff to give the full history of the covenant to the Planning Commission. The City staff could include the City attorney's opinion that it was not enforceable in the package if the City attorney had made such a determination. This isn't rocket science. More information is better than no information, especially when the residents all remember a "promise" was made. The specifics of the "promise", whether enforceable or not, need to see the sunshine for full transparency.

  3. I think where you've gone astray is that if the agreement wasn't filed -- and, according the the County Clerk's office and multiple independent title searches, it wasn't filed -- it's not part of the property's history, since it wasn't completed. Similarly, when you're buying a house, the sellers aren't required to disclose all the things they wanted to do to the home; they're only required to disclose what's actually been done to it. If the covenant wasn't filed, it doesn't exist and there's nothing to give to the Planning Commission. If it were acceptable to parade non-existent items in front of the Planning Commission, they would be tied up with false promises and never get anything done.

    If the covenant was legal (which it appears that it's not), it is still irrelevant to the planning commission. Remember, City of Germantown is NOT a party to the covenant -- only the signed parties are. This isn't rocket science. The agreement only says that Ruleman or heirs will not seek zoning change for the specific purpose of the development specifically outlined in the agreement. It doesn't say that City of Germantown can't rezone it. This isn't rocket science.

  4. Well at least now we have an admission that promises to neighborhoods mean nothing because the Planning Commission would be "tied up with false promises." However you characterize this signed agreement, it certainly is NOT a false promise. If you want efficiency above promises, that is where your values and mine go opposite ways.

    In fact, the fortuitous discovery by Mr. Massey has led to the third reading of the zoning change being put off twice, and the apparent willingness of the developer to try to reach a compromise with the residents, something he was unwilling to do prior to the discovery. If the document had no legal merit, the third reading would have happened and that would be the end of it.

    Are you saying that the Planning Commission would approve a project if there was a covenant present that would preclude the project from being constructed? Why is a covenant even included on the checklist for developers? If it is of no consequence to the city whether or not there is a covenant, then why should it be reported to the Planning Commission by the developer and on the checklist? Your explanation makes no sense.

    I don't know if Mr. Duke knew about this covenant or not. But, assume he didn't. And assume that Reaves did not tell him about it. Assume the City rezoned the property, knowing about the covenant. After beginning to build the development, the residents discover it and sue. Suppose they win? Why would the City not be at fault for approving a development that had a covenant that was in the City files and in the City BMA minutes? And while it is true that covenants should be recorded, there are definitely circumstances where unrecorded covenants are deemed in force by the courts. Whether the circumstances here meet those criteria we will have to see, in Court, if the two parties cannot come to an agreement. Yes, not only is disclosing the covenant the right thing to do from a moral point of view, (the signed document being a promise), it also ensures that the City would not unnecessarily be caught up in a lawsuit.

    Also, keep in mind that some of the original development did get done. Otherwise there would not be a furniture store on the corner.

  5. I think you're misunderstanding the process and where the responsibilities reside. First, there's no admission that "promises to neighborhoods mean nothing." That's ridiculous! What I wrote was that the PC must have standards and that it can't treat every claim of a verbal promise as settled law. If that were the case, nothing would ever get done and most of us wouldn't live here, since our houses would never have been built.

    Where you're misunderstanding the process is that the covenant in question (which, by all standards appears to not be legal nor binding) only applies to the original applicant and the residents who signed it. City of Germantown is NOT bound by that covenant. All it says is that, IF enacted and filed, Ruleman and his heirs can't approach the City and seek a re-zoning, without signature of the residents. Since you're talking promises, it was only a promise between neighbors, not a promise from the City. Thus, there's nothing for the city to concern itself with here.

    Why are covenants listed on the application checklist, you ask? It's there to force potential developers do their due diligence and do title searches before bringing an application to the PC. It's there to make sure that the PC's time and the applicant's time isn't wasted. There were three title searches done in this matter and NONE of them returned a covenant. Thus, due diligence was satisfied. Remember, the covenant was a promise between neighbors and did NOT include the City.

    The withdrawal of the application from the 3rd reading is absolutely no indication of legality, whatsoever. In this particular case, it's an indication of the developer wanting to be a good neighbor and meet with the neighboring residents to reach an agreement. If you want to talk about morals, this is where you should be focused. Remember, the City had no part in the original agreement, so it has no part in this agreement, either. The parties involved are working it out amongst themselves -- as they should.

  6. Right! The developer suddenly decides to be a good neighbor, after not negotiating with the neighbors at all, and it is merely a coincidence that this occurred right the residents hired an attorney, and it was discovered that the covenant not only was read into BMA minutes at the time the zoning was voted on on 2006, we learned the City was instrumental in negotiating it.

    The title searches miss things when developers fail to file covenants. They would have had to search BMA minutes.

    Despite what you say this was a promise to a neighborhood, and the City actually helped with the negotiations! You just can't get around that. The City failing to disclose this was very poor judgment. Again, if the residents had found out about this after a lot of the site work was done, then, like it or not, the City could have been dragged into a lawsuit......all due to failure to disclose the covenant.