Legal Definitions - implied reciprocal covenant

An implied reciprocal covenant refers to a mutual promise or agreement that is not explicitly written down in a legal document but is understood to exist between parties due to their actions, the circumstances, or an overarching plan or scheme. It is 'implied' because it's inferred rather than stated, and 'reciprocal' because it creates mutual obligations and benefits among the parties involved.

This concept often arises in real estate, particularly in planned communities or subdivisions. If a developer establishes a common scheme of restrictions for a group of properties (e.g., residential-only use, specific building materials, minimum lot sizes) and sells most of the properties with these restrictions clearly stated in their deeds, then even if one or a few deeds accidentally omit a particular restriction, that restriction may still be legally binding on those properties. The courts infer that the restriction was intended to apply to all properties within the common scheme because it benefits all property owners equally and was part of the original development plan.

• Example 1: Residential Subdivision Restrictions

  A developer creates a new residential neighborhood called "Oakwood Estates." The developer sells the first 50 lots, and every deed explicitly states that "no commercial businesses shall operate on the property" and "all homes must be single-family dwellings." Due to an administrative oversight, when the developer sells the 51st lot to a new homeowner, the deed for that specific lot accidentally omits the "no commercial businesses" restriction. The new homeowner later decides to open a small accounting firm out of their home.

  How it illustrates the term: Even though the restriction isn't in the 51st homeowner's deed, an implied reciprocal covenant would likely prevent them from operating a commercial business. The consistent inclusion of this restriction in the deeds of the other 50 properties, and the clear residential character of Oakwood Estates, establishes a common scheme. The restriction is implied for the 51st lot because it's reciprocal – it benefits all homeowners by preserving the residential nature and property values of the neighborhood, and it was clearly intended to apply to all properties within the development.

• Example 2: Architectural Standards in a Planned Community

  A master-planned community, "Riverbend Greens," has an established set of architectural guidelines, including rules about exterior paint colors, landscaping requirements, and fence heights, all designed to maintain a cohesive aesthetic. These guidelines are referenced in the homeowners' association (HOA) documents and most property deeds. A new homeowner purchases a lot, and their specific deed, due to a clerical error, does not explicitly mention the requirement that "all fences must be no taller than six feet and made of wood or wrought iron." The new homeowner plans to install an eight-foot chain-link fence.

  How it illustrates the term: The HOA could likely enforce the six-foot wood or wrought iron fence rule against the new homeowner through an implied reciprocal covenant. The widespread application of these architectural standards across the community, as evidenced by other homes and the HOA's consistent enforcement, creates a clear common scheme. The covenant is implied for the new homeowner's property because it's reciprocal – maintaining consistent architectural standards benefits all residents by preserving property values and the community's aesthetic appeal.