Real Covenants: Restrictions on Surface Use Bonus: Refund

摘要

In 1999, as part of the subdivision of the Weiden Lake Community, a plat is filed that contains a number of restrictive covenants including limiting surface use to single family homes, agricultural or recreational uses, and expressly prohibiting commercial uses. Klansky purchases a 66.17 acre tract within the Community described as Lot 25. He is aware of the restrictive covenants. Several years later Klansky executes an oil and gas lease to Cabot for a primary term of five years. The Weider Lake Property Owners' Association then brings this action arguing mat the proposed oil and gas development is a commercial use that is prohibited by the covenants, conditions and restrictions filed with the subdivision plat. While restrictive covenants are construed in favor of the free use of land, the clear language contained in the subdivision plat prohibits all commercial, nonresidential, non-agricultural and non-recreational uses. Not only was Klansky aware of the restrictions, but so was Cabot Oil since the CC&R's were filed of record with the county. The court rejects Klansky's argument that the purpose of the CC&R's is to protect the lake and that his acreage is over a mile from the lake. The court thus grants the plaintiffs motion for declaratory relief, stating that the CC&R's prohibit the use of the Klansky acreage for exploration, drilling or production activities. Cabot also files a cross-claim against Klansky for return of the $99,255 bonus it paid him upon the execution of the lease. Because Cabot's claim is essentially one for rescission it is based on equitable factors. In this case Cabot should have been aware of the CC&R's when it executed the oil and gas lease. There is no mistake of law that would excuse Cabot from knowing that it could not develop the Klansky acreage.