How to interpret covenant that restricts building on a lot smaller than 16,000 sqft

Question

Hey folks, I'm looking for some help interpreting this covenant that applies to a 10,000 sqft lot in Brunswick County NC. There is no HOA, the covenants were drafted and signed by the residents of the subdivision, so there's no single source of truth I can consult on what the intent of the covenant is.

This is the covenant word for word:

"There shall be no dwelling placed on or permitted to remain on any lots or lots where the lot contains less than 16,000 square feet. However, an exception to this square footage restriction shall be given to any lot of record existing prior to January 24, 1977, as long as the current building setbacks can be met on said lot. "

What's strange about this covenant, is ALL of the lots in that subdivision were originally smaller than 16,000 square feet, according to the plat map dated 1967, so the exception seemingly omits ALL lots. I'm trying to understand the intent of the exception to make sure this can't be interpreted some other way that could prevent me from building a single family home on this lot.

I've spoken to a RE attorney, who also sought council from a title insurance company, and both feel that if anyone tried to file a suit against me for building a home on this 10,000 sqft lot, they would likely not have a case, but the RE attorney feels there's still some small risk that the covenant had some intention, that's not clear from the wording, that a resident of the subdivision could try to enforce.

The RE attorney's best guess at what the intention of the covenant is, is it would prevent anyone that combined lots to then break them back down to smaller than 16,000 sqft.

Timothy Fortin · Answer

Residents of the sub division recorded the covenants in 2018, there is no HOA. Looks like there was a “ring leader” so to speak but attempts to make contact with him have been fruitless, according to online searches he no longer lives in the area.

Kristi Kandel · Answer

Who recorded the covenant? AKA who is enforcing it?   Is this an AHJ issue or a HOA issue? Depending on that will depend on the next steps for vetting the issue and feeling confident in how you'll proceed.

Peter Walther · Answer

The only person competent to interpret the "intent' of the restriction is a court with jurisdiction.  Anyone else is just guessing.

If the restriction dates to 1967, does it contain an expiration date or does it self-renew?  Does it identify who has a right to enforce the restriction?  It may be that anyone affected by the restriction may have that right so your attorney is right to advise you there is a possibility, no matter how sleight, that a suit to prohibit construction could be filed.  Have other homes been built in apparent violation of the restriction?  If so, it's less likely the restriction could be enforced against just you.

Are you asking because you're considering buying and are concerned about the restriction being enforced?  If so, ask for a title commitment and confirm it does not contain an exception for the restriction and the policy will not either.

If you're planning on building, I'd recommend you ask for a commitment and policy with an amount of insurance equal to what the estimated market value to be at the end of construction.  This way there should be coverage for any additional money you put into improving the property if suit was to be filed.  The policy will probably also contain a clause that limits liability to the value of the property at the time a claim is made.

I hope this helps.

Timothy Fortin · Answer

Thanks Chris!  The lot was platted in 1967.  There is a separate covenant that basically states "one single family dwelling is permitted per lot", so that case of someone combining multiple lots and building multiple dwellings should be covered under that.

Assuming your line of reasoning was the intent for the covenant I quoted, I'm not fully understanding how the covenant I quoted would prevent someone from "combining multiple lots for multiple properties", would you be able to elaborate?

I'm probably making a mountain out of a mole hill here but this is a large investment for me.

Chris Seveney · Answer

You are omitting one major detail. When was your lot platted? If its before 1977 then you are fine to build as you follow those guidelines.

This is not uncommon actually as what they want is they do not want someone combining multiple lots for multiple properties. If someone combined 2 or 3 lots they still could only build one home.

hope that makes sense.