I.
The pertinent facts in this case are undisputed. Defendants
W. Stephen Gilboy, Joan Gilboy, and R. Michael Gilboy (the
developers) sought to develop a subdivision on approximately 180acres of land in Henderson County. On 30 April 1987, the
developers executed and recorded Protective Covenants (the
covenants) for the Claremont Subdivision (the subdivision).
Paragraph 16A of the covenants provides that the cost of
maintaining all of the roads within the subdivision will be divided
by the number of lots, with the owner of each lot paying an equal
pro rata share. Paragraph 16B states in pertinent part: “Each lot
is hereby made subject to a specific and continuing lien to secure
the payment of such charges, including interest thereon, and this
lien shall run with the land and be enforceable notwithstanding any
change of ownership of the lot.” Paragraph 16 also provides that
the developers will pay road maintenance fees on the same basis as
any other lot owner for any lot that has not yet been sold.
Finally, Paragraph 16D provides that the developers may assign to
an association of the property owners “the right to maintain the
subdivision roads and to collect the costs thereof from the owners
of the lots.” In 1990, pursuant to this provision, the developers
assigned these rights to plaintiff.
The developers developed the subdivision over a period of
years in multiple phases, periodically recording plats depicting
additional lots on the property. That the covenants contemplate a
gradual development in multiple phases is borne out by a provision
defining “Claremont Subdivision” as the property “shown on plats
filed or to be filed,” and by a provision declaring the covenants
to be binding upon the property identified by “plats of Claremont
Subdivision (whether now or hereafter recorded).” On 3 March 1993,
and again on 5 January 1994, the developers recorded plats with theHenderson County Register of Deeds depicting Lots 109 and 110 as
two separate lots situated side by side facing Claremont Drive.
Subsequent to filing these plats, the developers paid road
maintenance fees to plaintiff for Lots 109 and 110 individually.
On 15 August 1995, these plats were amended by a plat which depicts
Lot 120 as a combination of former Lots 109 and 110. However,
despite combining the lots, the developers continued to pay two
individual road maintenance fees for this property.
Lot 120 was then conveyed by the developers to defendant Myron
Steppe on 13 March 1996. Since that time, plaintiff has attempted
to assess and collect from Steppe road maintenance fees for two
lots. However, Steppe has refused to pay fees for two lots,
contending that he is obligated to pay fees for only one lot.
On 8 February 1999, plaintiff filed a complaint seeking a
declaratory judgment as to (1) whether the developers have the
right to combine previously platted lots in Claremont Subdivision
for the purpose of reducing the annual road maintenance fees, and
(2) whether the developers have the right to amend the covenants
and to create new rights of way in the subdivision. The trial
court's judgment, entered 30 August 1999, sets forth three
conclusions “as a matter of law”:
1. Although the Restrictive Covenants do not
address the issue of whether or not after a
lot is platted, the Developer without the
permission of other land owners may combine
two lots into one, and reduce the obligation
to pay road assessments, it appears to the
undersigned that the intention of the
Developer at the time the restrictions were
filed was to establish lots with obligations
at the time of the filing and thereafter, to
pay road assessments. Otherwise, he would not
have contained the provision within therestrictions by which the Developer himself
pays the road assessments per lot until the
lot is sold.
2. Purchasers of lots from the plats as filed
had a right to assume that they would be
paying a certain proportion of the road
maintenance costs as shown by the plat, and to
assume that the owners of each and every other
lot on said plat would pay an equal sum
pursuant to the plan of road maintenance as
contained in the restrictive covenants.
3. Since lots had been sold from the plats
enumerating Lots 109 and 110 as separate lots
prior to the amended plat combining them, it
would be inequitable to the purchasers of
other lots to allow the road assessments for
Lots 109 and 110 to be reduced without their
permission.
We note that the trial court's judgment does not address the
developers' right to amend the covenants, and defendants do not
assign error to the trial court's failure to address this issue.
Thus, although the law is clear on this issue, see Smith v. Butler
Mtn. Estates Property Owners Assoc., 324 N.C. 80, 85, 375 S.E.2d
905, 908 (1989) (holding that, in the absence of a provision in the
covenants to the contrary, restrictive covenants running with the
land in a subdivision may be modified or repealed only by a release
or agreement executed by all of the property owners in the
subdivision), the issue is not before us on appeal, see N.C.R. App.
P. 10(a).
II.
On appeal, defendants do not assign error to the six findings
in the judgment denominated factual findings by the trial court.
Defendants' assignments of error pertain only to the three findings
denominated conclusions of law recited above. However, the trial
court's first purported conclusion of law is a finding as to theintent of the developers with regard to the covenants. Our Supreme
Court has held that when the language of an instrument is
ambiguous, and when the effect of the instrument must be resolved
by determining the intent of the parties, the question of the
parties' intent is one of fact to be determined by the court. See
Runyon v. Paley, 331 N.C. 293, 305, 416 S.E.2d 177, 186 (1992).
Thus, although denominated a legal conclusion, the trial court's
finding pertaining to the developers' intent is actually a finding
of fact. Therefore, we must determine (1) whether this challenged
finding of fact is supported by any competent evidence, and (2)
whether the remaining legal conclusions are supported by the
factual findings. See, e.g., Smith v. Butler Mtn. Estates Property
Owners Assoc., 90 N.C. App. 40, 43, 367 S.E.2d 401, 405 (1988),
aff'd, 324 N.C. 80, 375 S.E.2d 905 (1989).
III.
The issue in the instant case is whether Steppe, having
purchased Lot 120, which is a combination of Lots 109 and 110, is
required by the covenants to pay road maintenance fees for one lot
or two. Our Supreme Court has explained in considerable detail the
applicable principles where restrictive covenants are imposed upon
individual lots in a subdivision:
[T]he principle upon which these restrictive
burdens on the use of lands within a real
estate subdivision are enforceable is that
they are servitudes imposed on the various
lots or parcels for the benefit of the area
affected. . . . These servitudes . . . are
usually imposed by restrictive covenants
between the developer and the initial
purchasers and become seated in the chain of
title . . . thus fixing it so each lot in alegal sense owes to all the rest of the lots
in the subdivision the burden of observing the
covenant, and each of the rest of the lots is
invested with the benefits imposed by the
burdens. Accordingly, in legal contemplation
the servitude imposed on each lot runs to and
attaches itself to each of the rest of the
lots in the restricted area, thus forming a
network of cross-easements or
cross-servitudes, the aggregate effect of
which is to impose and confer on each lot
reciprocal and mutual burdens and benefits
appurtenant to the lots, so as to run with the
land and follow each lot upon its devolution
and transfer. Therefore, where land within a
given area is developed in accordance with a
general plan or uniform scheme of restriction,
ordinarily any one purchasing in reliance on
such restriction may sue and enforce the
restriction against any other lot owner taking
with record notice, and this is so regardless
of when each purchased; and similarly, a prior
taker may sue a latter taker.
Craven County v. Trust Co., 237 N.C. 502, 512-13, 75 S.E.2d 620,
628 (1953) (citations omitted).
The covenant at issue is an affirmative obligation to pay road
maintenance fees. An affirmative obligation to pay assessments is
considered to be a real covenant, or servitude, that runs with the
land where: (1) the instrument creating the covenants reveals such
an intent; (2) there is privity of estate between the party
enforcing the covenant and the party against whom the covenant is
being enforced; and (3) the assessments are for the maintenance of
property that is located within the subdivision for the benefit of
the lot owners.
See Homeowners Assoc. v. Sellers and Homeowners
Assoc. v. Simpson, 62 N.C. App. 205, 210-11, 302 S.E.2d 848, 852-
53,
cert. denied, 309 N.C. 461, 307 S.E.2d 364 (1983). There is no
dispute in the instant case as to the existence of these threeelements. Thus, the affirmative obligation to pay road maintenance
fees is clearly a real covenant that runs with the land. As the
Supreme Court explained in
Craven County, servitudes imposed by
restrictive covenants on a subdivision that is “developed in
accordance with a general plan or uniform scheme of restriction”
run with the land and attach to each lot in the subdivision
individually, forming a network of “cross-servitudes.”
Craven
County, 237 N.C. at 513, 75 S.E.2d at 628. We believe the
affirmative obligation to pay road maintenance fees in the instant
case is a real covenant that attached to Lots 109 and 110
individually upon the filing of the original plat establishing
these lots. Furthermore, we believe the act of combining Lots 109
and 110 to form Lot 120 did not alter or negate the real covenants
that had previously attached to each lot. Therefore, despite the
fact that the property was conveyed to Steppe as a single lot, it
remains subject to an obligation to pay road maintenance fees as if
it were two lots.
The holding in
Ingle v. Stubbins, 240 N.C. 382, 82 S.E.2d 388
(1954), supports this conclusion. In
Ingle, the restrictive
covenants of a subdivision prohibited any building on a particular
lot from being located nearer that 50 feet from the “front line” of
that lot, or nearer than 10 feet from the “side street line” of
that lot.
Id. at 384, 82 S.E.2d at 390. Lots 10 and 11 were
originally platted as adjacent, rectangular lots, with front lines
on the western boundary of the property facing Bueno Street, which
was considered a main street and which ran north and south. See
id. Lot 10 was directly north of Lot 11, and was situated on the
corner of Bueno Street and Plaid Street.
See id. Thus, the
northern side of Lot 10 faced Plaid Street, which was considered a
side street and which ran east and west.
The owner of Lots 10 and 11 re-divided the property to form
three adjacent, rectangular lots, facing the northern boundary of
the property and Plaid Street.
See id. at 385, 82 S.E.2d at 390-
91. The defendant purchased the most westerly of the three lots on
the corner of Bueno and Plaid Streets and began to construct a
house facing Plaid Street.
See id. at 386, 82 S.E.2d at 392. The
front of the defendant's house was to be 50 feet from Plaid Street,
and the side was to be 31 feet from Bueno Street.
See id. at 387,
82 S.E.2d at 393. Thus, what had once been considered the “front
line” of the property was now being used by the defendant as the
side line of the property, and vice versa.
The plaintiffs, who owned Lot 12, situated directly south of
what had previously been Lot 11, instituted an action to enjoin the
defendant from building the house, contending that the house would
violate the restrictive covenants. The Court held that the
restrictive covenants established the minimum building set-back
lines for both “front” and “side” lines, and that these terms were
to be interpreted as referring to the “front” and “side” lines as
each existed at the time the restrictive covenants were executed.
Id. at 389, 82 S.E.2d at 394.
Thus, the Court concluded that the
defendant's building would violate the covenants because the side
of the building would be less than 50 feet from what was originallyconsidered the “front” line of the property.
Id. at 38
9-90, 82
S.E.2d at 395.
From the Court's holding in
Ingle, we derive two principles.
First, the servitudes imposed by the restrictive covenants of a
subdivision attach to each individual lot at the moment the
subdivision becomes subject to the covenants. This may occur upon
the execution of the covenants if the subdivision is already
complete, or, as in the instant case, it may occur upon the filing
of a new plat of lots if the plat is intended to be subject to
covenants already in existence.
Second, any ambiguous terms in the covenants must be
interpreted according to what they meant at the time the servitudes
attached to the individual lots. Thus, Paragraph 16A, which
provides that “[t]he maintenance cost paid by the owner of each
lot, for that lot, shall be the total cost of maintenance of said
roads divided by the total number of lots served by said roads,”
must be interpreted according to what the term “lot” meant at the
time the property became subject to the covenants. At that time,
the division of lots on the original plat depicted Lots 109 and 110
as two individual lots. Therefore, the servitudes in the
covenants, including the obligation to pay road maintenance fees,
attached to Lots 109 and 110 individually. This is not to suggest
that lots may not be combined or re-subdivided. As in
Ingle, the
property may be combined or re-subdivided into different lots for
purposes of ownership or convenience, but, absent a provision in
the covenants to the contrary, the property must always conform tothe servitudes created by the covenants as they originally attached
to the property.
See Callaham v. Arenson, 239 N.C. 619, 80 S.E.2d
619 (1954) (holding that the owner of four lots in a subdivision
could re-subdivide the property into eight lots provided that the
property continued to conform to the restrictive covenants).
Furthermore, the extrinsic evidence tends to support the trial
court's finding that the developers intended to fix the lot
divisions according to the original plat for purposes of applying
the covenants. Where restrictive covenants are ambiguous, their
meaning must be construed by determining the intent of the parties,
and the intent of the parties must be gathered from an examination
of all the covenants contained in the instrument as well as an
examination of the surrounding circumstances.
See Long v. Branham,
271 N.C. 264, 268, 156 S.E.2d 235, 238-39 (1967).
The other restrictions set forth in the covenants support the
conclusion that although the developers intended to allow the
combining of lots, they also intended that the road maintenance fee
obligation would attach to each lot upon creation of the lot by
recorded plat, and that the combining of lots would not alter these
fee obligations. Paragraph 2D expressly allows the owner of two or
more adjoining lots to combine the lots in order to satisfy the
three acre requirement for erecting a guest house pursuant to
Paragraph 2B. The covenants do not contain an analogous provision
allowing lot owners to combine lots to reduce road maintenance
fees. Furthermore, Paragraph 16A provides that the developers
shall pay road maintenance fees on the same basis as any other lot
owner so long as they own any lots in the subdivision. Thus, ifthe subdivision contained 100 lots, with 90 lots already purchased
by individual owners and 10 still owned by the developers,
paragraph 16A would require the developers to pay approximately one
tenth of the total road maintenance costs. If, however, an owner
were allowed to combine multiple lots to form a single lot for
purposes of calculating road maintenance fees, the developers
could, in this hypothetical situation, combine the 10 lots to form
one single lot, and, as a result, pay a significantly smaller
fraction of the total costs. That such a result would undermine
the intended scheme for paying road maintenance fees is obvious.
This supports the conclusion that the system created by the
covenants does not contemplate treating property resulting from the
combination of multiple lots as a single lot for purposes of
calculating road maintenance fees.
In addition to examining the covenants themselves, intent may
be gleaned from actions undertaken by the developers, both prior to
and subsequent to the execution of the covenants.
See id. at 274,
156 S.E.2d at 243 (holding that developers' intent to prohibit the
building of additional roads over lots in a subdivision could be
inferred from the fact that developers believed it was necessary to
amend the covenants to allow for the building of a particular road
over a particular lot). In the instant case, the developers
continued to pay road maintenance fees for two lots subsequent to
combining Lots 109 and 110 and prior to the conveyance of Lot 120
to Steppe. Thus, it appears the developers believed that, despite
combining two lots into one, the road maintenance fees were to be
assessed according to the division of lots as established by theoriginal plat.
For the reasons set forth herein, we hold that there is
competent evidence in the record to support the trial court's
finding that “the intention of the Developer at the time the
restrictions were filed was to establish lots with obligations at
the time of the filing and thereafter, to pay road assessments.”
Furthermore, we hold that the findings support the legal conclusion
that road maintenance costs should be calculated according to the
division of lots appearing in the original plat, and that defendant
Steppe is, therefore, obligated to pay road maintenance fees for
two lots.
Affirmed.
Chief Judge EAGLES and Judge SMITH concur.
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