Pastor, Church & Law

Key point 7-13. A restrictive covenant is a restriction on the use of property. Such restrictions often are noted in deeds to property, but they may appear in other documents as well. Such restrictions apply to a church’s use of its property.

A restrictive covenant is a restriction on the use of property. Often, such covenants appear in deeds. Property owners, including churches, are legally bound by such restrictions. As a result, it is important for church leaders to review the deed to their property to be sure they are familiar with any such restrictions. However, as the following examples illustrate, such restrictions are not always legally enforceable.

Case studies

• A Missouri court ruled that a restrictive covenant contained in the deed to church property prevented a church from building a parking lot. The church owned and occupied several lots within a subdivision. Church leaders wanted to construct parking lots on three of the lots it owned. A homeowners’ association sought a court order permanently enjoining the church from building parking lots on its property. The association claimed that the building of parking lots would violate a 1917 restrictive covenant covering each lot in the subdivision. The covenant specified that “none of said lots shall be improved, used nor occupied for other than private residence purposes.” The court found conceded that restrictive covenants are “regarded unfavorably and are strictly construed because the law favors the free and untrammeled use of real property.” Nevertheless, restrictive covenants “will be enforced where the intention is clear.” The court rejected the church’s argument that the restrictive covenant could be ignored as a result of “changed circumstances.” To establish changed conditions warranting non-enforcement of a restrictive covenant, “the burden rests on the defendant to prove: (1) the radical change in condition; (2) that as a result enforcement of the restrictions will work undue hardship on him; (3) and will be of no substantial benefit to the plaintiff.” The court acknowledged that “no hard and fast rule can be laid down as to when changed conditions have defeated the purpose of restrictions, but it can be safely asserted the changes must be so radical as practically to destroy the essential objects and purposes of the agreement.” The court disagreed that “changed circumstances” warranted non-enforcement of the covenant.²¹⁸ Country Club Homes v. Country Club Christian Church, (Mo. App. 2003). See also Fitzwilliam v. Wesley United Methodist Church, 882 S.W.2d 343 (Mo. App. W.D. 1994).
• A North Carolina court ruled that a restrictive covenant in a deed to a church’s property requiring it to use the property for residential purposes was not legally enforceable because of nonresidential uses by several lots covered by the covenant, and because the restrictions had been waived. The court noted that restrictive covenants may be terminated in several ways: “Covenants may be terminated when they provide for their own termination. Covenants may also be terminated when changes within the covenanted area are so radical as practically to destroy the essential objects and purposes of the agreement.” Even if a restrictive covenant has not been terminated, it is possible that it will not be given effect if it has been “waived.” The court concluded that the covenant was no longer enforceable because of the “changes within the covenanted area are so radical as practically to destroy the essential objects and purposes of the agreement.” It conceded that the residential restriction was put in place for the “protection and general welfare of the community,” and that residential restrictions are generally “a property right of distinct worth.” However, in this case, “the changes have destroyed the uniformity of the plan and the equal protection of the restriction.”²¹⁹ Medearis v. Trustees of Meyers Park Baptist Church, (N.C. App. 2001).
• A Texas court ruled that a church had to be evicted from its property because its use of the property for religious purposes violated a restrictive covenant in a prior deed. The covenant stated that the property “shall be used for commercial/light industrial purposes only.” The court noted that “the issue we must address here is not, of course, whether these sorts of religious activities on property are generally permissible or desirable, but whether the church’s use of the property is a distinct or substantial breach of the restrictive covenant’s requirement that the property be used solely for commercial/light industrial purposes. … We conclude that the church’s use of the property for church purposes is a distinct or substantial breach of the terms of the restrictive covenant.”²²⁰ Cornerstone Church Corporation v. Pizza Property Partners 160 S.W.3d 657 (Tex. App. 2005). The court rejected the church’s argument that enforcing the restrictive covenant violated its right of religious freedom under the state constitution. It noted that the courts have “routinely rejected the notion that a neutral, otherwise valid restrictive covenant violates constitutional religious freedom protections if applied against a church.”

Restrictive Covenants Checklist

Many churches have purchased property that contains one or more restrictive covenants. Such covenants restrict a church’s lawful use of its property. If church leaders are not aware of the existence of a covenant, they may inadvertently violate it. This can trigger an immediate lawsuit by neighboring landowners. Here are three rules to note:

• Be careful to inspect the proposed deed to any property you are acquiring by purchase or gift. Does it contain one or more restrictive covenants that could hinder the church’s use of the property? If so, this issue should be resolved before title to the property is transferred to the church.
• Check out prior deeds in the “chain of title” of property prior to purchase, since restrictive covenants may be imposed in a prior deed. Such covenants “run with the land” because each subsequent deed, like the deed in this case, recites that it is “subject to any and all restrictions, encumbrances, easements, covenants and conditions” on the property.
• Check out the deed to your current property to see if it contains one or more restrictive covenants. If it does, has your church (and other neighbors) been violating them for years? If so, you may be able to argue that the restrictions have been “waived” by continual violation without objection, or that they have been “terminated” by substantial changes in the lots covered by the restriction. Do the same with prior deeds in the chain of title. A title company or real estate attorney can perform this task for you.