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In Callahan, et al. v. Point Clear Holdings Inc., the lot owners’ sole route of access to their homes was via a street that was originally owned by a resort developer.
Lot owners held a "private easement for streets." The resort developer’s successor, a residential developer, planned to build new homes in the area, and planned to open the private street to public use by residents and guests of the new-home community.
Lot owners amended the restrictive covenants governing their subdivision and sued for declaratory relief to enjoin the successor developer from using the street to benefit any properties that didn’t exist at the time the easement was created, and to further enjoin the developer from converting the private street to public use.
The U.S. District Court for the Southern District of Alabama agreed with the lot owners and issued an injunction prohibiting the successor developer from opening the street to private use. On review, however, the 11th Circuit Court of Appeals overturned the district courts ruling.
The appellate court analyzed the express terms of the easement and Alabama case law, finding that successor developer retained the right to use the easement along with lot owners so that the only question was the scope of successor developer’s right to use the easement.
Though lot owners cited the restrictive covenant’s reference to "private streets," the court clarified that the text actually stated "private easements for streets."
Language elsewhere in the grant verbiage expressly reserved the original developer’s right to use the easement for guests of the resort.
Accordingly, the court opined, there was no support for the lot owners’ argument to exclude expanded use by the developer: "the only interest granted to the lot owners was an easement for a street … a nonexclusive right-of-way by which the lot owners may access their lots."
The court explained that Alabama law frowns on exclusive easements, as they would give the easement holder the equivalent of an ownership interest in the property.
Since easements — and the right to use them — run with the land, the successor developer was also a successor to the original developer’s right to expand the use of the street, and the district court’s ruling was overturned.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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