Grutz conveys lots 1-4 to various Grantees and each Grantee agrees to a written covenant restricting their lots to residential use only. Although Grutz did not agree to restrict any of his land pursuant to the plan of residential development, he apparently orally represented to the Grantees at the time they purchased that all of the lots would be restricted to residential use only.
Grutz conveys lot 5 to Duncan without any restrictive covenants.
Duncan intends to build a Gordon Ramsey's Kitchen on Lot 5 and conduct a fine dining restaurant business on the property.
Is the oral agreement Grutz made to restrict Lot 5 enforceable as an equitable servitude against Duncan, whose deed to Lot 5 contains no express covenant restricting his use of Lot 5 to residential use only?
What does the Court hold? What is their reasoning?
The Court says that under the Massachusetts Statute of Frauds, "an equitable as well as a legal interest in land must be evidenced by some sufficient instrument in writing or it is unenforceable."
The implied equitable servitude theory does not work here, because the Massachusetts' cases take the Statute of Frauds very seriously and enforce it here to protect Duncan from an oral or implied equitable servitude.
This is not a major issue in practice, because most residential developments contain carefully drafted covenants in each deed in the subdivision.
Sprague v. Kimball--Must a covenant be in writing under the Statute of Frauds? The answer should clearly be yes, because covenants & servitudes are interests in land subject to the Statute. However, as a leading Hornbook points out, many courts either don't apply the Statute or find clever exceptions to avoid enforcing it. Thus, although "in theory the Statute applies... in practice it does not frequently bar the covenant." Again, the typical scheme of covenants in a single family development or a shopping center development is carefully drafted and properly recorded, so the Statute is usually clearly satisfied in any event.
