## Facts

- Presley recorded a replat for the Vista Del Sandia subdivision in 1979 and recorded restrictive covenants in 1982 covering all property on the replat, including an arroyo tract.
- The covenants established a single-family residential scheme by regulating land use and the type, quality, and size of dwellings permitted in the subdivision.
- The Appels purchased a lot in 1982 and alleged they were told the restrictive covenants reflected the intended nature of the development and were used as a sales tool on which they relied in buying and building their home.
- In 1984, the subdivision Architectural Control Committee—composed of three Presley employees or officers—executed an amendment deleting nine lots from the covenants, including lots relevant to later development plans.
- Wolfe later owned one of the deleted tracts and proposed construction of four townhouses, a use inconsistent with the original single-family scheme.
- The Appels sued Presley, Wolfe, and others for breach of restrictive covenants, negligent and fraudulent misrepresentation, and unfair trade practices, seeking injunctive relief and damages.
- The district court granted summary judgment for Presley and Wolfe, and the Appels appealed.

## Issues

1. Whether an amendment clause allowing a developer or its architectural control committee to amend recorded restrictive covenants permits exempting particular lots from restrictions without other owners’ consent, and what limits apply.
2. Whether summary judgment was improper because factual disputes existed as to the reasonableness of the amendment and whether it materially altered the subdivision’s general plan.
3. Whether claims for misrepresentation and unfair trade practices could proceed given disputed facts about sales representations and purchaser reliance.

## Decision

- The New Mexico Supreme Court reversed the summary judgment and remanded.
- The court held that amendment provisions in subdivision restrictions are enforceable only subject to a reasonableness requirement.
- The court ruled an amendment power is not invalid per se, but it may not be exercised in a way that destroys the general plan or scheme of development or disregards purchasers’ reliance-based property interests.
- The court concluded material fact disputes existed regarding the effect of deleting nine lots from the covenants and the Appels’ reliance on the original restrictions, making summary judgment improper.

## Legal Principles

- A recorded clause authorizing amendment of subdivision restrictive covenants is valid only if exercised reasonably.
- Reasonableness requires that amendments not destroy or materially defeat the subdivision’s general plan or scheme.
- Reasonableness also requires regard for the property rights and expectations of purchasers who bought in reliance on the restrictions in effect at the time of purchase.
- Where the reasonableness of a covenant amendment and related reliance questions are fact-dependent and disputed, summary judgment is improper.

## Conclusion

The court required judicial review of developer- or committee-made covenant amendments for reasonableness, reversing summary judgment because a factfinder had to determine whether exempting multiple lots from a single-family scheme unlawfully altered the subdivision’s plan and injured purchasers who relied on the original restrictions.


Appel v. Presley Cos., 111 N.M. 464, 806 P.2d 1054 (N.M. 1991)