Facts
- A developer recorded restrictive covenants governing “Limited Residential” lots in a planned resort subdivision on Hilton Head Island, South Carolina.
- The covenants required prior written approval of building and location plans before any construction and expressly permitted disapproval for “purely aesthetic considerations.”
- The developer created a nine-member Architectural Review Board (ARB) and issued written procedures and guidelines stating the goal of preserving high aesthetic and material standards.
- The guidelines identified aesthetic factors for review, including roof line, neighbors’ views, harmony with the area and natural surroundings, and landscaping.
- George F. Brown bought an unimproved lot subject to the recorded covenants and submitted plans to build a personal residence.
- The ARB twice rejected Brown’s plans on aesthetic grounds, including that the garage front and roof line overpowered the house and the design was not harmonious with the area.
- After discovering steps indicating imminent construction, the developer obtained a temporary restraining order and then a permanent injunction barring construction under the rejected plans.
Issues
- Whether a recorded covenant requiring prior written approval of building plans and permitting rejection for “purely aesthetic considerations” is valid and enforceable.
- Whether the ARB acted reasonably and in good faith, rather than arbitrarily or capriciously, in disapproving Brown’s plans.
Decision
- The South Carolina Court of Appeals affirmed the permanent injunction.
- The court held the aesthetic-based approval covenant was valid and enforceable when read with the development’s stated purposes and written guidelines.
- The court held the ARB’s disapproval was not arbitrary, capricious, or unreasonable because it relied on criteria identified in the guidelines (including roof line and harmony with surroundings).
- Prior approval of similar plans for other owners did not, by itself, establish unequal or arbitrary treatment on this record.
Legal Principles
- Restrictive covenants conditioning construction on prior plan approval, including express aesthetic review authority, are enforceable in planned developments when consistent with a stated development plan and accompanying guidelines.
- An architectural review authority must exercise approval power reasonably and in good faith; it may not reject plans arbitrarily or capriciously.
- Aesthetic judgments may be upheld where the governing instruments supply an identifiable framework for review (e.g., harmony with surroundings, roof line, effect on neighbors).
- Equity may enforce valid covenants through injunctive relief to prevent construction that proceeds without required approval.
Conclusion
The court upheld an architectural-control covenant allowing aesthetic disapproval and affirmed an injunction because the ARB applied the recorded covenants and written guidelines in a reasonable, good-faith manner when rejecting the homeowner’s plans.