## Facts

- A developer subdivided a tract around a small lake into sections known as Allison Acres.
- The developer’s principals formed Beekmere, Inc., a for-profit corporation, to hold and operate the lake and recreational facilities for lot owners’ use.
- A recorded subdivision plan and certain instruments included a covenant requiring each lot purchaser to (1) buy one share of Beekmere stock and (2) pay annual assessments for maintenance and operation of the lake and recreational areas.
- Lot owners filed a class action seeking a declaration that the covenant was invalid or unenforceable against successors in title.
- Beekmere and related parties brought (and consolidated) actions to collect a $100 stock subscription fee and a $75 annual assessment (1969) from each lot owner.

## Issues

1. Whether a subdivision covenant requiring lot owners to purchase stock in an entity operating common recreational facilities and to pay annual assessments is enforceable against subsequent purchasers.
2. Whether the obligation may be enforced as a covenant running with the land or, alternatively, as an equitable servitude where purchasers had notice and the covenant formed part of a general development scheme.
3. Whether enforceability is barred by public policy because the operating entity was a for-profit corporation organized and controlled by the developer.

## Decision

- The court entered judgment for Beekmere and declared the covenant valid and enforceable against the lot owners.
- The court enforced the obligations as an equitable servitude binding successors who took with notice as part of a common-plan subdivision scheme.
- The court upheld Beekmere’s right to collect the stock subscription and annual assessments, subject to the limitation that assessments be reasonable and applied to the intended maintenance and operation of the common facilities.

## Legal Principles

- Affirmative obligations to pay for maintenance of common subdivision amenities (e.g., lakes and recreational areas) may be enforced against successors when the obligations benefit the lots and are imposed under a general development plan.
- A covenant “touches and concerns” the land when the burden (payments) is sufficiently connected to a benefit that materially enhances the value or enjoyment of the benefited lots.
- Even if technical requirements for enforcement as a legal real covenant are disputed, equity may enforce the obligation as an equitable servitude against purchasers with record or actual notice.
- Use of a corporate vehicle, including a for-profit corporation, does not by itself invalidate a mandatory membership/assessment scheme where the charges are reasonably related to, and used for, operating and maintaining the common facilities.

## Conclusion

The court treated the stock-purchase and assessment obligations as enforceable equitable servitudes in a common-plan subdivision because they were tied to and benefited the lots, purchasers had notice, and the payments were necessary to maintain the lake and recreational facilities, with reasonableness limiting the assessments’ amount and use.


Petersen v. Beekmere, Inc., 117 N.J. Super. 155, 283 A.2d 911 (Ch. Div. 1971)