Citizens for Covenant Compliance v. Anderson

906 P.2d 1314, 12 Cal. 4th 345, 47 Cal. Rptr. 2d 898, 96 Cal. Daily Op. Serv. 50, 96 Daily Journal DAR 79, 1995 Cal. LEXIS 7352

• Court: California Supreme Court
• Decided: December 29, 1995
• Docket: S043578
• Status: Published

Opinions

Opinion

ARABIAN, J.

The Andersons want to plant and harvest grapes, operate a winery, and keep llamas on their property in Woodside. Some neighbors object, and claim such activities are prohibited by covenants, conditions and restrictions (CC&R’s) that limit the Andersons’ property, and theirs, to residential use. The Andersons counter, thus far successfully, that the CC&R’s are not enforceable because they are not mentioned in any deed to their property. The dispute is now before us.

Its resolution requires us to penetrate a legal thicket entangled by the ancient doctrines of convenants that run with the land and equitable servitudes. The task is not easy. “The law of easements, real covenants, and equitable servitudes is the most complex and archaic body of American property law remaining in the twentieth century.” (French, Toward a Modern Law of Servitudes: Reweaving the Ancient Strands (1982) 55 So.Cal.L.Rev. 1261.) Another commentator uses stronger language: “The law in this area is an unspeakable quagmire. The intrepid soul who ventures into this formidable wilderness never emerges unscarred. Some, the smarter ones, quickly turn back to take up something easier like the income taxation of trusts and estates. Others, having lost their way, plunge on and after weeks of effort emerge not far from where they began, clearly the worse for wear. On looking back they see the trail they thought they broke obscured with foul smelling waters and noxious weeds. Few willingly take up the challenge again.” (Rabin, Fundamentals of Modem Real Property Law (1974) p. 489.)

It is, however, necessary to take up the challenge. In vino vertías. Although the relevant doctrines go back centuries, they are more vital than ever today as California becomes increasingly crowded and people live in closer proximity to one another. Planned communities have developed to regulate the relationships between neighbors so all may enjoy the reasonable use of their property. Mutual restrictions on the use of property that are binding upon, and enforceable by, all units in a development are becoming ever more common and desirable. We recently confronted the question of what restrictions may reasonably be imposed in a condominium setting. (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361 [33 Cal.Rptr.2d 63, 878 P.2d 1275].) This case addresses an earlier step in the process, considering how a general plan of restrictions is created in the first place.

The CC&R’s of this case were recorded before any of the properties they purport to govern were sold, thus giving all buyers constructive notice of their existence. They state they are to bind and benefit each parcel of property as part of a planned community. Nevertheless, the Court of Appeal held they are not enforceable because they were not also mentioned in a deed or other document when the property was sold, We disagree, and adopt the following rule: if a declaration establishing a common plan for the ownership of property in a subdivision and containing restrictions upon the use of the property as part of the common plan is recorded before the execution of the contract of sale, describes the property it is to govern, and states that it is to bind all purchasers and their successors, subsequent purchasers who have constructive notice of the recorded declaration are deemed to intend and agree to be bound by, and to accept the benefits of, the common plan; the restrictions, therefore, are not unenforceable merely because they are not additionally cited in a deed or other document at the time of the sale.

We therefore reverse the judgment of the Court of Appeal.

I. The Facts

Defendants Jared A. and Anne Anderson (the Andersons) own two adjacent parcels of property in Woodside that were part of separate subdivisions developed at different times.

One parcel was part of Skywood Acres, created in the 1950’s when Joseph and Claire Stadler subdivided land into some 60 residential building lots. On June 5, 1958, an instrument entitled “Declarations Imposing Covenants Restrictions and Agreements Affecting . . . Skywood Acres,” executed by the Stadlers, was recorded in San Mateo County. It states that the Stadlers owned the property, the map of which had previously been recorded, and expresses their “desire to establish a general plan for the improvement and development of said property and to subject said property to the following conditions, restrictions, covenants and reservations upon and subject to which, all of said property shall be held, improved and conveyed . . . Numerous restrictions follow, the first of which is that each lot “shall be used for residential purposes only.” The instrument provides that “Dogs, cats, hares, fowls and fish may be kept as household pets provided they are not kept, bred or raised for commercial purposes or in unreasonable number,” and allows keeping horses on specified lots under certain conditions. It also states, “All these conditions and restrictions shall run with the land and shall be binding upon all parties and all persons claiming under them . . . .” It further provides that, as to the Stadlers and “their grantees and successors in interest of any lot or lots” in the subdivision, the conditions are to be “covenants running with the land” enforceable by “the Subdividers, grantees or assigns, or by such owners or successors in interest.”

The portion of Skywood Acres involved here was sold on October 14, 1958, and, after intermediate conveyances, was eventually acquired by the Andersons. Neither the original grant deed nor any other deed in the chain of title leading to the Andersons refers to the recorded restrictions. The Andersons’ title insurance report, however, identifies the Skywood Acres CC&R’s.¹

The second parcel was part of the Friars subdivision, comprised of four lots. On January 24, 1977, the Town of Woodside adopted a resolution approving the parcel map for the subdivision upon certain conditions, including that the developer submit to the town attorney for approval “the convenants, conditions and restrictions applicable to this land division.” On May 10, 1977, a “Declaration Imposing Covenants, Restrictions, Easements and Agreements,” executed by the owner, was recorded.

This declaration describes the property in the subdivision and states that the owner desired and intended “to subject [the property] to certain conditions, covenants and charges between them and all subsequent purchasers . . . .” It declares that the property “shall be conveyed subject to the conditions, convenants and charges” set forth, including that the property is to be used solely for single family residences, and specifically “exclude[s] every form of business, commercial, manufacturing, or storage enterprises or activity . . . Keeping animals other than household pets and horses is prohibited. The restrictions “are declared to constitute mutual equitable convenants and servitudes for the protection and benefit of each property in the said subdivision,” and “are to run with the land.” Moreover, “Each grantee of a conveyance or purchaser under a Contract or Agreement of Sale by accepting a Deed or a Contract of Sale or Agreement of purchase, accepts the same subject to any of the covenants, restrictions, easements and agreements set forth in this Declaration and agrees to be bound by the same.” The owner of any of the parcels may enforce the restrictions.

The portion of the Friars subdivision involved here was sold two days after the CC&R’s were recorded, and eventually was acquired by the Andersons at a foreclosure sale. The original deed refers to the parcel map, but not to the CC&R’s. No other deed in the Andersons’ chain of title refers to them. The title insurance report for this lot, purchased by the original buyers, identifies the Friars CC&R’s.

The parties agree that both subdivisions were “developed from a general plan of uniform development.” Both sets of CC&R’s contain provisions regarding possible modification and termination of the restrictions. The record does not indicate whether any other deed to property in either subdivision mentions the CC&R’s.

After purchasing the two parcels of property, the Andersons entered into a limited partnership agreement with a company located in the Island of Guernsey in the United Kingdom to operate a winery under the name Chaine d’Or Vineyards. They have obtained permits from the Town of Woodside to grow grapes and produce wine on their property, subject to specified conditions. In addition, the Andersons have admitted to keeping seven llamas on the property as pets.

The plaintiffs, an unincorporated association named Citizens for Covenant Compliance and individual landowners representing both subdivisions (hereafter, collectively, Citizens), filed this action against the Andersons to enforce both the Sky wood Acres and the Friars CC&R’s, which, they claim, prohibit the wine business and the keeping of llamas. The superior court found the CC&R’s unenforceable, and judgment was eventually entered for the Andersons. Citizens appealed.

The Court of Appeal affirmed. For “several reasons,” it determined that the CC&R’s are not covenants running with the land. It also found they are not enforceable as equitable servitudes because no deed or other written instrument exchanged between a buyer and a seller refers to the CC&R’s. For this reason, the court concluded, no parcel in either subdivision was “conveyed pursuant to an express, written, agreement that it was conveyed subject to a general plan of restrictions. Absent that, it is irrelevant that the Andersons may have had actual notice of the CC&R’s.”

We granted Citizens’ petition for review.

II. Discussion

A. Background

1. Covenants and Equitable Servitudes

Modem subdivisions are often built according to a general plan containing restrictions that each owner must abide by for the benefit of all. “Ordinarily, a general plan of restriction is recorded by the subdivider grantor for the purpose of insuring the uniform and orderly development and use of the entire tract by all of the original purchasers as well as their successors in interest. The restrictions are imposed upon each parcel within the tract. These subdivision restrictions are used to limit the type of buildings that can be constructed upon the property or the type of activity permitted on the property, prohibiting such things as commercial use or development within the tract, limiting the height of buildings, imposing setback restrictions, protecting views, or imposing similar restrictions.” (Sain v. Silvestre (1978) 78 Cal.App.3d 461, 466 [144 Cal.Rptr. 478], and quoted in Fig Garden Park etc. Assn. v. Assemi Corp. (1991) 233 Cal.App.3d 1704, 1707-1708 [285 Cal.Rptr. 303], fns. omitted.)

The CC&R’s of this case contain such restrictions. The Andersons contend, however, that they never took effect because they were not referenced in any deed to their property. Citizens contends they are enforceable as either (1) covenants that ran with the land, or (2) equitable servitudes, two doctrines of distinct lineage. The dual nature of the argument has substantially complicated the question. Indeed, the differing history, uncertain mutual interplay, and varying technical requirements of these doctrines help explain why the law in the area is “an unspeakable quagmire.” (Rabin, Fundamentals of Modem Real Property Law, supra, p. 489.) One author states that the distinction between the doctrines “can best be understood as an archaic survivor of the former separation of the courts of law and equity. Each type of court developed its own set of requirements for covenants to run with the land .... Unfortunately, the modem union of law and equity has not yet produced a unified law of covenants.” (5 Powell on Real Property (1995) Covenants as to Use, § 670[2], p. 60-12, fns. omitted.) A detailed review of the history and elements of these doctrines is unnecessary but, given modem confusion and, among legal scholars at least, interest regarding the degree to which the doctrines remain separate, a brief overview is appropriate.

The first doctrine to develop was that of real covenants or, as generally stated in California, covenants that run with the land, which dates back at least to Spencer’s Case (1583 Q.B.) 77 Eng.Rep. 72. (See 5 Powell on Real Property, supra, Convenants as to Use, § 670[2], p. 60-12.) A covenant is said to run with the land if it binds not only the person who entered into it, but also later owners and assigns who did not personally enter into it. (Civ. Code, § 1460;² Scaringe v. J. C. C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536, 1543 [253 Cal.Rptr. 344].) In California, only covenants specified by statute run with the land (§ 1461), primarily those described in sections 1462 and 1468. However, prior to the amendments of section 1468 in 1968 and 1969, these sections were written and interpreted very narrowly. Under section 1462, a convenant that benefits the property may ran with the land, but not one that burdens the property. Section 1468, as originally enacted in 1905, only applied to a covenant “made by the owner of land with the owner of other land,” and not to a covenant between a grantor and a grantee. (Marra v. Aetna Construction Co. (1940) 15 Cal.2d 375, 377-378 [101 P.2d 490]; see generally, 4 Witkin, Summary of Cal. Law (9th ed. 1987) Real Property, §§ 490-491, pp. 667-669.) Because the convenants in this case are between grantor and grantee and burden the property as well as benefit it, they would not qualify as covenants that run with the land under these provisions.

Beginning with the 1848 English decision of Tulk v. Moxhay (1848 Ch.) 41 Eng.Rep. 1143, courts of equity sometimes enforced covenants that, for one reason or another, did not run with the land in law, and the separate doctrine of equitable servitudes arose. (See 5 Powell on Real Property, supra, Convenants as to Use, § 670[2], pp. 60-7 to 60-9.) California adopted this doctrine, and it accumulated its own body of rules. (E.g., Werner v. Graham (1919) 181 Cal. 174 [183 P. 945].) Because of the statutory limitations on covenants running with the land, at least before section 1468 was amended, California courts have “[traditionally” analyzed CC&R’s under the doctrine of equitable servitudes. (Scaringe v. J. C. C. Enterprises, Inc., supra, 205 Cal.App.3d at p. 1544; see also Richardson v. Callahan (1931) 213 Cal. 683, 686 [3 P.2d 927].)

In 1968 and again in 1969, section 1468 was amended to make covenants that run with the land analytically closer to equitable servitudes. Today, that statute applies to covenants between a grantor and grantee as well as between separate landowners. (Scaringe v. J. C. C. Enterprises, Inc., supra, 205 Cal.App.3d at pp. 1543-1544.)³ Covenants governed by the amended statute might run with the land even if they formerly would not. (Id. at p. 1544.) The amendments have been held to apply only to covenants postdating their enactment. (Oceanside Community Assn. v. Oceanside Land Co. (1983) 147 Cal.App.3d 166, 174, fn. 4 [195 CaI.Rptr. 14]; Taormina Theosophical Community, Inc. v. Silver (1983) 140 Cal.App.3d 964, 972, fn. 3 [190 Cal.Rptr. 38].) Thus, they would apply to the 1977 Friars subdivision but not to the earlier Skywood Acres; no matter how the current issue is decided, the CC&R’s of the latter would remain enforceable, if at all, only as equitable servitudes.

Commentators have argued that covenants that run with the land and equitable servitudes should be, or possibly have been, merged into a single doctrine. (French, Design Proposal for the New Restatement of the Law of Property—Servitudes (1988) 21 U.C. Davis L.Rev. 1213, 1223 [“The conceptual identity between real covenants and equitable servitudes, and the courts’ practical fusion of the two has been recognized for at least a quarter of a century.”]; Reichman, Toward a Unified Concept of Servitudes (1982) 55 So.Cal.L.Rev. 1177, 1186,1230; Newman & Losey, Covenants Running with the Land, and Equitable Servitudes; Two Concepts, or One? (1970) 21 Hastings L.J. 1319.) Whether the amendments to section 1468 have accomplished this fusion in California is beyond the scope of the narrow issue before us. (But see Soman Properties, Inc. v. Rikuo Corp. (1994) 24 Cal.App.4th 471, 484 [29 Cal.Rptr.2d 427]; Note, Covenants and Equitable Servitudes in California (1978) 29 Hastings L.J. 545, 587-588.) Neither the previous statutes nor the current statutes answer this question, which involves how a covenant is created. But we see no difference regarding this issue between convenants that run with the land and equitable servitudes; the rule we adopt applies equally to both.

2. Recording Provisions

By statute, any instrument “affecting the title to . . . real property may be recorded” by the “county recorder of the county in which the real property affected thereby is situated.” (Gov. Code, § 27280, subd. (a); Civ. Code § 1169.) “Recording consists of copying the instrument in the record book and indexing it under the names of the parties. (See Govt. C. 27257, 27322 et seq.)” (4 Witkin, Summary of Cal. Law, supra, Real Property, § 200, p. 406.) Civil Code section 1213 provides that every “conveyance” of real property recorded as prescribed by law provides “constructive notice” of its contents to subsequent purchasers. The term “conveyance” is broadly defined to include “every instrument in writing ... by which the title to any real property may be affected . . . .” (Civ. Code, § 1215, italics added.) Constructive notice “is the equivalent of actual knowledge; i.e., knowledge of its contents is conclusively presumed.” (4 Witkin, Summary of Cal. Law, supra, § 203, p. 408, italics in original.)

CC&R’s, which affect title to real property, have long been recorded under these provisions. (See, e.g., Riley v. Bear Creek Planning Committee (1976) 17 Cal.3d 500, 504, 511-512 [131 Cal.Rptr. 381, 551 P.2d 1213] (Riley); Scaringe v. J. C. C. Enterprises, Inc., supra, 205 Cal.App.3d at pp. 1540-1541, 1543-1544; and cases cited below.)

B. Analysis

Two factual circumstances, and the interplay between them, are of paramount importance. First, the CC&R’s were recorded before any of the property was sold, thus giving the Andersons notice of their existence. Second, no written document executed at the time of any of the conveyances of the Andersons’ properties refers to the CC&R’s.

Properly stated, the issue here is not whether the restrictions run with the land, and thus bind successors as well as the original grantees, but whether they ever took effect in the first place so as to bind even the original grantees. Specifically, the issue is whether a purchaser is bound by previously recorded CC&R’s even though none of the written documents executed at the time of the conveyance refer to them. This involves the question whether there is sufficient expression of intent on the purchaser’s part to enter into the convenants. Although notice is relevant to our resolution of the issue, it is not the issue itself.

1. California Cases

In the 1919 decision of Werner v. Graham, supra, 181 Cal. 174 (Werner), a developer subdivided a tract and recorded a map of the tract. “This map showed no building lines or anything else to indicate any purpose of restricting in any way the manner in which the different lots might be built upon or otherwise improved or the uses to which they might be put.” (Id. at p. 177.) He then sold the lots. The early deeds contained “restrictive provisions, which, while differing slightly in some instances, dependent upon the location of the particular lot. . . are yet so uniform and consistent in character as to indicate unmistakably that [the developer] had in mind a general and common plan which he was following.” (Ibid.) The developer told the purchasers “that he was exacting the same restrictive provisions from all purchasers.” (Id. at p. 179.) He later quitclaimed the property eventually purchased by the plaintiff. The deed to this property contained no restrictions. The issue was whether the restrictions placed in the deeds to the other property were also binding on the plaintiff.

The developer in Riley, supra, 17 Cal.3d 500, sold the property in dispute by a deed that contained no restrictions. “[A]t the time of the conveyance there was no document of record purporting to restrict the use of’ the property. (Id. at p. 504.) Nine months after the conveyance, the developer recorded a document purporting to impose uniform restrictions on a number of lots, including the one in dispute. The issue was whether these restrictions applied to the lot sold earlier.

In both Werner, supra, 181 Cal. 174, and Riley, supra, 17 Cal.3d 500, we held the property was not bound by the restrictions. It is readily apparent that both are factually distinguishable from this case. In Werner, there was no recorded document imposing uniform restrictions on the entire subdivision, only individual deeds imposing restrictions on specific parcels. In Riley, the restrictions were recorded after the conveyance at issue. Nevertheless, the Andersons cite some of the language of these decisions as aiding their position.

In Werner, supra, 181 Cal. at pages 181-182, we noted that the restrictions in the earlier deeds did not state that the land was part of a larger tract, that the restrictions were intended to benefit other land, or that the benefit was to pass to other land. “Servitudes running with the land in favor of one parcel and against another cannot be created in any such uncertain and indefinite fashion. It is true, the nature of the restrictions is such that, when considered in connection with the fact that [the developer] still retained the greater portion of the tract, it is not improbable that he exacted them for the benefit of the portion so retained. But the grantee’s intent in this respect is necessary, as well as the grantor’s, and the deed, which constitutes the final and exclusive memorial of their joint intent, has not a word to that effect, nor anything whatever which can be seized upon and given construction as an expression of such intent. If such was their intent, it has not been expressed.” (Id. at p. 182, italics added.)

It made no difference in Werner that the developer “in all his deeds exacted similar restrictions and clearly had in mind a uniform plan of restrictions which he intended to impose, and actually did impose, upon all the lots in the tract as he sold them.” (Werner, supra, 181 Cal. at p. 183.) We recognized that if the deeds contain “appropriate language imposing restrictions on each parcel as part of a general plan of restrictions common to all the parcels and designed for their mutual benefit, mutual equitable servitudes are thereby created in favor of each parcel as against all the others.” (Ibid.) These mutual servitudes “spring into existence as between the first parcel conveyed and the balance of the parcels at the time of the first conveyance.” (Ibid.) But, we stated, the “crux of the present case” was that “here there is no language in the instruments between the parties, that is, the deeds, which refers to a common plan of restrictions or which expresses or in any way indicates any agreement between grantor and grantee that the lot conveyed is taken subject to any such plan.” (Id. at p. 184.)

We went on to explain the significance of these facts. “The intent of the common grantor—the original owner—is clear enough. He had a general plan of restrictions in mind. But it is not his intent that governs. It is the joint intent of himself and his grantees, and as between him and each of his grantees the instrument or instruments between them, in this case the deed, constitute the final and exclusive memorial of such intent. It is also apparent that each deed must be construed as of the time it is given. . . . Nor does it make any difference that . . . [the developer] gave each grantee to understand, and each grantee did understand, that the restrictions were exacted as part of a general scheme. Such understanding was not incorporated in the deeds, and as we have said, the deeds in this case constitute the final and exclusive memorials of the understandings between the parties. Any understanding not incorporated in them is wholly immaterial in the absence of a reformation. [Citations.] This whole discussion may in fact be summed up in the simple statement that if the parties desire to create mutual rights in real property of the character of those claimed here they must say so, and must say it in the only place where it can be given legal effect, namely, in the written instruments exchanged between them which constitute the final expression of their understanding.” (Werner, supra, 181 Cal. at pp. 184-185, italics added.)

In Riley, supra, 17 Cal.3d 500, we relied on Werner, supra, 181 Cal. 174, in finding the later recorded restrictions not enforceable. We stressed the key fact distinguishing that case from this—that the restrictions of Riley were recorded after the conveyance—and stated that “quite apart from the rule of Werner v. Graham, it is manifest that acknowledgment and recordation of a declaration of restrictions by the grantor after the conveyance to plaintiffs cannot affect property in which the grantor no longer has any interest.” (Riley, supra, 17 Cal.3d at p. 507.) We rejected the claim that parol evidence may be admitted to show that the parties in fact intended the property to be subject to restrictions like those later recorded, finding that the covenants must be in writing to be effective. “Every material term of an agreement within the statute of frauds must be reduced to writing. No essential element of a writing so required can be supplied by parol evidence.” (Id. at p. 509.) A contrary rule, we said, “ “would make important questions of the title to real estate largely dependent upon the uncertain recollection and testimony of interested witnesses. The rule of the Werner case is supported by every consideration of sound public policy which has led to the enactment and enforcement of statutes of frauds in every English-speaking commonwealth.” ’ ” (Id. at p. 510, quoting McBride v. Freeman (1923) 191 Cal. 152, 160 [215 P. 678].) Therefore, there “ ‘ “should be some written evidence” ’ ” indicating what property was affected by the restrictions. (17 Cal.3d at p. 510, quoting Wing v. Forest Lawn Cemetery Assn. (1940) 15 Cal.2d 472, 480 [101 P.2d 1099, 130 A.L.R. 120], italics added in Riley.) “ ‘ “As a matter of policy, the understanding of the parties should be definite and clear, and should not be left to mere conjecture.” ’ ” {Ibid.)

We also emphasized the importance of recording the restrictions. “ ‘[T]he recording statutes operate to protect the expectations of the grantee and secure to him the full benefit of the exchange for which he bargained. [Citations.] Where, however, mutually enforceable equitable servitudes are sought to be created outside the recording statutes, the vindication of the expectations of the original grantee, and for that matter succeeding grantees, is hostage not only to the good faith of the grantor but, even assuming good faith, to the vagaries of proof by extrinsic evidence of actual notice on the part of grantees .... The uncertainty thus introduced into subdivision development would in many cases circumvent any plan for the orderly and harmonious development of such properties and result in a crazy-quilt pattern of uses frustrating the bargained-for expectations of lot owners in the tract.’ ” (Riley, supra, 17 Cal.3d at pp. 511-512.)

In dicta, we also stated that Murry v. Lovell (1955) 132 Cal.App.2d 30 [281 P.2d 316], “a leading authority in the Werner line, makes clear that even if the restrictions here in question had been recorded prior to the issuance of plaintiffs’ deed, no equitable servitude would have been created absent the inclusion of such restrictions, by recitation or incorporation, in the deed. Compare Martin v. Holm (1925) 197 Cal. 733 [242 P. 718], wherein the deed to defendants contained no restrictions but they took with record notice of a prior deed establishing reciprocal servitudes binding upon their grantor.” (Riley, supra, 17 Cal.3d at p. 507, fn. 4; see also id. at p. 512.)

In both Werner, supra, 181 Cal. 174, and Riley, supra, 17 Cal.3d 500, there was no prior recorded document providing a common plan and stating that the restrictions were to apply to every parcel. The only documents in existence from which the mutual intent and agreement of the parties could be discerned were the deeds themselves, which were silent. No decision by this court invalidating restrictions involves a written plan, like that here, that was applicable to an entire tract and was recorded before conveyancing. However, some intermediate appellate decisions have concluded that for recorded uniform restrictions to take effect, they must at least be referenced in a deed or other instrument at the time of an actual conveyance. (Stell v. Jay Hales Development Co. (1992) 11 Cal.App.4th 1214, 1229-1230 [15 Cal.Rptr.2d 220]; Scaringe v. J. C. C. Enterprises, Inc., supra, 205 Cal.App.3d at pp. 1545-1547; Trahms v. Starrett (1973) 34 Cal.App.3d 766, 770-772 [110 Cal.Rptr. 239]; Anderson v. Pacific Avenue Inv. Co. (1962) 201 Cal.App.2d 260, 262-264 [19 Cal.Rptr. 829]; Murry v. Lovell, supra, 132 Cal.App.2d 30.)

In Murry v. Lovell, supra, 132 Cal.App.2d 30, for example, prior to any sales, the owners of a parcel of land to be subdivided recorded a document purporting to impose use restrictions upon the property. One of the original owners testified that when he executed the deeds to the properties at issue, he “told each of [the buyers] about the restrictions and read to them a copy of the recorded declaration.” (Id. at p. 32.) However, no deed mentioned the restrictions. The court concluded that the restrictions never took effect. It found that the owners “unquestionably had in mind that they would convey the various lots subject to the proposed equitable servitudes thereby evidenced, but, having gone that far, they had not as yet created any servitudes whatever. They were still the owners of the whole property and until and unless they made conveyances, which conveyances contained the provisions for equitable servitudes either by direct expression in the deeds or by reference to the recorded declaration of restrictions or other effective means of creating by the severance, and as a part of it, the equitable servitudes counted upon herein, those equitable servitudes would not arise. . . . We hold that, so far as the record here shows, no equitable servitudes existed.” (Murry v. Lovell, supra, 132 Cal.App.2d at pp. 35-36.)

It has not taken much to satisfy the requirement of a reference in a deed. As little as a statement that the property is “subject to” restrictions of record (Martin v. Holm (1925) 197 Cal. 733, 740, 745 [242 P. 718]; Soman Properties, Inc. v. Rikuo Corp., supra, 24 Cal.App.4th at pp. 482-483; Fig Garden Park etc. Assn. v. Assemi Corp., supra, 233 Cal.App.3d at pp. 1709-1710), or even a “reference to restrictions ‘of record, if any’ ” (Oceanside Community Assn. v. Oceanside Land Co., supra, 147 Cal.App.3d at p. 174) has been found to suffice. (But see Russell v. Palos Verdes Properties (1963) 218 Cal.App.2d 754, 767 [32 Cal.Rptr. 488] [indicating that “subject to” language is not enough to create convenants].) But to date, the Court of Appeal decisions have required some reference in the deed, however vague, to the recorded restrictions.

2. The Current Uncertainties

The Andersons argue that the CC&R’s never took effect because they were not mentioned in the deeds to their properties. Under this interpretation, if the developer of a subdivision records a uniform plan of restrictions intended to bind and benefit every parcel alike, implementation of the plan depends upon the vagaries of the actual deeds, and whether they contain at least a ritualistic reference to restrictions of record. When, as may often be the case, some deeds refer to the restrictions, and others do not, the enforceability of the restrictions can hinge upon the sequence of the conveyances, and can vary depending upon what property owner seeks to enforce them and against which property.

For example, if the deed to the first conveyance refers to the restrictions, they might be effective at least as between that property and later properties, even if the later deeds do not refer to them. “From the recordation of the first deed which effectively imposes restrictions on the land conveyed and that retained by the common grantor, the restrictions are binding upon all subsequent grantees of parcels so affected who take with notice thereof notwithstanding that similar clauses have been omitted from their deeds.” (Riley, supra, 17 Cal.3d at p. 507; see also Greater Middleton Assn. v. Holmes Lumber Co. (1990) 222 Cal.App.3d 980, 990-991 [271 Cal.Rptr. 917].) Moreover, under this view, even if a deed fully and expressly incorporates the CC&R’s, they would not be enforceable as to an earlier sale that did not contain such a reference. “But a grantee possessed of a dominant interest could not enforce the restrictions as to lots that were deeded without restriction . . . prior to the execution of the grantee’s deed." (Trahms v. Starrett, supra, 34 Cal.App.3d at p. 771.) Thus, the rights and duties of a later purchaser as against earlier ones would not depend on any document executed at the time of the later sale, but solely on the language of earlier sales of separate parcels.

The results can be byzantine. One commentator has reviewed some of the possibilities: “If the subdivider fails to insert the agreement in the first deed but remembers to insert it in the fifth deed, for example, the equitable servitude springs into existence from deed five onwards. The restrictions do not apply to the first four lots because the subdivider no longer has any interest in those lots and cannot place a restriction on them in favor of the rest of the tract. If the subdivider inserts the agreement in deeds five and six and then fails again to put them in seven and eight, the courts have held that lot owners five and six can enforce the restrictions against seven and eight, but seven and eight cannot enforce them against each other. When the subdivider put the agreement in the deeds to lots five and six, he agreed to burden the rest of the unsold subdivision. When he sold lots seven and eight, the burden of his agreement passed as an incident to lots seven and eight in favor of lots five and six. There was no agreement between lot owner seven and the subdivider that the subdivider burden the rest of his tract in favor of lot seven. Thus when the subdivider conveyed lot eight, there was no burden to pass incident to the land in favor of lot seven. Lot seven can enforce the restrictions against lots five and six, however, because just as the burden of the agreement between the subdivider and five and six passed as an incident to lot seven, so should the benefit of that agreement pass. The subdivider had the benefit of enforcing the restrictions against five and six, and that benefit passes to seven.

“If the subdivider resumes placing the agreements in the deeds to lots nine and ten, lot owners seven and eight cannot enforce the restrictions against nine and ten, and similarly nine and ten cannot enforce them against seven and eight. When the subdivider conveyed nine and ten, he no longer had any interest in seven and eight. He could neither impose a restriction on them in favor of anyone else nor confer a benefit on them.” (Note, Covenants and Equitable Servitudes in California, supra, 29 Hastings L.J. at pp. 569-570, fns. omitted.)⁴

As the author plaintively asks, this analysis “may be logical, but is it equitable?” (Note, Covenants and Equitable Servitudes in California, supra, 29 Hastings L.J. at p. 570.) And, to ask an even more pertinent question, is it what anyone intended? Would anyone really intend a subdivision where the order in which property is sold determines what restrictions are enforceable, where some landowners are not bound by restrictions of record and cannot enforce them against anyone, where some owners can enforce them against some property but not others and not against each other, and where some landowners are bound by the restrictions as against some owners but not against others who would be powerless to enforce them?

This situation dramatically complicates title searches. Instead of simply searching for restrictions of record in order to know exactly what is being purchased, a prospective buyer must search the chain of title of all previously sold property in the tract. If the deed to the property in question refers to the restrictions, the search would have to determine which of the earlier deeds, if any, contain a similar reference, for the restrictions would be enforceable only against those and later parcels, and not against earlier parcels whose deeds did not refer to the restrictions. If the deed does not refer to the restrictions, the buyer would nevertheless have to conduct the same search, for any earlier sold property that does refer to them would have a mutual servitude against the later property whether or not the later deed mentioned it.

Moreover, it is not certain exactly what the law is on this subject. “ ‘When a declaration of restrictions is recorded which describes multiple lots in a subdivision, it is not clear whether the restrictions are enforceable against each lot in the subdivision merely by reference to the restrictions in the first deed to the first lot (the “first deed only” theory), or whether it is necessary that the restrictions be referred to in the first deed to each of the lots (the “all first deeds” theory).’ ” (Soman Properties, Inc. v. Rikuo Corp., supra, 24 , quoting 7 Miller & Starr, Current Law of Cal. Real Estate (2d ed. 1990) Covenants and Restrictions, § 22.8, pp. 549-550.) It would appear that the “first deed only" theory is currently ascendant, but the “all first deeds” theory finds support in the cases. (E.g., Wing v. Forest Lawn Cemetery Assn., supra, 15 Cal.2d at pp. 482-483; Terry v. James (1977) 72 Cal.App.3d 438, 444 [140 Cal.Rptr. 201].)

In short, the current state of the law creates the very “crazy-quilt pattern of uses” that we warned against in Riley, supra, 17 Cal.3d at page 512. Moreover, the quilt might have a shifting pattern depending upon whether the court follows the “first deed only” theory or the “all first deeds” theory.⁵

3. The Solution

These uncertainties can be eliminated by adopting the rule stated at the outset. In essence, if the restrictions are recorded before the sale, the later purchaser is deemed to agree to them. The purchase of property knowing of the restrictions evinces the buyer’s intent to accept their burdens and benefits. Thus, the mutual servitudes are created at the time of the conveyance even if there is no additional reference to them in the deed. This rule has many advantages.

The first advantage is simplicity itself. One document, recorded for all purchasers to review, would establish the rules for all parcels, not many documents that may or may not be mutually consistent. There would be no bewildering mosaic of enforceability and nonenforceability. “The rules of law about covenants running with the land are so complex that only a very few specialists understand them. Sometimes complexity in the law is necessary. In this particular case, it is not. If the cases in this area were solved by reference to the underlying policies instead of by reference to outworn precedent, the rules would be reasonably simple to state and the results more consonant with a sound system of private land use control.” (Berger, A Policy Analysis of Promises Respecting the Use of Land (1971) 55 Minn.L.Rev. 167, 234; see also Reichman, Toward a Unified Concept of Servitudes, supra, 55 So.Cal.L.Rev. at pp. 1259-1260.)

A rule allowing the uniform implementation of a general plan from the outset of the development would be good policy, which no doubt helps explain the modem trend in the cases of accepting as sufficient the slightest reference in the deeds to restrictions of record. Although servitudes go far back into history, “Private land use arrangements are increasingly common and useful in the modem world.” (French, Toward a Modern Law of Servitudes: Reweaving the Ancient Strands, supra, 55 So.Cal.L.Rev. at p. 1318.) “In modem times, covenants are most often used in situations where they effectively regulate land uses, such as subdivisions, in the same manner as zoning laws. In these circumstances, mnning covenants generally enhance alienability, and therefore many authorities feel that they should be encouraged.” (5 Powell on Real Property, supra, Covenants as to Use, § 673[1], p. 60-46, fn. omitted; see also Newman & Losey, Covenants Running with the Land, and Equitable Servitudes; Two Concepts, or One?, supra, 21 Hastings L.J. at p. 1323.) “No longer is there any reason to believe that the average American buying into a residential development would ‘protest vigorously against being compelled to perform promises he has never made.’ [Fn., citing ‘Restatement of Property, Intro. Note at 3156 (1944).’] Since financial viability of the community depends on continued covenant compliance by all, the average buyer is more likely to protest if others in the development are permitted to escape performance of the covenants made by their predecessors.” (French, Design Proposal for the New Restatement of the Law of Property—Servitudes, supra, 21 U.C. Davis L.Rev. at p. 1217.)

Having a single set of recorded restrictions that apply to the entire subdivision would also no doubt fulfill the intent, expectations, and wishes of the parties and community as a whole. “One of the prime policy components of the law of equitable servitudes and real covenants is that of meeting the reasonable expectations of the parties and of the community.” (French, Toward a Modern Law of Servitudes: Reweaving the Ancient Strands, supra, 55 So.Cal.L.Rev. at p. 1282, fn. 113.) A buyer need only know of the single document, not study the current labyrinthine system and try to predict how a later court would apply it to the contemplated purchase. The rule would also better enable the community to protect its interests. Here, for example, Woodside’s approval of the Friars subdivision was conditioned on the town attorney’s review of the CC&R’s. Thus the community was able to exercise oversight as to the original recorded declaration. But it is unrealistic to expect such oversight of all subsequent individual deeds. The community should be able to expect that restrictions it requires as a condition of approving the subdivision will take effect, and not run the risk that they will fall victim to careless deed drafting.

By requiring recordation before execution of the contract of sale, the rule would also be fair. All buyers could easily know exactly what they were purchasing. (See Riley, supra, 17 Cal.3d at p. 512.) Title searches would be easier, requiring only a search of restrictions of record, not of all deeds to all properties in the subdivision. “The danger that subsequent purchasers might not be aware of restrictions in prior deeds, where the developer neglects to incorporate similar restrictions in later deeds, and where the obligation of the title searcher extends only to instruments in the direct chain of title, can be easily avoided by insistence that the developer follow a simple procedure. Where a tract index is in effect, a plan of the proposed development should be recorded against the entire tract, which would give notice to all purchasers by placing the restriction in the direct chain of title to each lot in the tract.” (Newman & Losey, Covenants Running with the Land, and Equitable Servitudes; Two Concepts, or One?, supra, 21 Hastings L.J. at p. 1341, fn. omitted.) “The burden should be upon the developer to insert the covenant into the record in a way that it can be easily found. Recording a declaration of covenants covering the entire area or filing a map which referred to the covenants would be sufficient.” (Berger, A Policy Analysis of Promises Respecting the Use of Land, supra, 55 Minn. L.Rev. at p. 202.) When a developer does follow this simple procedure, it should suffice; future buyers should be deemed to agree to the restrictions.

The rule is consistent with the rationale of the prior cases, and would undermine no legal or policy concerns expressed in those cases. The theoretical underpinning of the rule requiring the restrictions to be stated in the deeds is that a developer cannot unilaterally make an agreement. It takes two parties—in this case the seller and the buyer—to agree. Merely recording the restrictions does not create mutual servitudes. Rather, they “spring into existence” only upon an actual conveyance. (Werner, supra, 181 Cal. at p. 183; see also Rest.3d Property, Servitudes (Tent. Draft No. 1, Apr. 5, 1989) §2.1, com. c., p. 7 [“Recording a declaration or plat setting out servitudes does not, by itself, create servitudes. So long as all the property covered by the declaration is in a single ownership, no servitude can arise. Only when the developer conveys a parcel subject to the declaration do the servitudes become effective.”].) We agree with all this. The servitudes are not effective, that is, they do not “spring into existence,” until an actual conveyance subject to them is made. The developer could modify or rescind any recorded restrictions before the first sale.

Some of the prior cases, however, simply assumed that the deeds must expressly refer to the restrictions to evidence the purchaser’s intent and agreement. On the contrary, it is reasonable to conclude that property conveyed after the restrictions are recorded is subject to those restrictions even without further mention in the deed. “The issue in these cases is the intent of the grantors and grantees at the time of the conveyance.” (Fig Garden Park etc. Assn. v. Assemi Corp., supra, 233 Cal.App.3d at p. 1709.) This intent can be inferred from the recorded uniform plan. It is express on the part of the seller, implied on the part of the purchaser. The law may readily conclude that a purchaser who has constructive notice, and therefore knowledge, of the restrictions, takes the property with the understanding that it, as well as all other lots in the tract, is subject to the restrictions, and intends and agrees to accept their burdens and benefits, even if there is no additional documentation evidencing the intent at the time of the conveyance. “If future takers purchase a piece of property with notice of a restriction made by a predecessor, then, in the absence of duress or fraud, they may ordinarily be thought to have bargained for the property with the restriction in mind, and to have shown themselves willing to abide by it.” (Rose, Servitudes, Security, and Assent: Some Comments on Professors French and Reichman (1982) 55 So.Cal.L.Rev. 1403, 1405.)

Even under the Andersons’ interpretation, a buyer may often be subject to restrictions not referenced in the deed. If an earlier deed does reference the restrictions, they would be enforceable as between that earlier property and any property purchased later even if the later deed does not mention them. It is reasonable and logical to make them enforceable upon the actual conveyance even if no deed references them if the restrictions are recorded and apply to the entire development. The overall plan, and not individual deeds, should determine what restrictions are in effect, and between whom.

The necessity of a writing because of the “policy considerations” underlying the statute of frauds, a major concern in Riley, supra, 17 Cal.3d at page 510, is not implicated here. Both the recorded CC&R’s and the conveyance that triggered them are in writing. There is “written evidence” of the restrictions, the “understanding of the parties” is “definite and clear,” there is no need to rely “upon the uncertain recollection and testimony of interested witnesses,” there is no “mere conjecture.” (Ibid., italics omitted.)⁶

For these reasons, we adopt the rule, and disapprove inconsistent language and holdings of other cases.

The Andersons argue that because people have relied on the prior law, any new rule should apply prospectively only. We disagree. It is “the general rule that a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation.” (Peterson v. Superior Court (1982) 31 Cal.3d 147, 151 [181 Cal.Rptr. 784, 642 P.2d 1305], fn. omitted.) Significantly, the only holdings inconsistent with the rule are by intermediate appellate courts. (Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 986 [258 Cal.Rptr. 592, 772 P.2d 1059].) The proposed new rule is fully consistent with the facts of both Werner, supra, 181 Cal. 174—where there was no recorded uniform plan at all—and Riley, supra, 17 Cal.3d 500— where the restrictions were recorded after the sale.

Some of the dicta of those cases have already been repudiated. The language in Werner, supra, 181 Cal. 174, and Riley, supra, 17 Cal.3d 500, that appears to require that the servitude be created by deed has been disregarded. (Scaringe v. J. C. C. Enterprises, Inc., supra, 205 Cal.App.3d at p. 1545; Hudson Oil Co. v. Shortstop (1980) 111 Cal.App.3d 488 [168 Cal.Rptr. 801] [servitude may be created by a lease].) As explained in Hudson Oil Co. v. Shortstop, supra, 111 Cal.App.3d at page 495, our decisions focused on the deeds because they were the only documents that existed in those cases from which the intent of the parties could be determined. We did not preclude creating servitudes in other types of documents, such as leases. If servitudes may be included in a lease, it is reasonable to conclude they may also be included in a prior recorded uniform plan of development.

The rule is consistent with the rationale that a covenant requires an agreement between buyer and seller, and not a unilateral action by the developer. We merely reject the unexamined assumption that the intent of the purchaser, and therefore the agreement itself, must be expressed in the deed rather than be implied from the purchase with knowledge of the recorded restrictions. Moreover, as discussed above, the current law is unclear, and at best gives rise to a confusing pattern of enforceability and nonenforceability that no one could have intended. Replacing chaos with certainty need not be reserved for the future only. In Willard v. First Church of Christ, Scientist (1972) 7 Cal.3d 473 [102 Cal.Rptr. 739, 498 P.2d 987], we overruled an old common law of property rule that had outlived its usefulness. “Willard contends that the old rule should nevertheless be applied in this case . . . because grantees and title insurers have relied upon it. He has not, however, presented any evidence to support this contention, and it is clear that the facts of this case do not demonstrate reliance on the old rule.” (Id. at pp. 478-479, fn. omitted.)

The same is true here. Given current uncertainty in the cases, it would be unreasonable to conclude that the Andersons, or others, have bought property believing that restrictions of record were enforceable as to prior purchasers of property in the same subdivision whose deeds referenced the restrictions, no matter how vaguely, but not otherwise. Rather, the opposite is far more likely, that homeowners buy property in the expectation and intent that recorded mutual restrictions apply uniformly throughout the subdivision.

The rule is not inconsistent with the statutes regarding covenants that run with the land. Neither the current statutes nor the predecessor version of section 1468 directly answers the narrow question here of how a covenant is created. Although the Skywood Acres CC&R’s are not enforceable as covenants under section 1462 and former section 1468, this is not because they were inadequately created but because they burden the property as well as benefit it (§ 1462), and are between a grantor and a grantee (§ 1468).

For these reasons, we see no reason to deviate from the general rule that our decisions operate retrospectively.⁷

4. Resolution of this Case

The CC&R’s of this case were recorded before any of the parcels were sold, thus providing constructive notice to subsequent purchasers; they state an intent to establish a general plan for the subdivisions binding on all purchasers and their successors; and they describe the property they are to govern. Therefore, applying the rule to this case, the fact that the individual deeds do not reference them is not fatal to their enforceability. The superior court erred in finding otherwise, and in granting summary judgment for the Andersons.

Citizens argues that it should therefore prevail in the entire lawsuit and that we should direct the lower court to issue an injunction in its favor. This is premature. We have decided only the narrow issue before us on review. We express no opinion on any other issue in the case.

III. Disposition

The judgment of the Court of Appeal is reversed.

Lucas, C. J., Mosk, J., Baxter, J., George, J., and Werdegar, J., concurred.

1 The Skywood Acres declaration refers to “covenants, restrictions and agreements,” rather than covenants, conditions, and restrictions, or CC&R’s. Nevertheless, for the sake of simplicity and clarity, we will refer to both declarations of restrictions of this case as CC&R’s, in accordance with common usage. (See, e.g., Nahrstedt v. Lakeside Village Condominium Assn., supra, 8 Cal.4th at p. 369.)

2 All further statutory references are to the Civil Code unless otherwise indicated.

3 Section 1468 now provides in pertinent part: “Each covenant, made by an owner of land with the owner of other land or made by a grantor of land with the grantee of land conveyed, or made by the grantee of land conveyed with the grantor thereof, to do or refrain from doing some act on his own land, which doing or refraining is expressed to be for the benefit of the land of the covenantee, runs with both the land owned by or granted to the covenantor and the land owned by or granted to the covenantee and shall. . . benefit or be binding upon each successive owner, during his ownership, of any portion of such land affected thereby and upon each person having any interest therein derived through any owner thereof where all of the following requirements are met:

“(a) The land of the covenantor which is to be affected by such covenants, and the land of covenantee to be benefited, are particularly described in the instrument containing such covenants;

“(b) Such successive owners of the land are in such instrument expressed to be bound thereby for the benefit of the land owned by, granted by, or granted to the covenantee;

“(c) Each such act relates to the use, repair, maintenance or improvement of, or payment of taxes' and assessments on, such land or some part thereof . . . ;

“(d) The instrument containing such covenants is recorded in the office of the recorder of each county in which such land or some part thereof is situated.”

4 This hypothetical does not directly apply here, for none of the deeds to the Andersens’ properties refers to the CC&R’s. However, these possibilities are inherent in some of the Court of Appeal decisions. Similar questions could arise even regarding these subdivisions if some other deed in either subdivision does contain a reference, and someone else tries to enforce the CC&R’s because of this reference.

5 Amicus curiae California Association of Realtors argues in support of Citizens that, in practice, title searches generally do not encompass first deeds of other properties in the tract, and that the deeds are signed only by the seller and delivered to the buyer weeks after close of escrow, thus making them doubtful evidence of the actual intent of the parties. These assertions, if correct, would support our holding. However, the record does not demonstrate these facts, and we therefore do not rely on them in reaching our conclusion.

6 Neither the CC&R’s nor the deeds themselves were subscribed by the buyers. “We recognize that a deed poll such as used here and commonly throughout California does not satisfy the requirement of the statute of frauds that the written memorandum be subscribed by the party to be charged [when that party is the grantee.] (Civ. Code, § 1624; 1 Witkin, Summary of Cal. Law, supra, § 210.)” (Riley, supra, 17 Cal.3d at p. 511.) “Notwithstanding the lack of complete congruity of common conveyancing practice in the creation of so-called negative easements to the requirements of the statute of frauds,” we did not require such subscription, although we did require a writing because of the policy considerations underlying the statute of frauds. (Ibid.)

7 The dissent criticizes the court in this regard, but would apparently apply its own rule retroactively. Exactly what that rule would be is never stated, but presumably it would at least prohibit the longstanding practice of recording CC&R’s for a subdivision before the sale of the first parcel; and abrogate the “first deed only” theory whereby, if the first deed refers to the restrictions, they apply against a later deed even if that deed omits the restrictions. (See ante, pp. 360-361, 362.)

We also do not suggest that the method used to create the CC&R’s of this case is the only valid way to do so.