D. Todd Smith, founder of Austin’s Smith Law Group, has obtained reversal of a judgment in which the trial court denied a request to enforce restrictive covenants against landowners operating a wedding venue on their residential property.

After a bench trial, the trial court found that the venue owners were bona fide purchasers who lacked notice of the restrictive covenants, that operating a wedding venue did not violate the covenants, and that the covenants were abandoned or waived. As a result, the trial court denied the neighboring property owners’ request for declaratory and injunctive relief.

 In a unanimous decision, the Third Court of Appeals sustained all of the property owners’ issues on appeal and reversed the trial court’s judgment.

The appellate court first rejected the trial court’s determination that the restrictions could not be enforced under the bona-fide-purchaser defense. Despite a misnomer in the declaration of covenants, the court concluded that the restrictions were in the venue owners’ chain of title, thus providing constructive notice. The court further concluded that the venue owners had actual notice of the restrictions because they received documents referencing the restrictions (a survey and a title insurance policy) at or before closing.

The appellate court next held that operating a commercial wedding venue, as the venue owners were based on the evidence, violated the restrictive covenants. Construing the covenants de novo, the court held that a provisions specifying that “[t]he Property shall be used solely for private single family residential purposes and/or recreational purposes” and prohibiting “professional, business, or commercial activity to which the general public or any employee is invited” barred commercial activities other than incidental use to conduct private business, “such as parking a company car, receiving packages related to work, or working from a home office.”

Finally, the court of appeals held that a “nonwaiver” clause was valid, “meaning that any earlier failures to enforce the covenants did not waive appellants’ right to enforce them against the operation of [the wedding venue].” In any event, the court further concluded, no evidence supported the trial court’s determination that the covenants were waived.

The appellate court remanded the case for further proceedings consistent with its opinion. Significantly, the remand included an instruction that the trial court award the property owners—as prevailing parties—their attorney fees and costs under Texas Property Code § 5.006.

Sides v. Saliga, No. 03-17-00732-CV, 2019 WL 2529551 (Tex. App.—Austin June 20, 2019, no pet. h.) (mem. op.).

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