Homeowners’ Operation of Home-Based Daycare Business Doesn’t Violate Restrictive Covenant Requiring Residence Use – IL Third Dist.

The plaintiff homeowner’s association in Neufairfield Homeonwers Ass’n v. Wagner, 2015 IL App (3d) 140775, filed suit against two sets of homeowners claiming they violated restrictive covenants in the development’s declaration by operating daycare businesses from their homes.

The association based their suit on a declaration covenant that required all lots to be used for “Single Family Dwellings.”

The declaration allowed an exception for home-based businesses but only if they were operated in conformance with City ordinances and if there were no vehicles with business markings parked overnight in the development.  A further qualification to the home-based business rule prohibited activities that encouraged customers or members of the public to “frequent” the development.

The association sued when several homeowners complained that the daycare businesses resulted in increased vehicular traffic in the development and was a nuisance to the residents.

The association supported their case with an affidavit from the property manager and a homeowner – both of whom testified that the two daycares resulted in multiple non-residents entering and exiting the subdivision on a daily basis and that several residents had similar complaints.

Affirming summary judgment for the homeowner defendants, the appeals court provides a primer on the enforceability of restrictive covenants and the governing contract interpretation principles affecting them. It wrote:

-Restrictive covenants affecting land rights will be enforced according to their (the covenants) plain and unambiguous language;

–  In interpreting a restrictive covenant, the court’s objective is to give effect to the parties’ actual intent when the covenant was made;

– A condominium declaration is strong evidence of a developer’s intent and it will be construed against the developer where the declaration’s text is unclear;

– Undefined words in a declaration are given their “ordinary and commonly understood meanings” and a court will freely use a dictionary as a resource to decipher a word’s ordinary and popular meaning.

(¶¶ 16-20).

Here, the key declaration word was “frequent” – that is, did the defendants’ daycare businesses result in customers or members of the public “frequenting” the subdivision?

The declaration didn’t define the verb “frequent” but the dictionary did as to do something “habitually” or “persistently.”  Webster’s Third New International Dictionary 909 (1981); (¶ 20).

The plaintiff’s supporting affidavit established that, at most, 7 or 8 cars entered and exited the subdivision on a daily basis – supposedly to patronize the daycare businesses.  The court viewed this amount of traffic wasn’t persistent or habitual enough to meet the dictionary definition of “frequent” under the declaration.

As a result, the association’s declaratory judgment suit failed and the court affirmed summary judgment for the property owners.

Afterwords:

1/ Courts will construe declarations and restrictive covenants as written and will do so under standard contract interpretation rules (e.g. unambiguous language will be construed under plain language test and without resort to outside evidence).

2/ Where a term isn’t defined, a court can look to dictionary to inform a word’s ordinary and popular meaning.

3/ A court will construe a restrictive covenant in favor of free use of residential property and where a declaration specifically allows home-based businesses, a court will scrutinize association attempts to curtail a property owner’s use of his property.