Watch for “Residential Use Only” Covenants

“Said property shall be used for residential purposes only.”  Sounds simple doesn’t it?  This fairly common restriction on property use is found in many subdivision covenants.  Yet, working with this simple rule could have complex and unexpected results.

In December 1994, the Washington State Supreme Court decided the case of Metzner v. Wojdyla, 125 Wn. 2d 4456 (1994).  In Metzner, the Court had to decide whether the Wojdyla’s use of their home as a licensed daycare facility violated the restrictive covenant that the property would be used for residential purposes only.  The Metzners, age 79 and 74, lived next door to the Wojdylas.  The Metzners stated a significant reason for their moving into the subdivision was their understanding that the property could be used for residential purposes only.

The Wojdylas moved next door a year after the Metzners moved in.  Mrs. Wojdyla applied for and received a DSHS family daycare home license.  She usually provided daycare for six children, two of which were hers.

The Metzners complained about the noise, and sued the Wojdylas to prevent them from running their daycare business.

The Trial Court agreed with the Metzners, and shut the Wojdylas down.  The Court of Appeals reversed that decision, saying a daycare facility did not violate the covenant.  The Supreme Court then heard the case.

The Supreme Court decided the Trial Court was correct, and reversed the Court of Appeals.  Their reasoning was that the plain meaning of the term, “residential”, meant the opposite of “business.”  In particular, “residential” did not allow for the exchange of money for a service.  Therefore any business (emphasis added) conducted in the subdivision was prohibited.  The Court spent little time analyzing the impact of this decision.  Consequently, any potential buyer of a home within a subdivision with this restriction needs to be aware that their home-based business is potentially barred by this restriction.  Thus, your buyer’s part-time writing project, Amway sales party, babysitting jobs or computer business could all be affected.

A significant minority of the Supreme Court disagreed with the majority’s decision because it was so far reaching.  Nonetheless, the majority’s decision is the “law of the land.”  Therefore, a professional REALTORâ should review the prospective covenants with the Buyer, and alert them that any home-based business may be barred by a restrictive covenant.  The REALTORâ should refer the client to an attorney for a detailed assessment of the covenant and its possible impact.

Published April 1995

This article contains information of general interest, and is not intended to be, nor should it be relied upon as a substitute for specific legal advice.