Tennessee Supreme Court Rules That Restrictive Covenants Do Not Apply To Land That Was Sold Before The Covenants Were Recorded

June 1, 2021

The Tennessee Supreme Court today reversed a decision that applied a residential-use-only restriction to subdivision lots that were sold before the restriction was created.  The Court held that the individuals who recorded the restriction lacked the authority to restrict the use of land they did not own.

Mark Hatfield purchased land in a subdivision in Sullivan County and sought to construct a building for commercial purposes.  Neighboring landowners Ritchie and Roma Phillips, who reside in a home on their property, objected to Mr. Hatfield’s plan.  They filed suit in the Sullivan County Chancery Court seeking an injunction and a ruling that Mr. Hatfield’s property was restricted to residential use by restrictive covenants that had been recorded by the original developers of the subdivision.  The trial court concluded that Mr. Hatfield’s property was restricted to residential use and prohibited him from opening a retail business on his property.  The Court of Appeals upheld the trial court’s decision.  The Supreme Court granted Mr. Hatfield’s request for permission to appeal.

In its unanimous opinion, the Supreme Court determined that Mr. Hatfield’s property was not subject to the restrictive covenants.  Although restrictive covenants are recognized as valid under certain circumstances, longstanding Tennessee law generally favors the free and unrestricted use of land.  In this case, the original developers subdivided their land and began selling lots in 1953.  However, they did not execute and record the restrictive covenants until 1955.  By that time, they had already sold the property that Mr. Hatfield ultimately purchased decades later.  Although the restrictive covenants stated that they applied to all lots in the subdivision, established legal principles dictate that a person cannot restrict the use of another’s land simply by recording restrictive covenants that purport to apply to that land.  Therefore, the Court held that the restrictive covenants did not apply to Mr. Hatfield’s property.

To read the Supreme Court’s opinion in Phillips v. Hatfield, authored by Chief Justice Jeff Bivins, visit the opinions section of TNCourts.gov.