COURT OF APPEALS OF SOUTH CAROLINA 415 S.C. 72; 781 S.E.2D 115 (2015)

Sunil V. Lalla and Sharon W. Lalla were co-owners of a unit in a horizontal property regime known as The Spur at Williams Brice Stadium. Article XIV of the Master Deed provides

The rental of any unit to any student currently enrolled in a two (2) or four (4) year college, institute, or university is strictly prohibited. Additionally, any tenant of any Unit shall be prohibited from having any roommate that is enrolled in a two (2) or four (4) year college, institute, or university. Any tenant in violation of this Restriction shall have their lease automatically terminated, and shall have thirty (30) days to vacate the Unit.

During the summer of 2010, the Lallas notified the Homeowners Association of their decision to rent to college students and began doing so. On July 6, 2010, the Association sent notice to each owner regarding enforcement of the Master Deed provision barring rentals to unrelated college students. The notice gave owners until May 31, 2011, to terminate any such leases. The Lallas refused to comply, so the Association filed an action asking the court to declare them in violation of the Master Deed and enjoin them from renting to a student or students. The Lallas answered and counterclaimed, seeking a declaration that the restrictive covenant was null and void due to changed circumstances.
The circuit court granted the Association’s request for declaratory relief, ruling that “[w]hen the [Lallas] purchased Unit 101, they became subject to the provisions of the Master Deed and [b]ylaws.” The Lallas appealed, asserting that the restrictions discriminate against a specific class of individuals (college students) and are unreasonable as there has been no damage to other property owners. The Lallas further asserted that the circuit court erred in declining to hold the rental restriction null and void due to its unreasonableness and the changed economic circumstances depressing condominium values substantially below the 2007 purchase price.
JUDGE J. MCDONALD . . . Restrictive covenants, sometimes referred to as ‘real covenants,’ are agreements ‘to do, or refrain from doing, certain things with respect to real property.’ . . .
. . . In order to enforce a restrictive covenant, “a party must show that the restriction applies to the property either by the covenant’s express language or by a plain and unmistakable implication.” . . . “Courts shall enforce such covenants unless they are indefinite or contravene public policy.” . . . In their answer, the Lallas admit they own a unit in The SPUR, and that they are subject to the provisions of the Master Deed and bylaws . . . [w]e find no error in the circuit court’s ruling that “when the [Lallas] became owners of a unit in [The SPUR], they voluntarily and intentionally bound themselves by the restrictive covenants barring the rental of any unit to college students who are unrelated to the unit’s owner.” Accordingly, we affirm the circuit court’s ruling that the rental ban provision of the restrictive covenant is binding upon the Lallas.
Upon the Association’s showing that the restrictive covenant was binding on the Lallas, the Lallas bore the burden of asserting affirmative defenses to the restrictive covenant’s enforceability. . . . The circuit court ruled the restrictive covenant does not contravene public policy, as it neither unconstitutionally discriminates nor violates the statutory laws of the United States or the State of South Carolina.
The Lallas argue the rental restriction is impermissibly discriminatory and violates the Equal Protection Clauses of article I, section 3 of the South Carolina Constitution and the Fourteenth Amendment of the United States Constitution. We disagree.
To satisfy the equal protection clause, a classification must (1) bear a reasonable relation to the purpose sought to be achieved, (2) members of the class must be treated alike under similar circumstances, and (3) the classification must rest on some rational basis. . . . Where an alleged equal protection violation does not implicate a suspect class or abridge a fundamental right, the rational basis test is used . . . In a case such as this, the rational basis standard, rather than strict scrutiny, applies because the classification at issue does not affect a fundamental right and does not draw upon inherently suspect distinctions such as race, religion, or alienage.
The purpose of the restrictive covenant’s classification in this case is to ensure the comfort and safety of The SPUR’s residents and protect the investments of property owners by minimizing the risk of creating a dormitory-like atmosphere at the complex. The rental prohibition is rationally related to its purpose because it bars from the pool of possible renters a population that the Association alleges has a tendency to engage in certain behaviors dangerous to themselves and disruptive to those around them. The fact that some potential renters barred by the college student prohibition might not be disruptive or disorderly does not render the classification itself arbitrary or constitutionally violative. Accordingly, we affirm the circuit court’s well-reasoned opinion that the restrictive covenant satisfies both the federal and state equal protection clauses because it is “rationally related to maintaining the safety, comfort, and investment of owners.”
The Lallas argue the circuit court erred in failing to hold the Association’s restrictions null and void as the change in economic conditions, specifically the decline in the real estate market following their purchase of the Unit, renders enforcement of the restrictions unreasonable. We disagree.
[A]ffirmative relief may be granted against a restrictive covenant where there is such a change in the character of the neighborhood as to render the enforcement of the covenant valueless to the covenantee and oppressive and unreasonable as to the covenantor. . . . A party seeking to annul a restrictive covenant must show the change of conditions represented so radical a change that the original purpose of the restrictive covenant can no longer be realized. . . . Notwithstanding the changed character, when one protected by a covenant seeks enforcement thereof, we cannot endorse the change while the purpose of the covenant may still be accomplished. In this case, the purpose of the restrictive covenant is to ensure the safety of The SPUR’s residents as well as the value of the unit owners’ investments. The units’ decrease in value due to the declining real estate market and economy had no effect on the Association’s need to minimize the risk that The SPUR might develop a dormitory-like atmosphere. . . .[W]hen the Lallas purchased their unit, they were on notice (by way of the Master Deed) of the restrictive covenant prohibiting the rental of any unit to college students unrelated to the unit’s owner. Accordingly, we agree with the circuit court that the economic change in conditions alleged by the Lallas fails to support the discharge of the restrictive covenant.


Can you think of any other public policy arguments that the Lallas could have made to have the restrictive covenant struck down?


What values were the Lallas concerned about that the court did not appear to weight very heavily? What values does this decision further?

"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"
Looking for a Similar Assignment? Our Experts can help. Use the coupon code SAVE30 to get your first order at 30% off!