Should restrictive covenants be strictly construed against enforcement? Fort Pierce v. Shakespeare Explained

In a significant decision for property law practitioners, the Utah Supreme Court in Fort Pierce v. Shakespeare clarified how courts should interpret restrictive covenants, rejecting the traditional strict construction approach in favor of standard contract interpretation principles.

Background and Facts

The Fort Pierce Industrial Park Owners Association’s Board of Trustees denied the Shakespeares’ application to construct a cell phone tower on a River Road lot. The Board cited aesthetic concerns, a two-business limit (the lot already had two businesses), and a desire to limit tower proliferation given an existing tower served the park’s needs. Despite the denial, the Shakespeares proceeded with construction, prompting the Association to sue for breach of the CC&Rs.

Key Legal Issues

The central issue was whether restrictive covenants should be strictly construed in favor of free use of property, as the district court held, or interpreted using standard contract principles. Secondary issues included whether the Board had authority to limit cell phone towers and enforce business density restrictions, and whether the Board’s decision satisfied business judgment standards.

Court’s Analysis and Holding

The Utah Supreme Court definitively rejected strict construction of restrictive covenants, holding they should be interpreted “to give effect to the intention of the parties ascertained from the language used in the instrument” and “to carry out the purpose for which [they were] created.” The court noted that restrictive covenants “are widely used in modern land development and ordinarily play a valuable role.” Applying proper contract interpretation principles, the court found the CC&Rs clearly granted the Board authority to consider tower suitability, aesthetic impacts, and business limits when reviewing applications.

Practice Implications

This decision significantly strengthens the enforcement power of HOAs and similar associations. Practitioners representing associations should emphasize the contractual nature of CC&Rs and their legitimate developmental purposes. Those challenging association decisions can no longer rely on strict construction arguments but must demonstrate the board exceeded its actual contractual authority or failed to act reasonably within that authority.