Are unauthorized restrictive covenants void or voidable under Utah law? WDIS v. Hi-Country Estates Explained

The Utah Supreme Court’s decision in WDIS v. Hi-Country Estates provides crucial guidance for practitioners handling disputes over restrictive covenants that were recorded without proper landowner authorization.

Background and Facts

In 1973, Charles Lewton recorded documents creating a homeowners association covering 2,000 acres near Herriman, Utah, despite owning only eight acres (0.4%) of the affected land. No other landowners signed the restrictive covenants. Years later, when landowners attempted to develop their properties within the HOA boundaries, they discovered this defect and sued to quiet title, arguing the covenants were void ab initio under public policy reflected in the Wrongful Lien Act, statute of frauds, and Utah caselaw.

Key Legal Issues

The central issue was whether restrictive covenants recorded without affected landowners’ signatures are absolutely void or merely voidable. The court applied the two-factor test from Ockey v. Lehmer, examining: (1) whether the law has declared such contracts “absolutely void as against public policy,” and (2) whether the contracts harm the general public.

Court’s Analysis and Holding

The Supreme Court affirmed the district court’s denial of summary judgment, holding that unauthorized restrictive covenants are voidable, not void ab initio. The court found that neither the Wrongful Lien Act, the statute of frauds, nor Utah caselaw established a clear public policy rendering such covenants absolutely void. The Wrongful Lien Act focuses on liens rather than restrictive covenants, the statute of frauds serves primarily evidentiary purposes with numerous exceptions allowing enforcement, and existing caselaw had not categorically declared unsigned covenants absolutely void. Additionally, the harm from such covenants affects only the subject landowners, not the public as a whole.

Practice Implications

This decision significantly impacts how practitioners approach restrictive covenant disputes. Rather than arguing covenants are void ab initio, focus should shift to whether landowners have ratified the covenants through their conduct. The ruling preserves landowners’ freedom to accept or reject unauthorized covenants, while protecting reliance interests of those who may have relied on the covenants’ existence over decades.