Richards Layton & Finger

Delaware Real Estate Law Update: Homeowners’ Association Authority to Regulate Demolition

August 5, 2010

The Delaware Court of Chancery has recently held that where a restrictive covenant requires homeowners’ association approval of changes or alterations to buildings in a development, such approval is not required for a homeowner to demolish the homeowner’s house where no replacement structure is planned. Service Corp. of Westover Hills v. Guzzetta, 2009 Del. LEXIS 221 (Del. Ch. Dec. 22, 2009).

Robert and Kathleen Guzzetta (the “Owners”) owned two adjacent lots, each containing a single family home, in a development. The Owners, who initially owned one lot containing a house in the development, purchased the adjacent lot for the purpose of demolishing the house on the lot in order to create a field on which their children could play. Service Corporation of Westover Hills (“Association”) was a homeowners association formed to regulate certain activities in the development. One such regulation stated that no building or structure could be commenced, erected or maintained, nor could any change or alteration be made thereto, until plans and specifications were approved by the Association. The Association, arguing that this regulation required the Owners to obtain the Associations’ approval before demolishing the house, brought an action against the Owners to enjoin the Owners from their planned demolition.

The Court first noted that the relevant regulation did not apply to the complete demolition of a house, but only to changes to an existing structure where some structure would remain afterward. The Court further noted that even if the regulation could be found to apply to the Owners’ proposed demolition, the only available criteria for the Association’s consideration of the plans and specifications other than structural criteria was the consideration of “aesthetic and other reasons.” Because courts have voided as unreasonable restrictive covenants that allowed building plans to be rejected for purely aesthetic reasons, the Court found that the Association’s decision to deny the Owners’ demolition based upon “aesthetic and other reasons” would have been arbitrary. Accordingly, the Court held that the deed restriction did not give the Association approval authority over the complete demolition of a house where no replacement structure of any kind was planned.

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