Breaking the Covenants? A Way to Restrict Lakeshore Development

The desirability of lakeshore property is no secret. This desirability often creates conflicts between existing lakeshore owners who want to maintain the status quo by preventing development and developers looking to build and sell lake homes. The Wisconsin Court of Appeals recently decided a case dealing with these conflicting motivations. In Nordstrom v. Kane, 2021 WI App 71, the court was presented with a dispute between would-be developers and their neighbors. The developers wanted to create a three-unit condominium on their lakeshore property. Their neighbors, however, claimed that a restrictive covenant stating the tract could “not be divided so as to create any additional tracts therefrom” barred creation of the condominium.

To the casual observer, a prohibition on dividing land to create more tracts would clearly prevent a three-unit development. However, a unique aspect of Wisconsin law made the case more difficult. Wisconsin courts do not typically consider the “subjective intent of the drafter” when interpreting restrictive covenants on real estate. See Zinda v. Krause, 528 N.W.2d 55 (Wis. Ct. App. 1995). Instead, Wisconsin courts focus on “the language used” in the covenant. This is a departure from the law in other jurisdictions. For instance, under Minnesota law, restrictive covenants applicable to land “will be given the full force and effect intended by the parties who created them.” Klapproth v. Grininger, 203 N.W. 418 (Minn. 1925). Ultimately, the Nordstrom court did give effect to what seemed to be the clear intent of the parties, but only after examining the language of the covenant. Specifically, the Nordstrom court relied on the dictionary definition of “tract” as a “precisely defined or definable area of land” in finding the covenant barred the proposed development.