The Maryland Court of Special Appeals recently rejected a homeowner's challenge to the decision of an Architectural Review Board (Board) to deny the owner's request to build a 2-story, 3-car garage. In Moore v. Roland Park Roads and Maintenance Corporation, the homeowner contended that the architectural covenant did not apply and, if it did, the trial court should not have declined to review the Board action on the basis of the "business judgment rule".
Covenant Applies to Future Owners
The declaration of covenants for the Roland Park community in Baltimore City provided that that the restrictions would be "held and construed to run with and bind the land...and shall operate in perpetuity". However, several subsequent deeds conveying the owners' lot included a special warranty that the sellers had not done anything to "encumber the property hereby conveyed". The appeals court ruled that a reasonably prudent person would conclude that the original declaration of covenants were intended to "run with the land". Therefore, there was no reason to consider later deeds of conveyance to determine the meaning of the prior declaration of covenants, and the architectural covenants were binding on the property and the current owner.
Denial May Not Be Arbitrary
With regard to the Board refusal to approve the proposed garage, the Court of Special Appeals acknowledged in its unpublished decision that the Maryland appellate courts have articulated different judicial approaches to architectural review decisions. In some instances, the business judgment rule has been applied to preclude any judicial review of decisions to approve an architectural change where there is no allegation of "fraud or bad faith" or that the decision is "arbitrary".
Other decisions allow for courts to review decisions to deny an architectural change to determine if it is based on the standards in the covenant and is a "reasonable determination made in good faith and not high-handed, whimsical or captious in manner".
To the extent the Maryland courts have established different standards for approval and denials of architectural change decisions, the appeals court concluded that the Board denial of the request to build a 2-story, 3-car garage met both standards.
The conclusion that the Board action was reasonable and not arbitrary was based on the evidence presented at a 2-day trial which showed that the Board spent months reviewing the homeowners’ various garage proposals and communicated with the owners about the Board's concerns that the proposed garage was too wide compared to neighboring properties and that there were no other 2-story, 3-car garages behind row houses in the community.
The court also observed that the Board had met to consider the application and documented its meetings with detailed minutes.