Plaintiff buyers appealed judgments from the Superior Court of Monterey County (California), which dismissed their suit after sustaining demurrers to complaints challenging the validity of a recorded deed restriction that had been required by defendant county and alleging concealment of the restriction by defendant sellers.

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Overview

The sellers, two community housing organizations, sold homes to the buyers through a low-income housing program that required the buyers to invest time and labor. The homes were developed subject to a deed restriction that required homes in the program to remain affordable to buyers with very low to moderate income. The buyers claimed that they were surprised to learn of the restriction after they invested their time and labor. Some of the grant deeds disclosed the restriction by express reference to the recorded document. The original complaint was filed over three years after the last of the grant deeds was issued. The court held that the disclosure in the grant deeds provided actual notice under Civ. Code, §§ 18, subd. 1, 19, and not merely constructive knowledge under Civ. Code, § 1213; thus, as to those buyers who received such deeds, the fraud and contract claims were untimely under Code Civ. Proc., §§ 338, subd. (d), 339, subd. 1, respectively. The deed restriction particularly described the property in accordance with Civ. Code, § 1468, subd. (a), and Gov. Code, § 27281.5, subd. (a). The deed restriction was a reasonable restraint on alienation under Civ. Code, § 711.

Outcome

The court dismissed the appeal as to the county for untimeliness, sustained the demurrer as to a seller that had expressly referenced the deed restriction in all grant deeds, and reversed the judgment of dismissal and overruled the sustaining of the other seller’s demurrer only as to the claims of nondisclosure and breach of implied contracts asserted by those purchasers who received grant deeds that did not expressly reference the restriction.