Scheme of Development | Common Building Scheme | Authoritative & Comprehensive Definition with Reference Sources

scheme of development or common building scheme

As defined and explained in Real Estate Defined

A scheme by which an owner of a defined area of land divides it up into a number of separate lots for sale (or lease) and imposes on the purchasers (or lessors) restrictions as to the use and development of the land by means of uniform covenants restricting the use to which the grantees may put the lots, with the express intention that the area as a whole, and each and every lot, will benefit thereby. For example, a scheme that restricts the development of each lot to a single-family residence and requires that all buildings are to be erected and maintained in general conformity with a set of rules that are imposed on all purchasers. A scheme of development establishes a form of 'local law' by which the development and management of the land is controlled for the benefit of all the purchasers and their successors. The essential aim of the scheme is that each purchaser will have the benefit of the same restrictions as those to which he has been subjected (Besch v. Hyman, 221 App Div 455, 223 NYS 233 (1927); Snow v. Van Dam, 291 Mass 477, 197 N.E. 224 (1935); Re Dolphin's Conveyance [1970] Ch 654, 662, [1970] 2 All ER 664; Brunner v Greenslade [1971] Ch 993, 1003, [1970] 3 All ER 836; Texaco Antilles Ltd v Kernochan [1973] AC 609, [1973] 2 All ER 118 (PC)).

In order to be able to enforce the provisions of a scheme of development each purchaser of an area of land (or his successor), as well as the common vendor, must have a right to enforce the restrictions for his own benefit (technically by suing for breach of a negative or restrictive covenant), and by the same token, must accept the burdens imposed on his use of the land. Thus, "reciprocity is the foundation of the idea of a scheme … [and a purchaser] must know both the extent of his burden and the extent of his benefit", Reid v Bickerstaff [1909] 2 Ch 305, 319, [1908-10] All ER Rep 298 (CA) (Re Palmer v Reesor (1914) 6 OWN 622, 624 (Can)) (in the US called the 'doctrine of reciprocal negative easement'). The reciprocal benefits and burdens are referred to as 'equitable servitudes' (as they are rights originating from the English Court of Equity—Tulk v Moxhay (1848) 2 Ph 774, 41 Eng Rep 1143) (Trustees of Columbia College v. Lynch, 70 NY 440 (1877); Allen v. Detroit, 167 Mich 464, 133 N.W. 317, 319 (1911); Weigman v. Kusel, 270 Ill 520, 110 N.E. 884 (1915)).

In common law, as a rule, a scheme of development requires five conditions to be satisfied for there to be the 'mutuality of enforcement', that is an essential element of the scheme: (i) the area to which the scheme applies must be clearly defined (Reid v Bickerstaff, supra; Whitgift Homes Ltd v Stocks [2001] EWCA Civ 1732, [2001] 48 EG 130 (CA)); (ii) any of the parties seeking to enforce the scheme must have derived title to the land from a common vendor (or from a successor in title who is bound in equity to the common vendor); (iii) that prior to selling the land the common vendor must have laid out the area for sale in lots with the intention that the restrictions, drawn up in accordance with a common plan, would be imposed on the use and development of all the plots; (iv) each purchaser must have accepted the restrictions on the understanding that similar restrictions would be imposed on each and every purchaser of any one of the lots; and (v) the restrictions must be intended by the vendor to be, and are, imposed for the benefit of each and every plot (although the restrictions imposed on each plot need not be identical: Elliston v Reacher [1909] 2 Ch 384; Allen v Veranne Builders Ltd [1988] NPC 11; Sanborn v. McLean, 233 Mich 227, 206 N.W. 496, 60 ALR 1212 (1925); Anno: 4 ALR2d 1364, 1369: General Plan of Subdivision—Notice; Cash v. Granite Springs Retreat Ass'n, Inc., 2011 WY 25, 248 P.3d 614 (WYO 2011)). However, a scheme of development is likely to bind any owner of land on the estate where: (i) it is clear that the common vendor's intention was to impose substantially the same restrictions on all the plots in the defined area; (ii) the purchasers acquired their plots on the understanding that the 'laws' of the estate would be binding on them and would benefit the entire estate; and (iii) it was intended that the purchasers would have reciprocal rights to enforce the law against the other owners (Re Wembley Park Estate Co Ltd's Transfer [1968] Ch 491, [1968] 1 All ER 457; Eagling v Gardner [1970] 2 All ER 838; The American Law Institute, Restatement of Property (St. Paul, MN: 1944), § 541; Wichmeyer v. Finch, 231 Ind 282, 107 N.E.2d 661, 665 (1952); Cf. Steinmann v. Silverman, 14 NY.2d 243, 251 NYS.2d 1, 200 N.E.2d 192 (1964) where there was no "common scheme" with respect to the covenants). "The material thing I [Greene M.R.] think is that every purchaser … must know when he buys what are the regulations to which he is subjecting himself, and what are the regulations to which other purchasers on the estate will be called upon to subject themselves", White v Bijou Mansions Ltd [1938] Ch 351, 361, [1938] 1 All ER 546 (CA). A scheme of development may apply in the same way if the land is sold on long-term ground leases.

In the US, the covenants, conditions and restrictions are normally set out in recorded map or plat of the subdivision, or a 'declaration of restrictions' attached thereto, with the deed merely reciting that the sale is subject to these restrictions. These restrictions are normally enforced by a homeowners' association (HOA) set up for the purpose, with powers to levy an assessment on each homeowner to meet the cost of managing the scheme. In addition, the association has power to place a lien on any individual lot to enforce payment by a delinquent homeowner. With most new developments the developer forms an association (usually as a corporate entity or partnership) that takes on the role of managing the property and the owner's interests in the common areas. This entity has the power to enforce the covenants and restrictions that are established by the developer. Upon completion of the development (or usually when a given percentage of the units are sold), the control of the HOA passes from the developer to the owners. Even if there is no express provision for the transfer of all power from the developer to the HOA, this will be implied in order that the covenants and restrictions remain binding on the owners and their successors (Jensen v. Lake Jane Estates, 207 P.3d 435 (Wash Ct App 2011)).

In the US, a scheme of development is usually called a 'general scheme of development', or it may be referred to as a 'common plan of development' (5 Powell on Real Property (Albany, NY: 1997- ), § 672), a 'common scheme of development', a 'common building scheme', a 'general building scheme', 'general plan' or 'uniform plan of development', a 'neighborhood scheme', and the restrictions may be referred to as 'general plan restrictions', 'reciprocal negative easements', 'implied reciprocal servitudes' or, sometimes, 'mutual equitable servitudes'. (In English and Canadian law, it has been said that strictly a 'scheme of development' is a genus, and a particular instance of such a scheme is referred to as a 'building scheme' for the area (Brunner v Greenslade, supra; Scharf v Mac's Milk Ltd [1965] 51 DLR (2d) 565 (CA Can)). In British English, a similar scheme applied to a block of flats may be referred also as a 'flat scheme'.

In some communities, a common scheme of development is effectively a substitute for zoning, notably in Houston, Texas, where the later does not exist, instead consent to new development is based on the availability of resources such as infrastructure.

In English law, in the case of unregistered land, the covenants and restrictions may be protected by registration as a Class D(ii) land charge (Land Charges Act 1972, s. 2(4)); or, in the case of registered land, by entry of a notice at the Land Registry (or prior to 13 October 2003, by entry of a minor interest on the register).

See also declaration of covenants and restrictions/declaration of restrictions(US), planned unit development(US).

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