Deed restrictions can prove tricky

Monday, May 19, 2008 at 1:20am

Peter Kurland, an owner in the property housing the Darkhorse Theater, had an interesting day last week trying to determine whether or not his property had a deed restriction that required a church use there.

When he bought the property 20 years ago, Kurland said the due diligence showed that everything was clear.

With property deeds dating back more than 100 years, however, history can rear up and create some modern headaches. To Kurland’s relief, he was spared because the original deed on his property had been lost and therefore the restriction never applied.

In the late 1890s, the development company had broken out the parcels specifically for churches.

Any group buying the Church of Christ property a block away from Darkhorse must contend with a deed restriction that says church use is required or it reverts to someone. The Methodist church another block away has the same restriction.

That someone is a big question.

“Someone has to enforce it,” said Larry Papel, an attorney with Baker Donelson Bearman Caldwell and Berkowitz.

Basically, someone would have to find the successor if one existed. With a business, it depends on how the business was dissolved.

“It gets a little trickier if there’s a no successor out there,” said Janet Kleinfelter, senior counsel with the Tennessee Attorney General’s office.

A month ago, Kleinfelter wrote letter that said the deed restriction applies to the Charlotte Avenue property and her office could enforce it.

Papel represented the successor family on the Fall School on Nolensville Road. Metro stopped using the building as a school and it eventually reverted to the family, which turned around and sold it for a nice sum.

Metro had to deal with the reversion issue with the Ben West Library when the new one was built. There’s a small library branch in the building to meet the requirement that if the building isn’t being used for a library, it reverts to the family that donated the property.

In both cases, those are charitable situations. But with the Church of Christ on Charlotte, that may have been a developer putting in restrictions to benefit adjoining landowners. Kleinfelter’s letter, however, viewed the property as a charitable gift.

“The church is the charity to protect,” Papel said, not the land company.

The issues around deed restrictions can get extraordinarily complex. Just ask an attorney.

There have been deed restrictions that dealt with race and religion and those restrictions have been pierced. Some have been illegal and others impractical.

Restrictions could lower the value if they are left in place and the owners choose not to eliminate them.

For Kurland, if the records had come back otherwise now, he said he’d register as a nonprofit church organization and pay no taxes.

“That would be a huge savings for us,” he said jokingly.

Now, he said he also is trying to find the name of the clerk at the time who may have lost the deed and put a wreath on his grave.

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