I’ve seen some off-the-wall Deed restrictions in my line of work. Notably, something along the lines of “Reserving to the grantors during their lifetime such quantity of meat, poultry, milk and eggs as may from time to time be desired of them for their sustenance.” And though this is a pretty atypical restriction, nearly every deed reserves or restricts the buyer from certain practies or activites, and this is typically through no fault of the current grantor. A more common example would be that of mineral/oil/gas rights to a property. Frequently a parcel is sold, with the rights to oil/gas reserved to the grantor. It would patently absurd to declare that the current owner could sell those rights to someone else, having never acquired them to begin with.

I mentioned the fate of the Rackham public golf course, owned currently by the City of Detroit but located within the City of Huntington Woods, earlier today, and I promised a greater exposition of the issue, which I first read about in yesterday’s Detroit Free Press. The article notes that:

“One possible sumbling block is that backin the 1920s, Horace and Mary Rackham gave the City 120 acres on a condition: The property must remain a public golf course or the land would rever to their heirs…

[Detroit Mayor Kwame] Kilpatrick hopes to close the deal by the end of the month so the $5 million can go toward helping balance the city’s budget by the beginning of the city’s fiscal year, July 1.

The city is projecting it will end the fiscal year with a deficit of more than $60 million.”

I’m sorry, but an 8.5% reduction in the current deficit is like a midget pissing on a forest fire (I think I’m borrowing this analogy from Lew Rockwell). But the merits of the sale qua sale are beside the point. The city accepted the property on a condition, and now it wishes to free itself from the restraints it voluntarily adhered to. The principle at stake here is that a titleholder simply will itself free of pre-existing reservations and restrictions.

First and foremost, why doesn’t the city just mortgage the property? Aside from its lack of creditworthiness (it’s about a c-hair away from receivership), a mortgage would impose an obligation on the City, and Detroit wants none of this. Instead, it wants to give Premium Golf LLC something to which the City has no legitimate claim, and to reap all of the concurrent rewards. Detroit wants something for nothing. The only proper, legal way to resolve this issue is to gain consent from all of the Rackham family heirs. Otherwise, they could pop up anytime and claim damages. This type of cloud in the chain of title is a Title Insurer’s worst nightmare.

The problem is this: No buyer in any such transaction may maintain anytihng other than a public golf course on the premises, simply because the current vested title holder never acquired the right to develop the property. The City of Detroit never acquired the right because the conveyance from the Rackham family contained an explicit deed restriction. As such, the current titleholder cannot convey such privelege to any purchaser. If the city doesn’t have the right, it can’t sell the right. Case closed.

Presumably, if Premium Golf LLC (the proposed buyer) cannot overcome the deed restrictions, the site will remain a golf course whether they buy it or not. But, if PG does overcome the restriction, it will represent outright theft from the Rackham heirs. The only proper way to acqurie unrestricted interested in the property is to gain consent of the heirs, whoever and wherever they may be. Anything to the contrary would constitute an undue excercise of power by the current titleholder.

This is an interesting case for property rights, and I’ll try to keep informed about the proceedings.