WI Appeals Court Holds Owner’s Breach of a Restrictive Covenant Entitled the Village to Recover Back Taxes for Agricultural Use

This post was authored by Matthew Loeser, Esq.

Polk Properties, LLC and Donald J. Thoma purchased the subject property in 2006 to develop the farmland into a residential subdivision. Later that year, Polk successfully requested that the Village rezone the property from agricultural to residential, and recorded a restrictive covenant limiting the use of the property to residential. In December 2012, the circuit court issued an injunction prohibiting Polk from continuing agricultural activities. Polk’s agricultural use from 2009 to 2012 entitled it to pay lower property taxes from 2010 to 2013. In this case, Polk challenged the circuit court’s order subjecting Polk to daily forfeitures for the violation of zoning law and its related contempt order. Polk also appealed the circuit court’s determination that Polk’s breach of the restrictive covenant entitled the Village to recover as damages the difference between what Polk was taxed for agricultural use and what Polk should have been taxed at the residential rate for the years 2010 through 2013.

On appeal, Polk argued that it did not violate the zoning code since its continued agricultural use after the property was rezoned residential was a legal nonconforming use of the property. Polk further claimed that it harvested the land several times a year, since 2005. The record belied this claim, however. Specifically, Polk sought and obtained the rezoning of the property from agricultural to residential, and executed and recorded the Declaration, with the restrictive covenant that each lot “shall be occupied and used only for single family residential purposes and for no other purpose.” The court found these actions were sufficient to constitute a voluntary abandonment. Polk’s breach of its restrictive covenant, by failing to maintain the property as only residential, entitled the Village to recover its tax differential as damages. While Polk claimed that the Village failed to prove the number of days on which a zoning code violation occurred, the undisputed evidence presented at the hearing showed continued agricultural activity of farm equipment, cutting, bailing, and removing crops from the property through August 2017.

Polk next contended that another provision of the Declaration Article, 10.1, allowed agricultural use, and the injunction should therefore have never been issued. Here, the zoning at the time the restrictive covenant was recorded precluded agricultural activities. Moreover, Article 10.1 related to the general business of selling the lots, such as putting in an office and signs, and showing models. The court found that there was no indication that agricultural activities would be included in the business of selling the lots. Article 5.1, the Article that actually applied to Polk, was without exception and was clear that the subdivision was to be residential.

In May 2013, Polk filed an amended Declaration with new language in art. 10.1 which explicitly allowed Polk to use the outlots and unsold lots for agricultural activities. Based on the language contained in articles 5.1 and 11.3 of the Declarations, it was undisputed that Polk simultaneously agreed to a residential purposes restriction and made the Village a beneficiary vested with the power to enforce that restriction. As the record reflected that the Village had not “released or waived in writing” the residential purposes restriction, the court found that Polk could not unilaterally amend the Declarations to change the residential purposes only restriction. Accordingly, the circuit court’s order was affirmed.

Village of Slinger v. Polk Properties, LLC, 2019 WL 2997993 (WI App. unpub. 7/10/2019)