Opinion ID: 2056206
Heading Depth: 1
Heading Rank: 15

Heading: Preliminary Release

Text: We next examine the Preliminary Release. We agree with Claggett that even if the Easement did not accord Claggett a right to transfer a lot free of the agricultural preservation restrictions, any grant of release from the terms of the Easement in the Preliminary Release would bind the Foundation. Thus we carefully examine the Preliminary Release, keeping in mind the terms of the Easement for interpretive purposes. The Preliminary Release states in the introductory paragraph that as a personal covenant, the Releasees only may exclude from the easement restrictions up to two (2) acres ... for the owner's use for the purpose of constructing a dwelling house for owner's residence. (Emphasis added). In the formal grant of the release, the instrument states: the Releasor hereby conditionally releases [the Owner's lot]... from restriction contained in the agricultural land preservation easement, subject, however, to the terms and conditions hereinafter set forth, including the condition that its use be for the purpose of constructing a dwelling house for the owner's residence. Later, a condition set forth in paragraph 3 of the instrument states the intent that the lot be released for the purpose of constructing a dwelling. The parties agree that this right may not be transferred to any person. Paragraph 5 states that the Releasees shall have the right to request that the above described parcel of 2.00 acres be released from the operation and effect of the Deed of Easement subject only to the Terms and conditions set forth in Paragraphs 1, 3 and 4 above. Claggett maintains, quoting the CSA, that neither the Easement or the Preliminary Release conditions include an explicit restriction on the alienability of the Owner's Lot. At most, it restricted the dwelling house to be for the owner's residence, but made no provisions for the event that the owner might sell the lot. See Claggett, 182 Md.App. at 377, 957 A.2d at 1101. The Deed and Preliminary Release are silent on the question of transfer to a third party and, he argues, because these instruments are susceptible of two interpretations, public policy favors the interpretation least restrictive of the right to alienate freely. See Julian v. Christopher, 320 Md. 1, 9, 575 A.2d 735, 738-39 (1990) (holding that [b]ecause there is a public policy against restraints on alienation, if a lease is silent on the subject, a tenant may freely sublease or assign.). We disagree with Claggett and the CSA because we think the notion of selling the lot is inconsistent with the language of the Easement and Preliminary Release. These instruments are silent on the topic of a third party dwelling in and owning the lot because the parties intended to restrict that from happening. There was no intent that a person granting an agricultural easement, who benefitted from the price paid by the government-supported Foundation while retaining the ability to farm the land at a profit, also be able to develop a lot and sell it at a profit. The profits are enhanced by the Easement the fair market value of that lot might increase substantially because it was located amidst land protected by an agricultural easement. In the preliminary clauses, the instrument states that the Preliminary Release conditionally releases [the Claggett Property] from restriction contained in the agricultural land preservation easement, subject, however, to the terms and conditions hereinafter set forth, including the condition that its use be for the purpose of constructing a dwelling house for the owner's residence. (Emphasis added). We do not see language in the Preliminary Release expressing any intent that the instrument intends to release the restrictions so clearly stated in the Easement with regard to who may dwell on the Owner's Lot. The CSA considered meritorious Claggett's argument that language in AG-1999 indicated an intent that the easements would permit transfer of a lot free of agricultural restrictions. It opined: In our view, the Foundation's interpretation is problematic in terms of the plain text of the statute. In essence, the Foundation believes that the statute creates a de facto restriction on the ability to sell an owner's lot, because the Foundation believes that only the original landowner may use the lot for residential purposes. But the statute plainly contemplates that an owner's lot will be owned by other persons after the original owner. The statute provides: Any release, preliminary release, building permit, or other document issued or submitted in accordance with this paragraph shall be recorded among the land records where the land is located and shall bind all future owners. AG-1999 § 2-513(b)(2)(vii). Claggett, 182 Md.App. at 381, 957 A.2d. at 1103. In our view the quoted language in the statute does not suggest that the transfer may be made free of the agricultural restrictions. It simply recognizes that the title can be changed by execution and recordation of a deed, but if it does, the restrictions, including limitations on who may live in the dwelling, remain in effect. Their efficacy is assured by record notice to any buyer that the covenants and restrictions run with the land and are binding on future owners. [4] The CSA went on to make a more interesting point: Indeed, given the finite duration of a human life, one must expect that persons other than the original landowner will one day own an owner's lot. If the Foundation were correct that such subsequent owners could not use the lot for residential purposes, any subsequent owner would be forced to tear down the dwelling on the owner's lot and return the land to agricultural use. Although this result is, in some sense, in harmony with the purpose of the agricultural preservation easement scheme to preserve land for agricultural use, it seems a perverse way of ensuring agricultural preservation. 182 Md.App. at 381, 957 A.2d at 1103. Although this observation is astute, we do not think that consideration of the future prospects for the house after the death of both Claggett and his children should require our deviation from the language of the Easement and the Preliminary Release. Moreover, in light of the passage of AG-2004, and the Foundation's expressed adoption of the 5-year limitation on any use restriction that would prohibit transfer of such lot to a third party free of the restrictions, the issue is moot. The CSA interpreted this language differently, pointing out that, although the Easement restricted use of the lot for the grantor's dwelling, it did not contain an explicit restriction on alienability of the Owner's Lot. At most, it restricted the dwelling house to be for the owner's residence, but made no provision for the event that the owner might sell the lot. See Claggett, 182 Md.App. at 377, 957 A.2d at 1101. Our analysis differs, perhaps because we view this dispute as one about the use of land rather than the ownership of land-the Easement restricted use, not transfers. Because the Easement contained covenants running with the land, and recorded among the appropriate land records, it was not necessary to restrict transfer of title in order to effectuate the intended restrictions on use. These restrictions in the Deed of Easement are consistent with the agricultural preservation purpose as stated in AG-1999 Section 2-501. The General Assembly created the Foundation to preserve agricultural land as open-space land and curb the spread of urban blight and deterioration[.] AG-1999 § 2-501. The owner's lot release conditions reflect an intent to limit new construction on program-participating properties. An unrestricted right to sell an owner's lot once released would undermine this purpose by facilitating potential real estate speculation through an ostensible request to build a dwelling for the grantor or his children. The Easement reflects this purpose, expressly stating an intention that the property shall be preserved solely for agricultural use in accordance with the provisions of the Agricultural Article, Title 2, Subtitle 5 ... and that the covenants, conditions, limitations and restrictions ... are intended to limit the use of the [property under easement] and are to be deemed and construed as real covenants running with the land. The General Assembly clearly entrusted the Foundation with stewardship responsibility over program-participating properties to ensure that the program's preservation purposes are fulfilled. See AG-1999 Section 2-513(b)(1) (stating that a landowner may not use the land for any ... residential purpose.) [5] This intent is carried forward in Claggett's Deed of Easement. See § B(7) (stating that [i]f the Grantor has any doubts concerning the easement, covenants conditions, limitations or restrictions herein contained with respect to any particular use of the said land, the Grantor may submit a written request to the Grantee for consideration and approval of such use). Under these terms, Claggett certainly may request authorization to transfer his lot to a third-party, but ultimately it is the Foundation's province to grant his request. Indeed, the Foundation maintains that its practice has been to grant such requests when it would be impracticable for the dwelling to be occupied by the owner. Because Claggett did not possess an unrestricted right to transfer the Owner's Lot to a third-party when he obtained the Preliminary Release and Agreement, he was not deprived of any vested right when the Foundation incorporated Chapter 498's five-year restriction on transfer in the Final Release. Indeed, according Claggett the right to transfer his lot after five years actually expanded Claggett's transfer rights under the terms of the Preliminary Release and Agreement. There was no retroactive application of Chapter 498 that worked to his detriment. Accordingly, Claggett may not transfer the dwelling constructed on his requested Owner's Lot to a third-party without first obtaining approval from the Foundation. Neither the Deed of Easement nor the Preliminary Release provide Claggett with an unrestricted right of transfer. The Final Release issued by the Foundation lawfully includes a statement that the lot may not be transferred to any other person for five (5) years from the date of the release except on [a]pproval by the Foundation[.] JUDGMENT OF THE COURT OF SPECIAL APPEALS REVERSED; CASE REMANDED TO THAT COURT WITH DIRECTIONS TO AFFIRM THE JUDGMENT OF THE CIRCUIT COURT FOR KENT COUNTY. COSTS IN THIS COURT AND THE COURT OF SPECIAL APPEALS TO BE PAID BY RESPONDENT. Judge MURPHY joins in the judgment only.