Court Opinion

ID: 9533513
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:32:20.540868+00
Date Added: 2024-06-11T13:29:04.060770
License: Public Domain

KENNARD, J.
J.I dissent.
At issue in this case is the enforceabililty of a subdivision’s land-use restrictions that are set forth in a “declaration” recorded by the subdivider of the land. The majority holds that the restrictions are enforceable against future land purchasers even though the subdivider transferred the lots by means of grant deeds that on their face conveyed a fee simple estate and made no reference to any restriction on the land conveyed. The majority’s rule is a simple one, but simplicity is its only virtue. By adopting this rule, the majority blasts a gaping hole through the structure of real property law that has been painstakingly erected by the Legislature and by the courts over the past century.
Under California law, no restrictions on the use of land can be created unilaterally by a single landowner. To be enforceable, a restriction must result from an agreement between landowners or between a grantor and a grantee. The majority acknowledges the necessity of an agreement. Yet, the majority evades this requirement by holding that a purchaser/grantee “constructively agrees” to be bound by restrictions set forth in a declaration recorded by the subdivider/grantor, even though those restrictions are not mentioned in the unrestricted grant deed conveyed to the purchaser. To hold that parties can form an agreement based only on constructive intent, rather than actual, mutually shared intent, would be unusual in any context. In the context of the law governing the creation of land use restrictions and grant deeds, such a rule is not just unusual but foreclosed by statute.
To give certainty and stability to real property transactions, the Legislature has, by statute, established that a grant deed conveys the grantor’s entire fee simple interest—the whole of the grantor’s proverbial bundle of rights in the property. (Civ. Code, § 1105.)1 In addition, as provided by statute, the grantor of a grant deed covenants that the grantor has made no other encumbrance or conveyance of the property conveyed. (§1113.) A subdivider who records a declaration of restrictions before conveying any lots continues to possess the entire fee simple after the declaration is recorded. *370When, as here, the subdivider then conveys each lot in the subdivision by a grant deed that makes no reference to any restrictions, under the statutes just mentioned the subdivider/grantor has in each case conveyed the entire fee simple in the lot to the grantee.
By reaching a contrary result, the majority undermines the previously unquestioned certainty, established by statute, that an unrestricted grant deed passes all of the grantor’s rights in the property conveyed. Contrary to legislative mandate, the majority has now transformed grant deeds that on their face are unrestricted conveyances of the landowner’s entire interest into deeds conveying only a portion of the landowner’s interest.
The majority is also wrong in its view that a declaration of restrictions for a subdivision recorded before any lots are conveyed provides constructive notice to a subsequent grantee of one of the lots. Under the recording statutes, the only recorded documents that can provide constructive notice are written instruments that themselves create or transfer property interests. The majority concedes that the declaration does not create or transfer the restrictions it sets forth or any other property interest; it therefore follows that the declaration is ineffective as a means of constructive notice. Thus, contrary to the majority, the inclusion of the restrictions in a recorded declaration does not give prospective purchasers notice of those restrictions, nor does it transform a subsequent grant deed that fails to mention any restrictions into an agreement by the grantee to be bound by those restrictions.
Finally, in making its rule retroactive, the majority alters the enforceability of restrictions on the use of land that was conveyed long ago. Our decisions do not support giving retroactive effect to new rules when doing so will impair vested interests in real property. Because Californians have been creating subdivisions for at least 130 years, the majority’s decision to make its new rule retroactive will revive land-use restrictions that, like the restrictions in this case, were unenforceable under the law as it existed before today, while at the same time erasing other land use restrictions on which landowners may have relied for generations.
I
Background of This Lawsuit
Defendants Jared A. and Anne Anderson own two contiguous lots in the Town of Woodside, San Mateo County, that together comprise about four acres. One of these, a part of the Skywood subdivision, has been improved *371with a single-family residence. The other, which is included in the Friars subdivision, is land under cultivation by the Andersons as a vineyard.
In April 1992, the Woodside Town Council granted the Andersons a conditional use permit authorizing them to produce up to 1,000 gallons of wine each year on their 2-parcel property. One month later, Citizens for Covenant Compliance, an unincorporated association made up of some of the Andersons’ neighbors, brought this action on its own behalf and for certain individually named neighbors seeking to restore the Andersons’ Friars lot to its pre-vineyard state and to enjoin the production and sale of wine at the Andersons’ Skywood lot residence. According to the complaint, the grape-growing and winemaking activities, as well as the presence of seven llamas on the Andersons’ property, are prohibited under covenants, conditions, and restrictions (hereafter CC&R’s) governing the Skywood and Friars subdivisions. The individual plaintiffs, as owners of lots in the two subdivisions, assert that the restrictions of the CC&R’s inure to the benefit of their properties and accordingly seek to enforce the restrictions.2
The trial court granted judgment for the Andersons based on these undisputed facts:
The subdividers of the Skywood tract, Joseph and Claire Stadler, parceled the land into 60 lots in the early 1950’s. On June 5, 1958, the Stadlers recorded a declaration expressing their “desire to establish a general plan for the improvement” of the property and to subject the property to various “conditions, restrictions, and covenants,” including a restriction on each lot in the Skywood subdivision limiting its use to “residential purposes only.” The declaration described the CC&R’s as “covenants running with the land” enforceable by the subdividers, their grantees or assigns, or successors in interest. On October 14, 1958, by grant deed that did not refer to the CC&R’s, the Stadlers conveyed to Benjamin O. Herbert the lot that was later purchased by the Andersons.
The Friars subdivision is comprised of four lots. On May 10, 1977, its subdivider, Cowper-Hamilton Building, Inc., recorded a declaration of CC&R’s describing the property as subject to “mutual equitable convenants and servitudes for the protection and benefit of each property in [the] subdivision,” and stating that each lot was to be used for residential purposes only and not for any “form of business, commercial, manufacturing, or storage” activity. In addition, the declaration stated that no animals other *372than household pets or horses could be kept on the property. Two days later, by warranty deed, Cowper-Hamilton conveyed the first lot in the Friars tract to Ray and Nancy Gava. That deed made no mention of any CC&R’s or other land-use restrictions. After several additional transfers, this lot was purchased by the Andersons at a foreclosure sale.
Thus, no deed in the Andersons’ chain of title for either their Skywood lot or their Friars lot refers to any CC&R’s. Moreover, no deed conveying any lot in either subdivision refers to the CC&R’s.
Based on these facts, the trial court determined that the CC&R’s set forth in the recorded declarations did not satisfy the requirements for either of the two recognized forms of enforceable land-use restrictions: “covenants running with the land” and “equitable servitudes.” The trial court’s reasoning was as follows: the CC&R declaration for the Skywood subdivision, which was subdivided in the 1950’s, could not create enforceable “covenants running with the land” because the version of section 1468 (specifying the requirements for “covenants” to “run with the land”) that was then in effect (Stats. 1905, ch. 450, § 1, p. 610) did not authorize the creation of such covenants between a grantor and a grantee. By 1977, when the CC&R’s for the Friars subdivision were recorded, the Legislature had amended section 1468 to permit the creation of covenants running with the land between grantors and grantees; nonetheless, the Friars declaration did not meet the statutory requirement that the restrictions be particularly described in the deed or other similar instrument. Furthermore, the recorded declarations for the Skywood and the Friars subdivisions did not create “equitable servitudes” because, in the trial court’s words, “there does not exist any deed or other written instrument which expresses the joint intent of the declarants under the Skywood CC&Rs [the Stadlers] or the declarant under the Friars CC&Rs [Cowper-Hamilton], on the one hand, and any grantee of a Skywood lot or any grantee of a Friars lot, on the other hand, that any such grantee’s title would be subject to the CC&Rs for the benefit of other lots and that the lots of the declarants’ subsequent grantees would be bound for the benefit of such grantee’s lots. ...” Accordingly, the trial court entered judgment for the Andersons. On Citizens’ appeal, the Court of Appeal affirmed.
II
Enforcement of Land-use Restrictions Either as Covenants Running With the Land or as Equitable Servitudes
A. Historical Development of the Dual Doctrines of Covenants Running With the Land and Equitable Servitudes
English common law recognized the right of owners of neighboring land to enter into agreements to restrict the uses of their respective properties in *373ways that were mutually beneficial to each. (See Note, Covenants and Equitable Servitudes in California (1978) 29 Hastings L.J. 545, 546.) When they did, their contracts were enforceable between them, but could not be enforced contractually against their successors in interest absent an assignment of rights by the contracting parties. (Ibid.) Eventually the English law courts recognized a need for continuing enforcement of promises respecting land use, and by the mid-16th century developed a rule of property law that permitted agreements by landowners restricting the use of real property to “run with the land” and bind future owners. (Spencer’s Case (1583 Q.B.) 77 Eng.Rep. 72; 5 Powell on Real Property (1995) Covenants as to Use, § 670[2], p. 60-12.) Such an agreement, termed a “covenant running with the land,” was enforceable against future landowners only if certain strict requirements were met. (5 Powell on Real Property, supra, § 673 [2], p. 60-46 et seq.)
The extent to which these limitations restricted the enforcement in the English law courts of covenants to use or refrain from using land in a particular way led the English equity courts in the mid-19th century to develop the doctrine of “equitable servitudes” as an alternative means for enforcing land use restrictions known to a subsequent purchaser even though the precise requirements for covenants running with the land were not met.(Tulk v. Moxhay (1848 Ch.) 41 Eng. Rep. 1143; see 5 Powell on Real Property, supra, Covenants as to Use, § 670[2], pp. 60-7 to 60-9.)
In 1886, an American treatise on equity jurisprudence gave this explanation of equitable servitudes: “ ‘[I]f the owner of land enters into a covenant concerning the land, concerning its uses, subjecting it to easements or personal servitudes and the like, and the land is afterwards conveyed or sold to one who has notice of the covenants, the grantee or purchaser will take the premises bound by the covenant, and will be . . . restrained from violating it; and it makes no difference whatever with respect to this liability in equity whether the covenant is or is not one which “in law runs with the land.” ’ ” (2 Pomeroy, Equity Jurisprudence (2d ed. 1886) § 689, quoted in Hunt v. Jones (1906) 149 Cal. 297, 301 [86 P. 686].)
These dual concepts for enforcing private land use agreements either at law or in equity have survived into modem times. Under current California law, however, the differences between the two doctrines have been minimized by legislative changes to the statute governing covenants mnning with the land.
B. Covenants and Servitudes in California
Since 1872, California has permitted landowners to create “covenants mnning with the land” by meeting certain statutory requirements. (§ 1461 *374[“The only covenants which run with the land are those specified in this title, and those which are incidental thereto.”].)
Section 1460 describes covenants running with the land as follows: “Certain covenants, contained in grants of estates of real property, are appurtenant to such estates, and pass with them, so as to bind the assigns of the covenantor and to vest in the assigns of the covenantee, in the same manner as if they had personally entered into them.”
The requirements for covenants running with the land are set forth in section 1468. As originally enacted, that statute limited “covenants running with the land” to agreements “made by the owner of land with the owner of other land,” and did not include agreements between a grantor and a grantee of the same land. (Stats. 1905, ch. 450, § 1, p. 610.)
Such grantor-grantee agreements to restrict land use were enforceable, however, as “equitable servitudes.” (7 Miller & Starr, Current Law of Cal. Real Estate (2d ed. 1990) Covenants and Restrictions, § 22.1, pp. 527-528.) Indeed, in California, the doctrine of equitable servitudes has been used mainly to enforce such grantor-grantee agreements (ibid.), which often involve a uniform plan of restrictions for a tract of subdivided land (see Marra v. Aetna Construction Co. (1940) 15 Cal.2d 375, 378 [101 P.2d 490]). The leading case on equitable servitudes is this court’s decision in Werner v. Graham (1919) 181 Cal. 174 [183 P. 945].
Werner explained how the conveyance of parcels in a subdivided tract caused equitable servitudes to spring into being: “It is undoubted that when the owner of a subdivided tract conveys the various parcels in the tract by deeds containing appropriate language imposing restrictions on each parcel as part of a general plan of restrictions common to all parcels and designed for their mutual benefit, mutual equitable servitudes are thereby created in favor of each parcel as against all the others.” (Werner v. Graham, supra, 181 Cal. at p. 183, italics added.)
Werner was quick to point out, however, that the creation of an equitable servitude enforceable against future purchasers required an agreement: “[I]f the parties desire to create mutual rights in real property of the character of those claimed here they must say so, and must say it in the only place where it can be given legal effect, namely, in the written instruments exchanged between them which constitute the final expression of their understanding.” (Werner v. Graham, supra, 181 Cal. at p. 185, italics added.) Werner stated that the intent of the common grantor—the subdivider—was insufficient to create enforceable servitudes, noting that even though the grantor “has a *375general plan of restrictions in mind ... it is not his intent that governs [but] the joint intent” of the grantor and the grantees. (Id. at p. 184, italics added.)
Nearly 60 years later, we reiterated this understanding of equitable servitudes in Riley v. Bear Creek Planning Committee (1976) 17 Cal.3d 500, 510 [131 Cal.Rptr. 381, 551 P.2d 1213], in which we observed that the requirement of a written agreement is “ ‘supported by every consideration of sound public policy which has led to the enactment and enforcement of statutes of frauds in every English-speaking commonwealth.’ [Citation.]” This requirement is satisfied by the inclusion of the restrictions in a deed: “Equitable servitudes in land may be created in this state only by deed, and the expectations of the parties, reasonable or otherwise, are wholly without relevance in the absence of language in the deed having the legal effect of creating such a servitude.” (Id. at p. 512.)
Whereas traditionally the doctrine of covenants running with the land applied only to agreements between owners of separate properties and the doctrine of equitable servitudes served to enforce grantor-grantee agreements, in the late 1960’s the Legislature amended section 1468 to make agreements between grantors and grantees enforceable as covenants running with the land. (Stats. 1968, ch. 680, § 1, p. 1377; Stats. 1969, ch. 245, § 1, p. 594.) Section 1468 thus has largely, if not completely, merged the doctrine of covenants running with the land and the doctrine of equitable servitudes in this state. (7 Miller & Starr, Current Law of Cal. Real Estate, supra, Covenants and Restrictions, § 22.1, pp. 530-531 [describing the 1968 and 1969 statutory changes as the “final statutory abrogation of the common-law restrictions against covenants running with the land” and stating that the doctrine of equitable servitudes now remains relevant only for determining the enforceability of restrictions predating the present code].)
III
The Majority’s Holding Conflicts With the Settled Real Property Law of California
Under California law as it existed until today, the CC&R’s contained in the declarations recorded for the Skywood and Friars subdivisions could not be enforced either as covenants running with the land or as equitable servitudes. In the 1950’s when subdividers Joseph and Claire Stadler recorded the declaration for the Skywood subdivision, no enforceable “covenants running with the land” could be created between a grantor and grantee. And, although by 1977, when Cowper-Hamilton Building, Inc., recorded the CC&R declaration for the Friars subdivision, section 1468 permitted grant- or-grantee “covenants running with the land,” the Friars CC&R declaration *376failed to meet the statutory requirement for covenants running with the land that the CC&R’s be particularly described in a deed or other similar instrument. Nor were the CC&R’s pertaining to the Sky wood and Friars subdivisions enforceable as equitable servitudes because no reference was made to them in any deed.
The majority does not dispute that the Sky wood and Friars CC&R’s are not enforceable either as covenants running with the land or as equitable servitudes. Determined to enforce the land-use restrictions against the Andersons, the majority adopts this rule: “If a declaration establishing a common plan for the ownership of the property in a subdivision and containing restrictions upon the use of property as part of the common plan, is recorded before the execution of the contract of sale, describes the property it is to govern, and states that it is to bind all purchasers and their successors, subsequent purchasers who have constructive notice of the recorded declaration are deemed to intend and agree to be bound by, and to accept the benefits of, the common plan; the restrictions, therefore, are not unenforceable merely because they are not additionally cited in a deed or other document at the time of the sale.” (Maj. opn., ante, at p. 349, original italics.)
In short, the majority holds that a landowner may unilaterally impose retrictions on purchasers and their successors by subdividing the land, recording a declaration that sets forth a common plan of CC&R’s, and then conveying the lots in the subdivision, even though the conveyances are by means of grant deeds that on their face grant a fee simple estate and make no reference to any restriction upon the land conveyed. Although the future effect of the rule may well be beneficial because it will simplify the process for creating enforceable CC&R’s throughout a subdivision, the rule is not one that this court may impose by judicial fiat. As I explain in the sections that follow, this court’s establishment of a new method for creating enforceable CC&R’s conflicts not only with common law principles of equitable servitude law but also with legislative enactments that this court lacks the power to disregard.
A. The Majority Acknowledges the Need for Mutual Assent to Create Enforceable CC&R’s, Yet Its New Rule Eliminates That Requirement
The majority acknowledges that a subdivider of land “cannot unilaterally” impose enforceable land use restrictions on real property, and that “[i]t takes two parties—in this case the seller and buyer—to agree.” (Maj. opn., ante, at p. 365.) Thus, as the majority states, “[mjerely recording the restrictions does not create mutual servitudes.” (Ibid.)
*377Although the majority acknowledges the necessity for an agreement, the effect of the rule it creates is to dispense with that requirement. The majority asserts that “if the restrictions are recorded before the sale, the later purchaser is deemed to agree to them.” (Maj. opn., ante, at p. 363, italics added.) The majority’s conclusion, which substitutes a fictitious agreement for an actual agreement, does not withstand scrutiny.
By “deeming” the purchaser to have agreed to the restrictions by accepting an unrestricted grant deed from the subdivider that holds title in fee simple to the lot, the majority’s rule does away with the well-established requirement of California law that the purchaser and the subdivider must actually agree to be bound by the CC&R’s. (See Werner v. Graham, supra, 181 Cal. at p. 185; Riley v. Bear Creek Planning Committee, supra, 17 Cal.3d at pp. 510, 512.) The majority bases its “constructive agreement” theory on two premises, both of which are contrary to California’s statutory law of real property.
The majority’s first premise is that the recorded declaration containing the CC&R’s is an instrument of which the purchaser, under the recording statutes, is deemed to have constructive notice. Its second premise is that, by accepting a fee simple grant deed that on its face has no restriction and does not mention the CC&R’s, the purchaser who has constructive notice of the recorded CC&R’s may be deemed as a matter of law to have agreed to be bound by the CC&R’s. Both premises are wrong under California’s statutory scheme governing real property.
First, a subdivider’s declaration of CC&R’s that is recorded before any parcels are sold does not meet the requirements of California’s recording statutes pertaining to constructive notice. Section 1213 states that every “conveyance” of real property that is “recorded” as prescribed by law provides “constructive notice” of its contents to subsequent purchasers. But the term “conveyance” as defined in section 1215 refers only to a “written instrument” by which an “estate or interest in real property is created, aliened, mortgaged or incumbered, or. . . the title to . . . real property . . . affected . . . .” The term “written instrument” has a technical meaning under the recording statutes, which define it as “a written paper signed by a person or persons transferring the title to, or giving a lien on real property, or giving a right to a debt or duty.” (Gov. Code, § 27279; see Hoag v. Howard (1880) 55 Cal. 564, 565 [“If we look into the provisions of the Code in which the word ‘instrument’ is used, it will be invariably found to indicate some written paper or instrument signed and delivered by one person to another, transferring the title to or creating a lien on property, or giving a *378right to a debt or duty.”].) Therefore, under section 1213, to establish a “conveyance” that, when “recorded,” gives “constructive notice” of its contents to prospective purchasers, there must be a “written instrument” that either creates or transfers an interest in real property from one person to another. Conversely, recording some other document that does not itself create or transfer any interest in real property provides no constructive notice of its contents to prospective purchasers. (Black v. Solano Co. (1931) 114 Cal.App. 170, 173 [299 P. 843].)
A declaration of CC&R’s is neither a conveyance nor a written instrument, for it does not “transfer” any title to real property (Gov. Code, § 27279) or “create[], alien[ate], mortgage[], or incumber[]” any interest in real property (§ 1215). Nor does recordation of a declaration effectuate a transfer or creation of an interest in real property. Indeed, as the majority concedes, the CC&R’s never “ ‘spring into existence’ until an actual conveyance subject to them is made,” (maj. opn., ante, at p. 365) and “[m]erely recording the restrictions does not create mutual servitudes” {ibid.). Therefore, the recorded declaration of CC&R’s for a subdivision does not provide constructive notice of the contents of the declaration to prospective purchasers. (Black v. Solano Co., supra, 114 Cal.App. at p. 173.)3 Accordingly, a purchaser who later signs a deed that makes no reference to the recorded declaration of CC&R’s, and who thus has no actual or constructive notice of the restrictions contained therein, cannot be deemed to agree to be bound by the CC&R’s.
Because the majority’s rule permits CC&R’s to “spring into existence” without an agreement, the rule does exactly what the majority says it does not (maj. opn., ante, at p. 365): it allows for the unilateral creation of enforceable land use restrictions, contrary to established law.
Furthermore, even assuming that a prior recorded declaration of CC&R’s gave a purchaser constructive notice of those CC&R’s, that purchaser cannot be presumed to constructively agree to be bound by them by accepting a fee simple grant deed that contains no reference whatsoever to the CC&R’s. Indeed, under the pertinent statutory scheme, a contrary presumption arises from the subdivider’s use of an unrestricted grant deed, as I shall explain.
Under section 1105, a grant deed passes the entire fee simple unless the deed itself evidences an intention to grant a lesser interest in the property. (§1105 [“A fee simple title is presumed to be intended to pass by a grant of real property, unless it appears from the grant that a lesser estate was *379intended.”]; City of Long Beach v. Marshall (1938) 11 Cal.2d 609, 613 [82 P.2d 362].) By giving the purchaser a grant deed without restrictions, the subdivider conveys the entire interest held by the subdivider in the lot, free of any CC&R’s or other restrictions that the subdivider may have intended to reserve in favor of the retained land; the subdivider cannot give an unrestricted grant deed while reserving the property interest described by the CC&R’s. (Ibid.; American Enterprise, Inc. v. Van Winkle (1952) 39 Cal.2d 210, 220 [246 P.2d 935] [“In the absence of some exception, limitation or reservation, a grant deed is presumed to convey the grantor’s entire interest.”]; Schwenn v. Kaye (1984) 155 Cal.App.3d 949, 952 [202 Cal.Rptr. 374] [same].) Accordingly, if the subdivider gives every purchaser an unrestricted grant deed, as occurred in each of the subdivisions here, then each purchaser receives the subdivider’s entire interest in the lot purchased and the restrictions never come into existence.
This court has long recognized that under section 1105 an unrestricted grant deed conveys the grantor’s entire interest. In Taylor v. Avila (1917) 175 Cal. 203, 206 [165 P. 533] this court quoted the language of section 1105 and then stated: “The rule that a grant, bargain, and sale deed operates to pass the title in fee, unless it contains in itself some limitation, exception, or reservation, and that it estops the grantor thereafter from claiming any right or estate in the land so conveyed, is too well settled to require citation of authority. We find in the above deed no limitation or qualification whatever upon the fee-simple estate granted. The plaintiff, having made such conveyance, is estopped from asserting that it did not convey the entire estate in the land described.” (Italics added.)
This court has continued to adhere to the view that enforceable restrictions cannot arise if the deed fails to refer to the existence of any restrictions: “[Ejquitable servitudes restricting the free use of land may be created only by a deed setting forth the restriction (or referring to a recorded declaration of restrictions) . . . .” (Riley v. Bear Creek Planning Committee, supra, 17 Cal.3d 500, 512, fn. 7.) “[T]he expectations of the parties, reasonable or otherwise, are wholly without relevance in the absence of language in the deed having the legal effect of creating such a servitude." (Id. at p. 512, italics added; accord, Rest.3d Property, Servitudes (Tent. Draft No. 1, Apr. 5, 1989) § 2.1, com. c., p. 7; id., § 2.14, com. a, pp. 3-5.)
In this case, the subdividers of the Skywood and Friars lots now owned by the Andersons gave unrestricted grant deeds to those lots and to every other lot in those subdivisions. Under section 1105 and under the decisions I have discussed in the three paragraphs preceding this one, the subdividers thereby *380conveyed, and evidenced their intention to convey, their entire estates in those lots, free of any encumbrances. The majority’s assertion that the subdividers and their purchasers intended to convey title encumbered by the CC&R’s is contrary to this settled law. Accordingly, Citizens, in asserting interests derived from the subdivider, is “estopped from asserting that [the subdividers] did not convey the entire estate in the land described” in the deeds. (Taylor v. Avila, supra, 175 Cal. at p. 206.)
The majority attempts to minimize the difference between a grant deed that contains restrictions and one that does not, by noting that a grant deed may incorporate restrictions by express reference. (Maj. opn., ante, at pp. 359-360.) But the difference is a fundamental one under our statutory scheme governing conveyances of land: It is the difference between an agreement to convey the entire fee simple and an agreement to convey a lesser interest. According to the majority, the unrestricted grant deed of the first lot sold by a grantor/subdivider reserves in favor of the grantor a servitude defined by the restrictions in the CC&R declaration. Under section 1105, however, any limitation on the interest conveyed by a grant deed must be expressly stated in the deed. Thus, to reserve an interest in the grantor’s favor, the deed must contain some expression of that reservation, even if nothing more than an express incorporation by reference. Just as parol evidence is inadmissible to show that an unrestricted grant deed was intended to convey less than the grantor’s entire interest in the property (Winchester v. Winchester (1917) 175 Cal. 391, 394 [165 P. 965]; Riley v. Bear Creek Planning Committee, supra, 17 Cal.3d 500, 512, fn. 7), so too a prior recorded CC&R declaration that lacks the essential attributes of a conveyance is ineffective to limit the property interest conveyed by an unrestricted grant deed.
The majority’s rule violates not only section 1105, but also section 1113, which lists implied covenants that are made a part of every grant deed and that are based upon the principle that a grant deed conveys the grantor’s entire interest in the granted property. Section 1113 provides that, “unless restrained by express terms contained in such conveyance,” the grantor covenants “[t]hat such estate is . . . free from encumbrances done, made, or suffered by the grantor.” (See also Hotaling v. Hotaling (1924) 193 Cal. 368, 379 [224 P. 455, 56 A.L.R. 734].) Any restriction on the use of property “limiting the right of the owner of land to freely use it in any lawful way,” such as covenants running with the land, equitable servitudes, or the CC&R’s at issue in this case, is an “encumbrance” within the meaning of section 1113. (Fraser v. Bentel (1911) 161 Cal. 390, 394 [119 P. 509].)
As a result of the majority’s rule, section 1113 will now be routinely breached by subdividers. This is because subdividers who convey all their *381lots by means of unrestricted grant deeds will not be conveying property that is “free from encumbrances done, made, or suffered by the grantor” (§ 1113), for the property they are conveying is encumbered by CC&R’s. The majority does not even acknowledge that its rule results in subdividers’ breaching their deed covenants.
The legislative policy that grantors who use an unrestricted grant deed to convey title thereby convey the entire estate is so strong that even when the grantor partially or wholly lacks title at the time of conveyance, any interest in the conveyed property that the grantor later acquires passes immediately to the grantee by operation of statute. (§ 1106; Schwenn v. Kaye, supra, 155 Cal.App.3d at pp. 951-953.) “[T]he doctrine of after-acquired title applies even if the grantee had knowledge of the deficiency.” (Schwenn v. Kaye, supra, 155 Cal.App.3d at p. 953.) Because even after-acquired interests pass from the grantor to the grantee under an unrestricted grant deed, it makes no sense to suggest, as the majority does, that interests held by the grantor at the time of the conveyance do not so pass.
B. The Majority’s Rule Violates the Statutory Requirement That Covenants Running With the Land Be Embodied in an “Instrument”
The majority states that under its rule CC&R’s are enforceable throughout a subdivision not only as equitable servitudes but also as covenants running with the land. (Maj. opn., ante, at p. 354.) But under section 1468, restrictive covenants will run with the land and bind future landowners only if they are set forth in a recorded “instrument.”
Section 1468 provides that covenants “to do or refrain from” some activity will run with the land if certain conditions are met.4 One condition is recordation of an “instrument containing such covenants.” (Id., subd. (d).) Therefore, to come within the statute, the recorded document setting forth *382the CC&R’s must be an “instrument.” As I have already explained, the term “instrument” in the context of real property is a document that either transfers or creates an interest in real property. (Ante, at pp. 377-378.) A deed conveying an interest in real property qualifies as an instrument, but a declaration conveying no interest at all does not. Only by ignoring section 1468’s clear and unequivocal requirement that CC&R’s be set forth in an “instrument” can the majority reach the conclusion that CC&R’s contained in a recorded declaration “run with the land.”
IV
Although the Legislature Could by Statute Exempt Subdivision CC&R’s From the General Law, This Court Lacks That Power
As I have explained at the outset, in California covenants running with the land are a form of property interest created by statute, whereas equitable servitudes are a nonstatutory form of property interest created by courts acting in their common law capacity. Although this court can expand, contract, or even alter the basic premises of equitable servitude law, its power to do so is limited by the fundamental requirement that whatever changes it makes must not conflict with existing real property statutory law. More specifically, equitable servitudes are subject to the same statutes regarding constructive notice of recorded instruments and the interests conveyed by an unrestricted grant deed that govern every other form of real property interest in California.
Here, the majority devises a rule that makes CC&R’s enforceable throughout a subdivision once the subdivider records a declaration describing a common plan of CC&R’s and thereafter conveys one subdivision lot. As I have explained, however, the majority’s “constructive notice” rationale fails because section 1213 does not include a recorded declaration of CC&R’s among the instruments that give prospective purchasers constructive notice of their contents. Moreover, the majority’s rule cannot be reconciled with the deed covenant provisions of sections 1105 and 1113. Because of these statutory conflicts, this court lacks the power to adopt the rule it does.
*383The Legislature, however, could, if it wished to do so, enact a CC&R rule specific to subdivisions that would exempt the creation of subdivision CC&R’s from these general statutory provisions and authorize the creation of enforceable subdivision CC&R’s when a subdivider records a declaration of CC&R’s. A model for such a statute is section 1354 (part of the Davis-Stirling Common Interest Development Act [§ 1350 et seq.]), which applies exclusively to condominium projects and other common interest developments. (See Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361 [33 Cal.Rptr.2d 63, 878 P.2d 1275].) Section 1354 permits a developer to create CC&R’s that are “enforceable equitable servitudes,” by recording a declaration for the development setting forth the CC&R’s. Although our statutes generally do not permit restrictions set forth only in a recorded declaration and not included in any deed to be enforced as equitable servitudes, the Legislature has, through section 1354, made an exception to this general rule in the case of common interest developments. It is a settled principle of statutory construction that a specific statute enacted by the Legislature to cover a particular subject “controls and takes priority over a general statute encompassing the same subject.” (Estate of Kramme (1978) 20 Cal.3d 567, 576 [143 Cal.Rptr. 542, 573 P.2d 1369]; accord, Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 445 [41 Cal.Rptr.2d 362, 895 P.2d 469]; San Francisco Taxpayers Assn. v. Board of Supervisors (1992) 2 Cal.4th 571, 577 [7 Cal.Rptr.2d 245, 828 P.2d 147].) Or, in the words of Code of Civil Procedure section 1859, when a general statute conflicts with a particular statute, “the latter is paramount to the former.” Thus, the power to exempt the creation of subdivision CC&R’s from the general statutory law rests with the Legislature, not this court.
V
Retroactive Application of the Majority’s Rule, Which Impairs Vested Rights in Real Property, Is Contrary to Settled Law
The majority makes its new rule fully retroactive. In general, “ ‘a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation.’ [Citation.]” (Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 305 [250 Cal.Rptr. 116, 758 P.2d 58].) There are exceptions to this general rule, however, when fairness or public policy considerations dictate against giving a decision by this court full retroactivity. (Ibid.) “ ‘For example, where . . . contracts have been made or property rights acquired in accordance with the prior decision, neither will contracts be invalidated nor will vested rights be impaired by applying the new rule retroactively.’ [Citation.]” (Ibid.) accord, Estate of Propst (1990) 50 Cal.3d 448, 462-463 [268 Cal.Rptr. 114, 788 P.2d 628].)
*384The majority refuses to apply this exception here, even though giving retroactive effect to today’s holding will seriously impair vested rights in real property. According to the majority, retroactivity is justified for this reason: “Given current uncertainty in the cases, it would be unreasonable to conclude that the Andersons, or others, have bought property believing that the restrictions of record were enforceable as to prior purchasers of property in the same subdivision whose deeds referenced the restrictions, no matter how vaguely, but not otherwise. Rather, the opposite is far more likely, that homeowners buy property in the expectation and intent that recorded mutual restrictions apply uniformly throughout a subdivision.” (Maj. opn., ante, at p. 368.) I am not persuaded.
Before today’s decision, anyone contemplating the purchase of a subdivided lot could rely on existing law that mere recordation, by the subdivider, of a declaration specifying land use restrictions was insufficient to create enforceable restrictions throughout the entire subdivision unless referenced in at least one deed conveying a lot in the subdivision. In this respect, as I have discussed earlier, the law was certain and settled. Thus, contrary to the majority’s assertion, it is far more likely that purchasers in a subdivision would have relied on then-settled law rather than on the new rule announced by the majority today.
Also pertinent to the issue of retroactivity is the financial impact today’s decision will have on those landowners who, like the Andersons, relied on their vested rights in the full unrestricted use of their land in deciding what use to make of that land. Instructive in this regard are decisions by this court declining to apply changes in zoning or building permit laws to property owners when to do so would result in a divestment of property rights already acted upon. (See City of West Hollywood v. Beverly Towers, Inc. (1991) 52 Cal.3d 1184 [278 Cal.Rptr. 375, 805 P.2d 329]; San Diego Coast Regional Com. v. See The Sea, Limited (1973) 9 Cal.3d 888 [109 Cal.Rptr. 377, 513 P.2d 129].) The majority does not even consider these decisions.
It is clear that retroactive application of the majority’s new rule will revive land use restrictions that were unenforceable under the law as it existed before today. What is less clear is whether giving retroactive effect to today’s holding will also destroy CC&R’s that previously were enforceable; there is an internal conflict in the majority opinion on this point.
First, the majority claims that “uncertainties” in the law of servitudes “can be eliminated by adopting [its new] rule” that a subdivider’s recording of a *385declaration of CC&R’s and later conveyance of one lot in the subdivision by a deed that does not mention the restrictions creates enforceable land-use restrictions binding upon all the lots in the subdivision. (Maj. opn., ante, at p. 363.) Later, however, the majority states that the rule it adopts is not the exclusive method for creating valid CC&R’s in subdivisions. (Maj. opn., ante, at p. 368, fn. 7.) The majority cannot have it both ways: Either the majority’s new rule is now the exclusive means of creating subdivision CC&R’s or the majority has not eliminated the “uncertainties” in the existing law of servitudes.
The “uncertainties” to which the majority refers are those stemming from a conflict in two lines of cases, one applying the “first deed only” rule (holding restrictions would be binding in a subdivision on lots conveyed after the first deed containing the restrictions) and the other applying the “all first deeds” rule (holding that the restrictions could be enforced only if they appeared in all first deeds conveying lots in a subdivision). (Maj. opn., ante, at pp. 360-363.)5 Under the majority’s new rule, this conflict is irrelevant in those situations where a subdivider has recorded a declaration containing a common plan of restrictions for the subdivision; the CC&R’s will now be enforceable even though they appear in no deed for any lot in the subdivision. But what happens in situations where the subdivider has not recorded a declaration, and instead has included the restrictions either in the first deed only or in all first deeds for the subdivision? Although the majority does not explain how its rule applies in those situations, I see two possibilities.
If we take the majority at its word that it has actually eliminated the “uncertainties” in the present law, the majority must have resolved the “first deed only”/ “all first deeds” case law conflict by today adopting a “declaration only” rule, making the enforceability of CC&R’s in a subdivision depend in every case solely on whether the subdivider has recorded a *386declaration setting forth a uniform plan of restrictions. If that is the case, a common plan of restrictions will be enforceable only in those subdivisions with recorded declarations, and will not be enforceable in subdivisions where the plan of restrictions appears not in the subdivider’s recorded declaration but in one or more grant deeds for individual lots. Accordingly, CC&R’s that have long been enforceable will now, as the result of the majority’s retroactivity holding, become unenforceable.
If, on the other hand, the majority means to limit the retroactive application of its new rule only to subdivisions with a recorded declaration of restrictions (which is what the majority implies when it states that the new rule is not the exclusive method for creating valid CC&R’s), then the majority has not, as it claims, eliminated the “uncertainties” caused by the “first deed only”/ “all first deeds” conflict in our case law.
In any event, because of its retroactive application, the majority’s new rule will have widespread effect on all subdivisions, large and small. The majority states that its rule applies only to “subdivisions,” thereby implying that its rule will be limited to planned communities and tract housing developments. But in California it is a fact of life that most privately owned property is located in subdivisions, for California law provides that virtually every division of land into lots constitutes a subdivision. Under the Subdivision Map Act (Gov. Code, § 66410 et seq.), a subdivision is created by any “division ... of any unit or units of improved or unimproved land, or any portion thereof, shown on the latest equalized county assessment roll as a unit or as contiguous units, for the purpose of sale, lease or financing, whether immediate or future.” (Gov. Code, § 66424.) Thus, a 100-acre tract of single-family homes built by a developer is a “subdivision,” as is a half-acre parcel divided into 4 lots by a landowner who plans to sell the lots off one by one over time; the majority’s rule applies in either situation.
The practice of subdividing land in some parts of California dates back at least as far as the 1860’s, when state statutes governed the mapping of subdivided lands in some cities and towns. (Cal. Subdivision Map Act Practice (Cont.Ed.Bar 1987) Legislative History, § 1.2, p. 3 [citing Stats. 1867-1868, ch. 331, pertaining to San Francisco subdivisions].) By 1893, however, the Legislature had enacted a map act that applied to “subdivisions of lands into small lots or tracts for the purpose of sale” throughout the state. (Cal. Subdivision Map Act Practice, supra, Legislative History, at p. 2.)
Because in this state virtually every division of land into lots is a subdivision and Californians have been subdividing land for at least 130 *387years, the number of subdivision lots in California must number in the multiples of thousands. If the subdivider of any of these thousands of lots recorded a plan of common restrictions for the lots but conveyed the lots by unrestricted grant deeds, retroactive application of the majority’s new rule will now bring those restrictions to life regardless of how long they have lain dormant.
Conclusion
Before today, the CC&R’s contained in the declarations recorded by the subdividers of the Skywood and Friars subdivisions but not included in any deed were unenforceable against the Andersons, regardless of whether one applied the “first deed only” or the “all first deeds” rule. This was the conclusion reached by the trial court and by the Court of Appeal, and with which I fully agree.6
As I have shown, the majority is wrong in its holding that enforceable land-use restrictions are created when a subdivider records a declaration of restrictions and then conveys lots by grant deeds that make no reference to any restrictions. This holding results in the enforceability of restrictions that violate our statutes and common law rules because:
1. The grantee has not actually assented to the restrictions.
2. The grantee lacks constructive notice of the declaration under the recording statutes.
3. The lots have been conveyed by unrestricted grant deeds.
4. The restrictions violate the grantor’s statutory covenant against encumbrances.
5. The restrictions have not been created by a written instrument that satisfies the statute governing covenants running with the land.
*388And, by making its rule retroactive, the majority aggravates its assault on real property law by upsetting the vested rights of current landowners, such as the Andersons, who in developing their land as a vineyard and winery and in keeping seven llamas, could have reasonably relied on existing law.
Because the majority’s adoption of the new rule is ill-considered, unsupported, and contrary to statute, I would affirm the judgment of the Court of Appeal, which in turn affirmed the judgment of the trial court.
The petition of defendants and appellants for a rehearing was denied March 28, 1996. Kennard, J., was of the opinion that the petition should be granted.

Further undesignated statutory references are to the Civil Code.

For convenience, I will hereafter refer to plaintiffs collectively as “Citizens” even though the unincorporated association itself claims no right to enforce the land-use restrictions.

I do not suggest, of course, that subdividers are precluded from recording a declaration of CC&R’s so long as the recordation is permitted under the recording statutes.

Section 1468 provides in relevant part:
“Each covenant, made by an owner of land with the owner of other land or made by a grantor of land with the grantee of land conveyed, or made by the grantee of land conveyed with the grantor thereof, to do or refrain from doing some act on his own land, which doing or refraining is expressed to be for the benefit of the land of the covenantee, runs with both the land owned by or granted to the covenantor and the land owned by or granted to the covenantee and shall, except as provided by Section 1466, or as specifically provided in the instrument creating such covenant, and notwithstanding the provisions of Section 1465, benefit or be binding upon each successive owner, during his ownership, of any portion of such land affected thereby and upon each person having any interest therein derived through any owner thereof where all of the following requirements are met:
“(a) The land of the covenantor which is to be affected by such covenants, and the land of covenantee to be benefited, are particularly described in the instrument containing such covenants;
*382“(b) Such successive owners of the land are in such instrument expressed to be bound thereby for the benefit of the land owned by, granted by, or granted to the covenantee;
“(c) Each such act relates to the use, repair, maintenance or improvement of, or payment of taxes and assessments on, such land or some part thereof, or if the land owned by or granted to each consists of undivided interests in the same parcel or parcels, the suspension of the right of partition or sale in lieu of partition for a period which is reasonable in relation to the purpose of the covenant;
“(d) The instrument containing such covenants is recorded in the office of the recorder of each county in which such land or some part thereof is situated.”

As one commentator has observed, California law “is not clear” whether it is sufficient to reference the restrictions in the first deed to the first lot conveyed in the subdivision (“first deed only”) or whether the restrictions must appear in the first deed conveying each of the lots in the subdivision (“all first deeds”). (7 Miller & Starr, Current Law of Cal. Real Estate, supra, Covenants and Restrictions, § 22.8, pp. 549-550; compare Riley v. Bear Creek Planning Committee, supra, 17 Cal.3d at p. 507 [“From the recordation of the first deed which effectively imposes restrictions on the land conveyed and that retained by the common grantor, the restrictions are binding upon all subsequent grantees of parcels so affected who take with notice notwithstanding that similar clauses have been omitted from their deeds.”] with Wing v. Forest Lawn Cemetery Assn. (1940) 15 Cal.2d 472, 482 [101 P.2d 1099, 130 A.L.R. 120] [“ ‘To create an equitable servitude in the grant of lands in a large area it is essential that there must be a general scheme of restrictions .... The restrictions must not only appear in one deed, but in all the deeds. . . .’ [Citations.]”].)

It makes no sense for the majority to state that the dissent “would apparently apply its own rule retroactively.” (Maj. opn., ante, at p. 368, fn. 7.) Retroactivity is irrelevant when a court resolves a case under settled law—as I have done here. The majority is also wrong when it states that I would “abrogate the ‘first deed only’ theory.” (Ibid.) I have no reason to choose between the “first deed only” and “all first deeds” theories in this case, in which the CC&R’s do not appear in any deed.