Akers v. Butler, 476 S.W.3d 183

Background

In April 2005 Darrell and Angie Butler entered into an Agreement for Deed to buy property in the Forest Ridge Estates subdivision; the agreement referenced but did not list the subdivision’s "Land Use and Architectural Controls." The agreement contained a forfeiture clause for default.
The Land Use and Architectural Controls were executed and recorded on October 28, 2005 and signed by fourteen owners, but not by the Butlers. Paragraph 1.1 originally prohibited commercial uses.
A Modification of Land Use and Architectural Controls was recorded April 30, 2013 amending paragraph 1.1 to permit rentals for special events; the Butlers signed that 2013 modification (and contend that 37 owners signed it).
The Butlers built a barn and began renting it for events; twenty-one other subdivision owners (appellants) filed for a temporary restraining order and permanent injunction alleging the Butlers’ use violated the subdivision restrictions.
The Butlers moved for summary judgment, arguing they were not bound by the 2005 Controls because they had not signed them; the trial court granted summary judgment and dismissed the complaint with prejudice.
On appeal, the court affirmed, finding the 2005 restrictive instrument was not executed by the Butlers and Arkansas Code § 18-12-103 requires execution by owners for a restrictive covenant to be effective.

Issues

Issue	Appellants' Argument	Butlers' Argument	Held
Whether purchasers under a contract for deed who did not sign recorded restrictive covenants are bound by those covenants	The Butlers had only an inchoate interest in 2005 and thus were not required signatories; restrictions still bind them	Butlers were "owners of the real property" for purposes of § 18-12-103 and were not bound because they did not execute the 2005 instrument	Court held Butlers were owners for § 18-12-103 purposes and, because they did not sign the 2005 Controls, they were not bound
Whether actual knowledge of restrictions (via agreement reference) can substitute for signing under § 18-12-103	Knowledge of the Controls (agreement referenced them) is sufficient to bind the Butlers despite lack of signature	Statute plainly requires execution by owners; knowledge does not satisfy the execution requirement	Court held actual knowledge did not negate the statutory signature requirement
Whether omission of the word "consideration" in acknowledgments invalidates the restrictions	The lack of the word "consideration" is immaterial when parties had actual knowledge and intended covenants	Butlers alternatively argued signature/recording requirements were not satisfied so the document is ineffective	Court did not reach this alternative argument because signature requirement disposition was dispositive
Whether genuine issues of material fact precluded summary judgment	Appellants argued factual disputes exist about ownership status and signatures on the 2013 modification	Butlers argued undisputed lack of their signatures on the 2005 Controls entitled them to judgment as a matter of law	Court found no disputed material fact on the dispositive point and affirmed summary judgment

Key Cases Cited

McGuire v. Bell, 297 Ark. 282, 761 S.W.2d 904 (Ark. 1988) (refused to extend § 18-12-103 to require mineral owners to join in bills of assurance)
Collins v. Keller, 333 Ark. 238, 969 S.W.2d 621 (Ark. 1998) (cases concerning equitable interest of defaulting buyers under land-sale contracts)
White v. Page, 216 Ark. 632, 226 S.W.2d 973 (Ark. 1950) (land-sale contract and forfeiture clause precedent)
Wilcox v. Wooley, 454 S.W.3d 792 (Ark. Ct. App. 2015) (summary-judgment standard discussion)
Harvest Rice, Inc. v. Fritz & Mertice Lehman Elevator & Dryer, Inc., 231 S.W.3d 720 (Ark. 2006) (summary-judgment standard and purpose)