The findings that did it were ordinary

Nothing dramatic appears in the record. The violations the circuit court found were the kind that accumulate quietly in any older rural subdivision.

One plaintiff, Peters, “testified that he has a home business and admitted he brought leftover materials from his contracting job to his lot,” and the court found he violated the covenant because his “business activities . . . resulted in materials being stored outside.” Another, Boadwire, runs a tree-cutting business and testified that he keeps “a bucket truck, a chipper, a dump trailer, a pickup and a skid steer” outside his house and that his employees “can park anywhere they want, just out of the way.” The court found employees parked in grassy areas, equipment stood on the lot, and gravel had been added for a turnaround.

Then the finding that carried the case, at paragraph 21: the circuit court found “pervasive violations” across the subdivision, and also found that “[n]o one has any record of anyone attempting to enforce the covenants since their recording in 1976.” A footnote records that the parties did not dispute that finding.

The equitable reasoning

The circuit court's conclusion, quoted in full at paragraph 22:

“The covenants are not enforceable given the pervasive violations that have gone unchecked or unenforced by the Plaintiffs or any other parties that may have had the right under the covenants to enforce said violations. If the court were to order strict adherence to the covenants, it would have to order strict adherence to the covenants among all parties and order the removal of all offending structures, which would cause more significant harm to all parties. Getting all the homes in the subdivision to comply with the covenants is impractical and would harm all parties. Therefore, enforcement of the covenants against any of the parties would be inequitable at this point, given the pervasive violations throughout the subdivision.”

And the equal-treatment sentence that the news coverage picked up: “[a]llowing homeowners within a subdivision to selectively enforce the covenant against some property owners or new property owners that move in while allowing property owners who have been there longer to maintain covenant violations would be inequitable and unjust.”

The judgment itself went further than non-enforcement. It permanently enjoined enforcement, and declared that “[t]he Covenants may not be enforced against any of the parties. The covenants shall be considered void and terminated through inactions of the parties and the failure to enforce said covenants[.]”

What the holding reaches, and what it does not

The standard of review is the limit on how far Hood travels. Interpretation of a covenant is reviewed de novo, but the decision to void one is equitable and is reviewed only for abuse of discretion — “a fundamental error of judgment, a choice outside the reasonable range of permissible choices.” The Supreme Court did not hold that this covenant had to be voided. It held that voiding it was inside the circuit court's discretion, given findings that were not clearly erroneous.

That cuts both ways. A different circuit judge on the same record could have declined, and been affirmed as well. What Hood establishes is that the remedy is available, and that a long record of non-enforcement plus widespread violations is enough to support it.

It is also worth separating the two things the plaintiffs lost. The challenge to the lot split failed on its own ground: the circuit court found the plaintiffs had not timely objected when Lot 6 was divided, and that the challenge was an improper collateral attack on the City of Summerset's quasi-judicial proceeding. That determination was not appealed. The covenant fell for a different reason entirely.

What changes for a South Dakota subdivision

A dormant covenant is now an asset with a documented failure mode. Before Hood, a South Dakota association facing a violation had reason to think the worst case was losing that dispute. After Hood, a defendant who can show pervasive unchallenged violations has a counterclaim that reaches the instrument itself, and one reported case in which it succeeded.

The plaintiffs' own violations were part of the record. Paragraph 29 notes that some of the widespread violations “were perpetrated by the Plaintiffs.” The enforcement question in a case like this is not only what the neighbors tolerated; it is what the people bringing the suit were doing on their own lots.

Age of the covenant is not itself the problem — the enforcement record is. A 1976 instrument that had been enforced would have been no weaker for its age. The finding that no one could record a single enforcement attempt in 49 years is what made the equities one-sided.

The covenant here had no association behind it. Shadowland Ranch's covenant was enforced, when it was enforced at all, by lot owners suing lot owners. Our South Dakota governing statute page sets out why that is the ordinary posture in this state, and South Dakota mediation and dispute resolution covers what sits between a letter and a lawsuit.

What to watch next

The opinion leaves open how much non-enforcement is enough, and over what period. The court noted it had addressed waiver of a covenant only twice before, in Vaughn v. Eggleston and Hammerquist v. Warburton, and that neither examined a court's ability to declare a covenant unenforceable by all owners. The next case to test the line will be the one where the violations are real but fewer, or where the association has enforced sporadically rather than never.