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The proper legal standard for the inquiry as to the continuing validity of a covenant is to examine whether, after the passage of a reasonable period of time, the continuing validity of the covenant cannot further the purpose for which it was formed in light of changed relevant circumstances.
The parties to a recorded set of restrictive covenants encumbering a property were the city, an original covenantee, and the owner, a successor covenantor. The owner's predecessor in title agreed with the city to a declaration of covenants which limited the development of the property to permissible uses. Contemporaneously, an annexation agreement was executed with the city, bringing the affected parcel, then undeveloped, within the city's corporate limits. The agreement contemplated the development in association with a university of a science and technology, research, and office park on the property. After the city objected to a tenant's use of a leased space on the property as not being a permitted use, the owner challenged the continuing vitality of the covenants. The circuit court upheld the continuing validity of the covenants. The Court of Special Appeals of Maryland reversed the judgment, ruling that the trial judge applied the wrong standard for determining the ongoing validity of the restrictive covenants. The parties petitioned for a writ of certiorari.
Under the circumstances, did the covenants remain valid and enforceable?
The court noted that the proper legal standard for the inquiry as to the continuing validity of a covenant was to examine whether, after the passage of a reasonable period of time, the continuing validity of the covenant cannot further the purpose for which it was formed in light of changed relevant circumstances. In this case, the court found that there has been no radical change to the character of the neighborhood so as to defeat the purpose embodied in the covenants and the annexation agreement. Moreover, the covenants' purpose was not obviated by either the absence of the university from participation in the project or surrounding physical changes to the neighborhood. Thus, the covenants remained valid and enforceable. Additionally, the enforcement of the covenants by the city did not constitute illegal contract zoning, and the city did not waive the covenants.