Under what circumstances can a commercial builder be bound by a residential-use restriction?

A commercial builder can be bound by a residential-use restriction under the specific circumstances where the grantor had a common scheme and unrestricted lot holders had notice of that scheme. This principle is grounded in the doctrine of equitable servitudes, which allows for the enforcement of restrictions on land use when a common plan or scheme has been established.

In situations where a common scheme exists, it typically implies that the grantor intended to impose uniform restrictions on all parcels within a specific area to maintain a certain character or use of that property. If the unrestricted lot holders were aware of this scheme—either through public records, physical indications on the property, or other means—the builder can be held to abide by these residential-use restrictions, even if they were not originally part of the ownership or development plan.

This understanding ensures that the intent to create a cohesive and consistent use for the area is honored, reinforcing the contractual nature of property development and ownership. It is also an example of how equitable principles work in real estate to protect the interests of property owners and maintain the intended use of a community.

The other choices do not adequately reflect the criteria necessary for imposing residential-use restrictions on a commercial builder. Having exclusive rights or requiring unanimous agreement from lot holders does not automatically bind the builder