Shalimar Ass'n v. D.O.C. Enters., Ltd.

Shalimar Estates is a residential land development in Tempe, Arizona. The initial developer intended for a centrally-located golf course to be an integral part of the development. Starting in 1960, he used the golf course in advertisements for the surrounding houses. Many buyers relied on the advertisement when deciding to purchase houses beginning in 1960. The deeds for the surrounding properties each contained restrictions, including where structures could be located, that were designed to improve the appearance of the golf course. Additionally, at the property sales, the developer told the buyers that the golf course would be maintained as such for the next 40 years, with the time period to be extended another 25 years unless a majority of the homeowners agreed in writing to change the golf course. Despite this, no restrictions were ever recorded against the golf course property itself. In 1978, three Canadian men, a lawyer and the two real estate agents, purchased the golf course land intending to develop it. The men visited the golf course several times and had notice that the initial developer had intended to restrict the land to being used as a golf course. Nonetheless, they intended to develop the golf course. Acting on behalf of the homeowners, Shalimar Association (plaintiff) filed suit against D.O.C. Enterprises, Ltd. (defendant), an entity created by the Canadians to handle the development. The trial court found that, due to the restrictions on the homeowners’ properties, there was an implied restriction on the use of the golf course, and that the Canadians would have learned of the restriction if they had made reasonable inquiries. The judge barred them from developing the golf course until the 40-year period had expired. They appealed.