Who is at fault and what can be done?

North Carolina: We bought 10 acres of land in January in a development that has 10 lots; eight are 10 acre lots, two are 20 acre lots. At closing we were given a copy of the covenents which clearly states the lots can not be subdivided, the homes must be at minimum 3000 sf, and have no vinyl siding. Less than a month after we bought (we bought the last lot) the developer subdivided the first acre of a 10 acre lot and constructed 3 homes, all less than 2500 sf with vinyl siding. All of the lot owners are very upset as we feel it reduces the value of our property. Most of the homes going up in the development are 7000 - 8000 sf. We learned 3 months ago that we were going to have to transfer out of the state, so we put the property up for sale. As a result of the commotion, we have already lost 3 contracts. The developer is now saying the covenents were never recorded, so anything goes. What can we do? Who is to blame? Can we sue the closing attorney for not catching this? How much can we sue for?We were basically lied to and now it is wreaking havoc on us as we try to move on. Any help would be much appreciated! Thanks.

In most states, a property owner is held liable for convenants that are recorded OR of which s/he had actual knowledge. Since the developer gave YOU the copy of the covenants, he definitely had actual kowledge!

You need to consult a real estate attorney to see why the restrictive covenants weren't recorded or incorporated into the deeds & legal effect of this. At the very least, record a copy of the covenants on every remaining parcel number ASAP to maintain the status quo until a court cann sort this out. You're going to end up in court against someone! You may be able to rescind the sale & get all your money back because the developer committed fraud in the inducement by telling you the covenants applied to all land & then breaking them. Wouldn't that be a nasty blow to his wallet.

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.