Of Resorts And Glue - A Sticky Legal Problem

Issues regarding enforcement of positive covenants in mixed-use

resorts.

A five-star boom

The Turks and Caicos Islands (TCI) have experienced an enormous

growth in luxury tourism development in recent years. As the

territory has developed, the size and sophistication of resort

development has increased significantly. The early days of pioneer

stand-alone projects are rapidly disappearing as large scale

mixed-use branded five star resorts become the norm. Recent

developments include:

Amanyara, the first Amanresort opened in the Caribbean, is

located on TCI's commercial centre, Providenciales ?

main elements: hotel and villas.

Work is progressing on the prestigious Dellis Cay project which

will feature a Mandarin Oriental hotel ? main elements:

hotel, condominiums, villas and over-water villas

A Ritz Carlton resort on West Caicos is near completion

? main elements: hotel, condominiums and villas

Ambergris Cay, a large-scale private-island retreat, with its

own jet-strip ? main elements: villas and sporting

club

The early resort developments in TCI, primarily on Grace Bay

beach on Providenciales, tended to be stand-alone condominium

developments which benefited from TCI's flexible, modern and

straightforward Strata Titles Ordinance which allowed for the

vertical subdivision of real estate. In recent years, as projects

have expanded in size, scope and sophistication, resorts have

become more mixed-use, featuring hotels, condominiums, villas

(standing on their own land parcel), and over-water villas. Several

of the developments currently underway include a variety of other

large scale amenities such as golf courses, marinas and beach

clubs. The demands that this increased sophistication imposes on

the resorts' TCI lawyers are significant, but hardly

unique.

The "legal glue" problem

A major concern of any sensible of any developer of expensive

mixed-use resorts is the enforcement of ownership restrictive

covenants, the legal glue that binds such developments together.

When projects in TCI were stand-alone condominium resorts, there

was little problem: the Strata Titles Ordinance provides an

excellent legal framework for the governance of such developments.

However once other components (such as villas) were introduced,

matters became more complicated, due to a legal problem common in

many common law jurisdictions in the English-speaking Caribbean and

elsewhere.

At common law, only covenants which are negative in nature are

said to "run with the...