Pg 39

Question 1

What is the analogy that is used to describe vertical privity for the running of covenants?

Answer 1

Real covenants run with estates in land as a bird rides on a wagon

Question 2

What is the exception for homeowners association’s regarding vertical property?

Answer 2

Homeowners association’s can enforce subdivision covenants on behalf of successors to the benefited estate

Question 3

In order to have vertical privity what portion of the estate must be transferred?

Answer 3

The entire estate. A 99 year lease doesn’t work because anything held back doesn’t work.

Question 4

Privity is only required to enforce what?

Answer 4

Covenants at law, not equitable servitudes

Question 5

Does property that is taken through foreclosure have vertical privity?

Answer 5

No because there was no interest from the original covenanting party, so the person that took the property is not a successor, so there’s no vertical privity

Question 6

If someone takes property through foreclosure, what happens with burdened land and benefitted land as far as any covenants?

Answer 6

• burdened: the current possessor is not bound by the covenant if he has a lesser estate. Minority: bound by negative covenants if he had notice, but not affirmative ones
  – benefited: enforce a covenant when the possessor of the burdened land has a lesser estate than the original covenantee

Question 7

What is the traditional approach and the new restatement approach to vertical privity for a covenant to run?

Answer 7

Traditional approach:
- benefit: any interest through AP cannot be enforced. The interest that is succeeded to does not have to be the same, any interest that benefits him is fine. The benefit of a covenant at law is enforced. Allows for relaxed vertical privity which means that the successor can have a lesser estate than the promisee.
– burden: must succeed to the same estate as the original promisor, and bound by the promises of the original lease [called strict vertical privity]. Must enforce the burden of a covenant at law.

New restatement: rejects vertical privity

Question 8

What is horizontal privity?

Answer 8

It requires that there be a relationship between the original contracting parties at the time the covenant was created, plus it must come from the covenant itself. This is only needed for the running of the BURDEN at law. This is privity of contract which involves contractual relationships connected to the land like buyer/seller, mortgagor/mortgagee, landlord/tenant.

Question 9

What are the elements of horizontal privity?

Answer 9

There must be an exchange of a real property interest and a promise at the same time

Question 10

What are the different views on horizontal privity?

Answer 10

– Traditional view: privity is satisfied if the covenantor gave the covenant at the same time the covenantee transferred title (I.e.: neighbours exchange covenants not to build on their parcels in a way that interferes with the other’s view of the lake. No privity because not given when title was transferred)
– liberal view: privity is satisfied if given in exchange for the conveyance of any interest in land
- some states: need horizontal privity for the burden to run, but not the benefit

Question 11

What are possible remedies for issues related to the running of a covenant?

Answer 11

Damages

Question 12

What are possible remedies for issues relating to an equitable servitude?

Answer 12

Injunction to give protection against future breaches.

Question 13

How do you determine who has the right to enforce a real covenant or an equitable servitude?

Answer 13

Look at the candidates:
– original promises: they must retain an interest in the benefited land in order to enforce a restriction. Exceptions: developers that rely on reputation from past developments in order to sell new ones. They have an interest in whether the prior restrictions are enforced even though they’ve already sold their parcels
– successors to some or all of the original promisee’s interest in the benefited land: The original needs horizontal privity, intent, touch and concern, and vertical privity. Today you do not need horizontal privity. In equity, courts only need intent and touch and concern for the benefit to run
– parties other than the original promisee and successors of the original promisee: courts look to see if a common scheme of development or a third-party beneficiary theory can be used to enforce the restriction

Question 14

What are the major reasons that a restriction on title could be invalid or unenforceable?

Answer 14

– Public policy
– restraint on trade and competition that is unreasonable
– unconscionability
– violating a federal or statutory provision
– fair housing act
– zoning, land-use, environmental statutes or regulations

Question 15

What is a common law principal regarding restraints on property?

Answer 15

Courts disfavour restraints because they affect property by making it less desirable and less valuable

Question 16

What is the difference between a direct restraint on property and an indirect restraint?

Answer 16

– Direct: these prohibit transferring ownership by disabling restraints, forfeiting restraints or promissory restraints.
• Invalid: absolute restraints on alienation that prohibit any conveyance of the property under any circumstances
• Valid: courts often enforce personal restraints if they are reasonable. These may prohibit conveyance unless it complies with conditions that the restraint sets such as first getting permission for the conveyance
- indirect restraints: these do not directly restrict transfer of the property, but they come from burdens that are aimed at unrelated goals that still make it more difficult to sell the property. These are usually enforced if they are reasonable. I.e.: a covenant that you can never sell your property is only valid if it is reasonable

Question 17

What is the rule regarding restraint on trade and competition for property?

Answer 17

These are usually invalid if they are unreasonable.

I.e. you can’t put a restriction in a deed that the person can only sell the house with a certain realtor because this has a purpose to eliminate competition which is not reasonable enough to enforce.

Ie: there could be a covenant in a fancy neighbourhood not to put a for sale sign on the lawn because there are other ways to sell your house that are reasonable

Question 18

How is unconscionability a reason to invalidate a restriction on land?

Answer 18

This is an agreement that no person in his right mind would make, and no fair or honest person would accept. If the court finds this, the court can refuse to enforce the offensive part of the agreement, or refuse to enforce the entire agreement.

Ie: maintenance fees double every year to an astronomical sum

Question 19

How can violating a federal or statutory provision be a reason to invalidate a restriction on land?

Answer 19

Covenants cannot violate civil or criminal statutes otherwise they are invalid.

I.e.: land covenant to continue to use it as a big game lot, and then a new law prohibits high calibre rifles, that would make this covenant invalid

Question 20

How can the fair housing act be a reason to invalidate a restriction on land?

Answer 20

Federal and state governments enact these to protect certain groups of people from discrimination in getting, owning, and possessing real property. These prohibit discrimination based on race, color, religion, sex, handicap, family status, and national origin.

Question 21

How can a federal or state constitutional provision be a reason to invalidate a restriction on property?

Answer 21

All states are prohibited from taking any action that results in discrimination. Covenants and equitable servitudes that bar ownership or possession of real property based on things like race, religion, beliefs, or any constitutionally protected characteristic are unenforceable and invalid. Arbitrary covenants that have no rational relationship to protection, preservation, or purpose of the affected land are also unenforceable.

Question 22

What is assignment/assumption?

Answer 22

If a benefit doesn’t run with the land, it is just transferred to the new owner as if it was assigned to him. If it does run, it automatically transfers with the property.

If the burden doesn’t run, the new owner only gets it if he assumes the covenant. If it does run, the new owner is bound