Restrictive Covenants

Question 1

THE COVENANT

Answer 1

• Written promise to do/not do something related to land (ex. to maintain a fence, or to not build a multifamily dwelling).
• Real covenants are normally found in deeds and when certain requirements are met they run w/ the land, which means that subsequent owners may enforce/ be burdened by covenants

Question 2

Negative Covenants

Answer 2

• Known as restrictive covenants.
• Restrictive covenant: promise to refrain from doing something related to land

Question 3

Affirmative Covenants

Answer 3

• Promise to do something related to land

Question 4

Covenant vs. Equitable Servitude

Answer 4

• If P wants money damages, you must construe promise as a covenant.
• If P wants an injunction, you must construe the
  promise as an equitable servitude.

Question 5

Running with the Land

Answer 5

• In covenant parlance, one tract is burdened by promise & another benefited.

Question 6

Requirements for Burden to Run

Answer 6

• If following are met, any successor in interest to burdened estate will be bound by covenant
• For burden of a covenant to run, W I T H N:
• Writing
• Intent
• Touch & concern
• Horizontal & vertical privity
• Notice

Question 7

Writing

Answer 7

• Original promise (between A & B) must have been in writing.

Question 8

Intent

Answer 8

• Original covenanting parties (A & B) must have
  intended that covenant would run (intended that successors to originally promising parties would be bound by covenant).
• Intent may be inferred from circumstances surrounding creation of covenant, but is usually found in the language of conveyance itself (ex. “A promises on behalf of herself, her successors and assigns…”).
• Cts are generous in finding requisite intent.

Question 9

Touch and Concern

Answer 9

• Promise must affect parties’ legal relations as
  landowners.
• Restrictive covenants touch & concern the land
  if they restrict burdened parcel owner in her use of that parcel of land.
• Affirmative covenants touch & concern the land if they require holder of servient estate to do something that increases her obligations in connection w/ the land.
• Covenants to pay money to be used in connection
  w/ the land (such as homeowners’ association fees) & covenants not to compete do touch & concern the land.

Question 10

Horizontal and Vertical Privity

Answer 10

• Horizontal & vertical privity are required for burden to run.

Question 11

Horizontal Privity

Answer 11

• Horizontal privity: nexus between original promising parties (A & B).
• Requires they be in succession of estate (they were in a grantor-grantee/landlord-tenant/mortgagor-mortgagee relationship when covenant was created).
• At time promisor entered into covenant w/ promisee, the 2 must have shared some interest in the land independent of covenant.
• Horizontal privity is difficult to establish.
• Its absence is reason why many burdens will not run.

Question 12

Tip:

Answer 12

Horizontal privity concerns the connection between original parties. No matter that it’s the successors in interest who are trying to enforce covenant, horizontal privity is determined on the basis of the connection between originally covenanting parties.

Question 13

Vertical Privity

Answer 13

• Vertical privity: nexus between the successor in interest (A-1) and originally covenanting party (A).
• Requires some non-hostile nexus (ex. K, devise, or descent.
• Only time vertical privity will be absent is when successor acquired her interest through adverse possession

Question 14

Notice

Answer 14

• Successor must have had notice of promise when she took.
• Because under modern recording acts, to be
  bound by a covenant, a subsequent purchaser for value must have had actual, inquiry, or record notice of covenant at the time of purchase.

Question 15

Tip

Answer 15

Under recording statutes, a subsequent purchaser
for value will not be bound by covenant if that purchaser for value took w/o either actual, inquiry, or record notice of the covenant.

Question 16

Requirements for Benefit to Run

Answer 16

• If the following requirements are met, promisee B’s successor in interest (B-1) may enforce covenant.
• W I T V:
• Writing
• Intent
• Touch and concern
• Vertical privity

Question 17

Writing

Answer 17

• The original promise (between A and B) must have been in writing.

Question 18

Intent

Answer 18

• The originally covenanting parties (A and B) must have intended that the benefit would run, meaning they intended that successors in interest to the promisee would be able to enforce the covenant.

Question 19

Touch and Concern

Answer 19

• Benefit of covenant touches & concerns the land if promised performance benefits promisee & her successors in their use & enjoyment of benefited land.
• Promise must affect parties as landowners

Question 20

Vertical Privity

Answer 20

Must be a non-hostile nexus between original promisee (B) & successor in interest (B-1).

Question 21

Tip

Answer 21

Horizontal privity is not required for benefit to
run (that’s why it’s easier for benefit to run than
for burden to run). Thus, where horizontal
privity is lacking, promisee B’s successor (B-1) can enforce covenant against original promisor (A), but not against promisor’s successor (A-1).

Question 22

Specific Situations Involving Real Covenants

Answer 22

• Generally, promises to pay money to be used in connection w/ the land (ex. homeowners’ association fees) & covenants not to compete run w/ land.
• Racially restrictive covenants are unenforceable.

Question 23

Remedy—Damages

Answer 23

• Breach of real covenant is remedied by award of money damages, collectible from D’s general assets.
• If injunction is sought, promise may be enforced as equitable servitude

Question 24

Termination

Answer 24

• Covenant may be terminated by RMC:
  (1) written release,
  (2) merger of benefited & burdened estates, or
  (3) condemnation of burdened property.

Question 25

EQUITABLE SERVITUDES

Answer 25

• Promise that equity will enforce against successors of burdened land regardless of whether it runs w/ the land, unless successor is a bona fide purchaser (a subsequent purchaser for value w/o notice of covenant).

Question 26

Tip

Answer 26

A single promise can create both a real covenant & equitable servitude. Main difference between the 2 will be remedy sought. If money damages are sought, you should use the real covenant analysis. If a party seeks an injunction, you should consider whether the requirements for enforcement as an equitable servitude have been met.

Question 27

Creation

Answer 27

• Created by promises contained in writing that satisfies SOFs.
• To create W I T N E S:
• Writing, Intent, Touch, Notice, Equitable Servitude

Question 28

Writing:

Answer 28

Generally, but not always, original promise was in writing (common scheme doctrine, is an exception to this requirement)

Question 29

Intent:

Answer 29

Original parties intended that promise would be enforceable by & against successors

Question 30

Touch and concern:

Answer 30

Promise affects parties as landowners

Question 31

Notice:

Answer 31

• Subsequent purchasers of land burdened by covenant had actual, inquiry, or record notice of covenant when they acquired the land.
• (Note: This rule is part of the law of equitable servitudes, and exists apart from recording acts, so notice is required to bind a subsequent purchaser regardless of whether they seek protection of a recording act. On the exam, though, a recording act will usually be involved. Note also that in most states, successors of burdened land who are not purchasers (such as donees) are bound by the covenant whether or not they had notice).

Question 32

ES

Answer 32

For equitable servitudes

Question 33

Tip

Answer 33

In contrast to real covenants, which require vertical & horizontal privity of estate for burdens to run, and vertical privity for benefits to run, no privity of estate is required for an ES to be enforceable by & against assignees.

Question 34

The Implied Equitable Servitude—The General or Common Scheme Doctrine

Answer 34

• This issue will likely be on the exam.
• You can think of it as an exception to general requirement that original promise be in writing.
• Under CSD, ct will imply a reciprocal negative servitude to hold unrestricted lot holder to the promise.
• (Reciprocal negative servitude means an implied equitable servitude).
• Thus, if a developer subdivides land, and some deeds contain restrictive covenants while others do not, restrictive covenants will be binding on all parcels provided there was a common scheme of development & notice of covenants.

Question 35

Elements of the Common Scheme Doctrine

Answer 35

• 2 elements
  (1) When sales began, subdivider (A) had a general scheme of residential development which included D’s lot (scheme may be evidenced by: a recorded plat, a general pattern of restrictions, or oral representations to early buyers); and
  (2) D lot-holder (B) had notice of promise contained in those prior deeds when it took.

Question 36

Notice

Answer 36

• 3 forms of notice, A I R:
  (1) Actual notice: D had literal knowledge of promises contained in prior deeds
  (2) Inquiry notice: neighborhood seems to conform to common restriction (“the lay of the land”)
  (3) Record notice: there’s a prior deed w/ covenant in grantee’s chain of title

Question 37

Tip:

Answer 37

If scheme arises after some lots are sold, no implied servitude can arise w/ respect to lots already sold w/o express covenants. So, if Lots 1-5 are sold w/o restrictive covenant & deeds to Lots 6-50 contain one, covenant cannot be enforced as a servitude against owners of Lots 1-5.

Question 38

Equitable Defenses to Enforcement

Answer 38

A ct will not enforce an ES if:
(1) Neighborhood conditions have changed so significantly that enforcement would be inequitable.
- Changed circumstances alleged by party seeking release from terms of ES must be so pervasive that entire area/ subdivision has changed.
- What’s never good enough here is piecemeal change or mere pockets of limited change;
(2) Person seeking enforcement is violating a similar restriction on his own land (unclean hands);
(3) A benefited party agreed to a violation of the servitude by a burdened party;
(4) Benefited party acted in such a way that a reasonable person would believe covenant was abandoned/waived (estoppel); or
(5) Benefited party fails to bring suit against violator w/in a reasonable time (laches).

Question 39

Termination

Answer 39

• ES may be terminated by: RMC
  (1) written release from benefit holders,
  (2) merger of benefited & burdened estates, or
  (3) condemnation of burdened property.