Restrictive Covenants Flashcards
THE COVENANT
- 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
Negative Covenants
- Known as restrictive covenants.
- Restrictive covenant: promise to refrain from doing something related to land
Affirmative Covenants
- Promise to do something related to land
Covenant vs. Equitable Servitude
- 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.
Running with the Land
- In covenant parlance, one tract is burdened by promise & another benefited.
Requirements for Burden to Run
- 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
Writing
- Original promise (between A & B) must have been in writing.
Intent
- 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.
Touch and Concern
- 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.
Horizontal and Vertical Privity
- Horizontal & vertical privity are required for burden to run.
Horizontal Privity
- 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.
Tip:
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.
Vertical Privity
- 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
Notice
- 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.
Tip
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.
Requirements for Benefit to Run
- 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
Writing
- The original promise (between A and B) must have been in writing.
Intent
- 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.
Touch and Concern
- 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
Vertical Privity
Must be a non-hostile nexus between original promisee (B) & successor in interest (B-1).
Tip
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).
Specific Situations Involving Real Covenants
- 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.
Remedy—Damages
- 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
Termination
- Covenant may be terminated by RMC:
(1) written release,
(2) merger of benefited & burdened estates, or
(3) condemnation of burdened property.
EQUITABLE SERVITUDES
- 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).
Tip
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.
Creation
- Created by promises contained in writing that satisfies SOFs.
- To create W I T N E S:
- Writing, Intent, Touch, Notice, Equitable Servitude
Writing:
Generally, but not always, original promise was in writing (common scheme doctrine, is an exception to this requirement)
Intent:
Original parties intended that promise would be enforceable by & against successors
Touch and concern:
Promise affects parties as landowners
Notice:
- 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).
ES
For equitable servitudes
Tip
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.
The Implied Equitable Servitude—The General or Common Scheme Doctrine
- 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.
Elements of the Common Scheme Doctrine
- 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.
Notice
- 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
Tip:
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.
Equitable Defenses to Enforcement
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).
Termination
- ES may be terminated by: RMC
(1) written release from benefit holders,
(2) merger of benefited & burdened estates, or
(3) condemnation of burdened property.
