Restrictive Covenants Flashcards
Overview
• Three legal mechanisms for imposing restrictions on future use of land:
o Negative Easement
o Equitable Servitude
o Real Covenant running with the land
• People more likely to buy property if they know how neighbor’s property will be used – certain restraints thus make the property more valuable
• Compare w/ determinable estates
o Forfeiture penalty was too harsh so courts were reluctant to actually enforce
• Who can enforce?
o Not state/public generally
o Must be benefitted by the covenant and were intended to benefit from covenant
o Some jurisdictions will allow implied reciprocal servitudes
Equitable Servitudes
• Restriction on land created by contract that applies to the party owning the land, his heirs, and assignees [intention to bind]. Subsequent purchaser must comply with restriction so long as it pertains to the land and they had notice (actual or constructive)
o Components are: (TWIN) Touch/concern land Writing Intention to bind Notice at time of purchase
o Creates a real property interest
• Constructive notice is satisfied if :
there is a record of the covenant in the chain of title or the original deed
o Some states allow notice by inquiry. Completely uniform appearance of an area constitutes notice that there might be a general plan – puts them to inquiry
• General Plan/Common Scheme Doctrine:
restrictions applied generally to a development may be excluded from individual lot deeds yet still be enforceable. usually estoppel theory – buyer has received benefits of covenant in question. Some jurisdictions do not recognize on statute of frauds grounds.
• Benefit can be in gross
o Personal to individual and not normally related to some other parcel of land
o Common example is the covenant not to compete
o Neither benefit nor burden will run with the land traditionally (some change; see Whittinsville infra regarding real covenant)
• Cheatam v. Taylor – VA (1927)
o F: Restrictions on land development include 20ft setback requirement; D expands store and goes into setback zone, P brings suit
o H: For P – addition must be torn down because the equitable servitude applies
Substantial consequence, but better than forfeiture
• Rodgers v. Reimann – OR (1961)
Who can enforce?
o F: Sellers sold lot to D wanting to protect their view via a height restriction. Sellers used real estate agent who did not tell D’s about restriction. (not a common plan community)
o H: For D – need reliance not demonstrated by P here, so P does not have standing to sue
Prior grantee may sue upon a covenant subsequently made by his grantor if all the elements essential to the enforcement of the covenant are present
To make a 3rd person beneficiary of a promise: it must be shown that the promise was sufficiently comprehensive to include the benefit of the 3rd person w/in its intended operation
Purchaser must have notice there is a restriction on the land purchasing + the scope
• No evidence here that covenant was intended to benefit other owners
• No implied reciprocal servitude here
P here was not burdened and not explicitly benefitted
Real Covenant Running with the Land
• Contractual limitation, not real property interest
o Differs from equitable servitude because it connotes some form of affirmative obligation
• Remedy is money damages
• Elements of Real Covenants Running with the Land
(WITH VERNE) o Writing: must be in writing o Intent to bind future owners o Touch and concern the land: o Horizontal Privity • Modern rule in some states: no horizontal privity requirement
o VERtical Privity:
o Notice:
o Enforceable
• Moseley v. Bishop – IN (1984)
o F: 1896 agreement between P and D’s predecessor in interest that drain would be permanently maintained
o H: For P, this agreement runs with the land
Intent to bind: “permanently maintain”
Touch and concern: clearly affects the land
Vertical privity: complete transfer between D and D’s predecessor who was original party to the covenant
Horizontal privity – potential issue because this wasn’t created at time of sale
• Ct. says that this drainage arrangement created an easement which satisfies horizontal privity
• Whitinsville Plaza Inc. v. Kotseas – MA (1979)
o H: Broadens touch and concern to economic impact covenant not to compete case
o “Reasonable covenants against competition may be considered to run with the land when they serve a purpose of facilitating orderly and harmonious development for commercial use”
How to identify difference between Real Covenants and Equitable Servitudes
By the Remedy!
• Real Covenant= money damages
• Equitable Servitudes= Injunction