Restrictive Covenants Flashcards
In a residential subdivision, will a commercial builder be bound by a residential-use restriction that was omitted from his deed?
A Yes, if the builder is in horizontal privity with the developer.
B No, because there is no written restrictive covenant in the deed to the builder’s lot.
C Yes, if the builder had inquiry notice of a common scheme for development.
D No, unless the builder had actual notice of restrictive covenants in the deeds to other lots.
Yes, a commercial builder will be bound by the restriction if the builder had inquiry notice of a common scheme for development. An equitable servitude is a covenant (i.e., a promise to do or not do something on the land) that, regardless of whether it runs with the land at law, can be enforced in equity against assignees of the burdened land who have notice of it. Generally, equitable servitudes are created by covenants contained in a writing that satisfies the Statute of Frauds. However, in the absence of a writing, reciprocal negative servitudes may be implied if:
- There is a common scheme for development (i.e., a plan existing at the time sales of the subdivision parcels began that all parcels be developed within the terms of the negative covenant); and 2. The grantee had actual, record, or inquiry notice of the covenant.
Thus, the builder may be bound without actual notice of restrictive covenants in the deeds to other lots. In a residential subdivision, the builder would be on inquiry notice of a common scheme for development if the neighborhood appeared to conform to common restrictions. Thus, the builder would be bound by the residential-use restriction.
Which of the following is not required for the burden of an equitable servitude to run to successors in interest?
A The covenant touches and concerns the land.
B There is vertical privity between the covenantor and his successor in interest.
C The successor in interest has notice of the covenant if she has given value.
D The covenanting parties intended that successors in interest be bound by the covenant.
Vertical privity between the covenantor and his successor in interest is not required for the burden of an equitable servitude to run to successors in interest. An equitable servitude is a covenant (i.e., a promise to do or not to do something on the land) that, regardless of whether it runs with the land at law, can be enforced in equity against assignees of the burdened land who have notice of the covenant.
The burden of an equitable servitude will run to successors in interest if: 1. The covenanting parties intended that successors in interest be bound by the covenant; 2. The successor in interest has notice of the covenant (if she has given value); and 3. The covenant touches and concerns the land (i.e., it benefits the covenantor and his successor in their use and enjoyment of the burdened land).
May a grantee be bound by a covenant that does not appear in his deed or chain of title?
A grantee may be bound by a covenant that does not appear in his deed or chain of title if there is a common scheme for development and the grantee had notice of the covenant. An equitable servitude is a covenant (i.e., a promise to do or not to do something on the land) that, regardless of whether it runs with the land at law, can be enforced in equity against successors to the burdened land who have notice of the covenant. Generally, equitable servitudes are created by covenants contained in a writing that satisfies the Statute of Frauds. However, in the absence of a writing, negative equitable servitudes may be implied if (i) there is a common scheme for development (i.e., a plan existing at the time sales of the subdivision parcels began that all parcels be developed within the terms of the negative covenant), and (ii) the grantee had actual, record, or inquiry notice of the covenant.
A realty company developed a residential development. Included in the deed to each unit was a covenant under which the grantee and the grantee’s “heirs and assigns” agreed to purchase electrical power only from a plant that the realty company had constructed within the development. After constructing and selling half of the units, the realty company sold its interest in the development to an investment firm. The investment firm operated the power plant and constructed and sold the remaining units. Each conveyance from the investment firm contained the same covenant relating to electrical power that the realty company had included in the conveyances it had made.
A woman bought a dwelling unit from a man who had purchased it from the realty company. Subsequently, the woman, whose lot was along the boundary of the development, ceased buying electrical power from the investment firm and began purchasing power from another power company. The investment firm instituted an appropriate action against the woman to enjoin her from obtaining electrical power from the power company.
If judgment is for the woman, what is the most likely reason?
If the woman prevails, it will be because the covenant does not touch and concern the land. The investment firm is seeking to enforce the covenant by means of an equitable remedy. Thus, this question concerns an equitable servitude. An equitable servitude relates to a promise that touches and concerns the land. A covenant touches and concerns the land when it makes the land itself more useful or valuable to the benefited party. Here, an agreement to purchase electrical power only from a specified source probably does not touch and concern the land.
A developer prepared and recorded a subdivision plan. There were five different approved plans from which a purchaser could choose the design of the home to be built on his lot. Each deed, which referred to the recorded plan, stated that “no residence shall be erected on any lot that has not been approved by the homeowners’ association.”
A lawyer purchased a lot and built a home based on one of the approved designs. However, many of the lots were purchased by investors who wanted to hold the lots for investment purposes. Two years after the lots went on the market, one investor sold her lot to an architect by a deed that did not contain any reference to the recorded plan nor the obligation regarding approval by the homeowners’ association. Because very few residences had been built in the subdivision since the lots were first available for purchase, no HOA meetings had been held in two years.
The architect began building a very modernistic house on her one-half acre. When the lawyer noticed the house being built, he brought an action to enjoin the construction.
For which party will the court rule?
The lawyer will likely prevail. When a subdivision is created with similar covenants in all deeds, there is a mutual right of endorsement (each lot owner can enforce against every other lot owner) if two things are satisfied: (i) a common scheme for development existed at the time that sales of parcels in the subdivision began; and (ii) there was notice of the existence of the covenant to the party sued.
Here, there was a common scheme evidenced by the recorded plan, and the fact that the covenant was in the architect’s chain of title gave her constructive notice of the restriction. The covenant applies to the architect’s land, and the lawyer (or any other lot owner) can enforce it as a reciprocal negative servitude.
When can negative covenants or equitable servitudes be implied in a subdivision?
Two requirements must be met before reciprocal negative servitudes will be implied: (i) a common scheme for development, and (ii) notice of the covenants. The second requirement may be satisfied by actual notice, record notice, or inquiry notice.
How is an equitable servitude enforced against assignees?
An equitable servitude is a covenant that, regardless of whether it runs with the land at law, equity will enforce against the assignees of the burdened land who have notice of the covenant. The benefit of an equitable servitude runs to successors if: (i) the original parties so intended, and (ii) the servitude touches and concerns the land. The burden runs if (i) and (ii) are met and (iii) the subsequent purchaser has actual or constructive notice of the covenant. Privity of estate is not needed to enforce an equitable servitude because it is enforced not as an in personam right against the owner of the servient tenement, but as an equitable property interest in the land itself.
For the burden of a real covenant to be enforceable against a successor promisor, there must be:
For the burden of a real covenant to be enforceable against a successor promisor, there must be:
- intent that it will run with the land
- notice of the covenant (actual, record, or inquiry) at time an interest in the burdened land is acquired
- covenant must touch and concern the land (affects the relationship of the parties as landowners)
What are two types of restrictive covenants?
Two types of restrictive covenants are:
- real covenants (when enforcing the law): when P wants money damages
- equitable servitudes (when enforcing in equity): P wants an injunction to enforce the restriction
What is horizontal privity?
Horizontal privity refers to the original parties to the covenant; at the time the promisor entered into the covenant with the promisee, the two landowners shared some interest in the land independent of the covenant.
What is vertical privity?
Vertical privity is when those who subsequently acquire property subject to the covenant (successor-in-interest) and the original party from whom they got the property. There must be a transfer of the original covenantor’s entire estate to the successor.
For the benefit of a real covenant to run to a successor promisee, there must be:
- intent that it run with the land
- covenant must touch and concern the land
- vertical privity; owner of any succeeding possessory estate can enforce the benefit at law
For the burden of an equitable servitude to be enforceable against a successor promisor, there must be:
- intent that it run with the land
- notice of the covenant (actual, record, or inquiry) at time of an interest in the burdened land at time acquired
- must touch and concern the land (make the land more valuable or more useful and must not be a personal promise)
For the benefit of an equitable servitude to run to a successor promisee, there must be:
- intent to run with the land
- must touch and concern the land
What are equitable defenses to enforcement?
Equitable defenses to enforcement include:
- unclean hands defense (person seeking enforcement is violating a similar restriction on his own land)
- acquiescence (benefited party does not challenge a violation by a burdened party and then wants to)
- laches (P sits back and watches the violation occur before speaking up)
- estoppel (benefited party has acted in a way that a reasonable person would believe that the covenant was abandoned or waived and the burdened party acts in retaliation)
