Restrictive Covenants

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Restrictive Covenants
Property
Prof. David Glazier Mar 8, 2007
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Todays Class

• Covenant Terminology
• Covenant Rules
• Cases Touch Concern
• Neponsit
• Caullett
• Covenant Servitude comparison

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Covenant Terminology

• Real Covenant enforceable in a court of law
• - generally results in monetary damages
• Equitable Servitude covenant enforceable in
  equity
• - enforcement via injunction

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Covenant Terminology

• Benefitted Estate entitled to enforce servitude
• Burdened Estate bound to comply w/servitude
• - Affirmative Covenant requires performance of
  specified act or payment of money
• - Negative Covenant restricts use of property

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Covenant Example

• A and B own homes in subdivision limited to
  single family homes.
• Type of covenant?
• Benefitted estate?
• Burdened estate?
• B converts his garage into barber shop. A sues.
• Benefitted estate?
• Burdened estate?

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Equitable Servitudes - Rule

• Enforceable by injunction if
• Parties intended promise to run
• Promise touches and concerns the land
• Subsequent purchaser has notice
• Should be in writing (SOF)
• Can be implied by courts

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Real Covenants - Rule

• Enforceable by damages if
• Parties intended promise to run
• Promise touches and concerns the land
• Privity of estate
• Horizontal (between promisors)
• Vertical (between successors)
• Must be in writing (SOF)
• Many states now allow injunction too

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Real Covenants Intent to Bind

• Original parties must intend covenant to benefit
  and/or burden successors in interest
• Magic words provide rebuttable presumption
• - agrees for self, heirs, and assigns . . .
• - this covenant shall run with the land . . .
• - this covenant is appurtenant to the land . .
  .
• Must evaluate both benefit and burden
• - Either or both may run

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Easement Hypothetical
A B
A to B I promise to let you swim in my pool . .
. . Is benefit intended to run? Is burden
intended to run?
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Real Covenants Privity of Estate
Horizontal Privity
A X
V e r t I c a l Privity
V e r t I c a l Privity
B C
Y Z
A and X are original promisors B,C,Y, and Z are
successors
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Real Covenants Privity of Estate
Horizontal Privity
A X

• Privity of Estate required for benefit/burden to
  run
• - A and X can enforce as contract
• Majority view limits covenant creation to
  transfers of interest in land
• - easement, fee simple, life estate, lease
• Many states now substitute notice for horizontal
  privity
• - trend towards merging covenant servitude
  rules

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Privity Example

• A and X own homes on residential cul de sac.
  They sign and record covenant limiting their lots
  to single family homes. Can successors in
  interest be bound?
• Majority view
• Minority view
• What could A and X do in a majority jurisdiction?

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Real Covenants Privity of Estate
Horizontal Privity
A X
V e r t I c a l Privity
V e r t I c a l Privity
B C
Y Z

• Vertical privity traditionally requires obtaining
  full estate
• Many states now let benefit run with possessory
  interest
• What else do we call vertical privity?

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Privity Examples

• A buys new home in subdivision as investment.
  Covenant requires landscaping back yard w/in six
  months of taking possession. Is As tenant
  liable for failing to do so?
• Does As tenant have right to bring action
  against neighbor B for failure to landscape?

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Privity Examples

• A buys new home in subdivision. Covenant
  requires landscaping back yard w/in six months of
  taking possession. After a month Sally Squatter
  notices the house still sitting empty, moves her
  family in, and acts like she owns the place.
  Five years later
• - Sallys still there,
• - the backyard is still dirt, and
• - neighbor B decides to enforce the covenant.
• Can he? Against who?
• What if real property SOL is 5 yrs?

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Neponsit Owners Assn v. Emigrant Bank (NY 1938)

• Whats the fundamental issue before the court?
• What are the rules for a covenant to run?

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Neponsit Owners Assn v. Emigrant Bank (NY 1938)

• Is there intent?
• - Read the deed
• Does it touch and concern?

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Neponsit Owners Assn v. Emigrant Bank (NY 1938)

• What about privity?

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Covenants in real life

• Theyre almost everywhere
• - enforcement varies

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Caullett

• Issue can builder selection clause impact
  title?
• - Contract v. covenant

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Equitable Servitudes v. Real Covenants

• Requirements
• Intent to bind (run)
• Touch and concern
• Notice
• Enforcement
• - Injunction

• Requirements
• Intent to bind (run)
• Touch and concern
• Privity of Estate
• - Horizontal
• - Vertical
• Enforcement
• - Damages (all)
• - Injunction (some)

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Upcoming Reading
Tuesday Just read actual cases Hill,
Western Land, Rick
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Questions?