BAR FLASHCARDS - P9 Covenants (1)
(32 cards)
RESTRICTIVE COVENANTS
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Covenant
Covenant = Promise to do or not do something.
The covenant is a written promise to do or not do something related to land (for example, to maintain a fence, or to not build a multifamily dwelling).
It’s unlike the easement because it is not the grant of a property interest.
Instead, it is a contractual limitation or promise regarding land.
Real covenants are normally found in deeds and when certain requirements are met they run with the land at law, which means that subsequent owners may enforce or be burdened by the covenants.
Negative/Restrictive Covenant
Refrain from doing something related to land. (I promise not to build for commercial purposes).
Covenants can be negative. These are known as restrictive covenants.
A restrictive covenant is a promise to refrain from doing something related to land. What are some examples of restrictive covenants? Refrain from some commercial activity.
Affirmative Covenant
Do something related to land (I promise to maintain our shared fence).
Affirmative Covenants: Covenants can be affirmative: The affirmative covenant is a promise to do something related to land.
What are some examples? I promise to water our shared garden.
Covenant vs. Equitable Servitude
On the exam, the same set of facts could seem to give rise to either a covenant or an equitable servitude.
How will you know which analysis to apply? On the basis of the remedy plaintiff seeks.
-Money damages: Construe as covenant at law. if the plaintiff wants money damages, you must construe the promise as a covenant.
-Injunction: Construe in equity as equitable servitude. If the plaintiff wants an injunction, you must construe the promise as an equitable servitude.
Running with the Land
In covenant parlance, one tract is burdened by the promise and another is benefited.
Our key question in this area is figuring out when a covenant will run with the land. In other words, when is a covenant capable of binding successors? When will the burden and/ or benefit run to successors?
1. Does the BURDEN run? Harder for burdens to run, WITHN.
2. Does the BENEFIT run?
Requirements for Burden to Run
If requirements are met, any successor in interest to the burdened estate will be bound by the covenant as if they themselves had expressly agreed to it.
For the requirements for the burden of a covenant to run, remember W I T HVP N:
• Writing: The original promise (between A and B) must have been in writing.
• Intent:
• Touch and concern
• Horizontal and vertical privity
• Notice
Requirements for Burden to Run: W I T HVP N
Writing, Intent, Touch and Concern, Horizontal AND Vertical Privity, Notice
Requirements for Burden to Run: Intent
The original covenanting parties (A and B) must have intended that the covenant would run (meaning they intended that successors to the originally promising parties would be bound by the covenant). This intent may be inferred from circumstances surrounding the creation of the covenant, but is usually found in the language of the conveyance itself (for example, “A promises on behalf of herself, her successors and assigns…”). Courts are generous in finding the requisite intent.
Requirements for Burden to Run: Touch and Concern
The promise must…
Restrictive covenants touch and concern the land if…
Affirmative covenants touch and concern the land if…
The promise must affect the parties’ legal relations as landowners and not simply as members of the community at large.
Restrictive covenants touch and concern the land if they restrict the burdened parcel owner in her use of that parcel of land.
Affirmative covenants touch and concern the land if they require the holder of the servient estate to do something that increases her obligations in connection with the land.
Covenants to pay money to be used in connection with the land (such as homeowners’ association fees) and covenants not to compete do touch and concern the land.
Requirements for Burden to Run: Horizontal AND Vertical Privity
Both horizontal and vertical privity are required for the burden to run.
Horizontal Privity:
This requirement rests on the relationship between the original covenanting parties. Specifically, horizontal privity requires that, at the time the promisor entered into the covenant with the promisee, the two shared some interest in the land independent of the covenant (e.g., grantor-grantee, landlord-tenant, mortgagor-mortgagee).
Horizontal privity refers to the nexus between the original promising parties (A and B).
It requires that they be in succession of estate, meaning that they were in a grantor-grantee*** or landlord-tenant or mortgagor-mortgagee relationship when the covenant was created.
In other words, at the time the promisor entered into the covenant with the promisee, the two must have shared some interest in the land independent of the covenant. Horizontal privity is difficult to establish. Its absence is the reason why many burdens will not run.
Vertical Privity: Vertical privity refers to the nexus between the successor in interest (A-1) and the originally covenanting party (A). It simply requires some non-hostile nexus, such as contract, devise, or descent. The only time vertical privity will be absent is when the successor acquired her interest through adverse possession.
Horizontal privity
Horizontal privity concerns the connection between the original parties. No matter that it’s the successors in interest who are trying to enforce the covenant, horizontal privity is determined on the basis of the connection between the originally covenanting parties.
Horizontal Privity: Horizontal privity refers to the nexus between the original promising parties (A and B). It requires that they be in succession of estate, meaning that they were in a grantor-grantee*** or landlord-tenant or mortgagor-mortgagee relationship when the covenant was created.
In other words, at the time the promisor entered into the covenant with the promisee, the two must have shared some interest in the land independent of the covenant. Horizontal privity is difficult to establish. Its absence is the reason why many burdens will not run.
Requirements for Burden to Run: Notice
The successor must have had notice of the promise when she took.
Why? 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 the covenant at the time of purchase.
Under the recording statutes, a subsequent purchaser for value will not be bound by the covenant if that purchaser for value took without either actual, inquiry, or record notice of the covenant.
Under the recording statutes, will a subsequent purchaser for value be bound by the covenant if that purchaser for value took without either actual, inquiry, or record notice of the covenant?
Under the recording statutes, a subsequent purchaser for value will not be bound by the covenant if that purchaser for value took without either actual, inquiry, or record notice of the covenant.
Requirements for Benefit to Run
EASIER than burden.
What you’re asking here is, does the successor (B-1) have standing to enforce the covenant?
If the following requirements are met, the promisee B’s successor in interest (B-1) may enforce the covenant. For the benefit of a covenant to run, remember W I T V:
• Writing
• Intent
• Touch and concern
• Vertical privity
Requirements for Benefit to Run: W I T V:
• Writing
• Intent
• Touch and concern
• Vertical privity
a. Writing: The original promise (between A and B) must have been in writing.
b. 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.
c. Touch and Concern: The benefit of a covenant touches and concerns the land if the promised performance benefits the promisee and her successors in their use and enjoyment of the benefited land. In other words, the promise must affect the parties as landowners.
d. Vertical Privity: There must be a non-hostile nexus between the original promisee (B) and the successor in interest (B-1).
for the benefit to run, do you need Horizontal privity?
NO!
Horizontal privity is not required for the benefit to run (that’s why it’s easier for the benefit to run than for the burden to run).
Thus, where horizontal privity is lacking, the promisee B’s successor (B-1) can enforce the covenant against the original promisor (A), but not against the promisor’s successor (A-1).
Specific Situations Involving Real Covenants
Generally, promises to pay money to be used in connection with the land (for example, homeowners’ association fees) and covenants not to compete run with the land. Racially restrictive covenants are unenforceable.
Remedy for a breach of a real covenant
Damages. A breach of a real covenant generally is remedied by an award of money damages, collectible from the defendant’s general assets. If an injunction is sought, the promise may be enforced as an equitable servitude (see 9.2., infra).
Termination of a covenant: (3)
As with all other nonpossessory interests, a covenant may be termi- nated by: (1) a written release, (2) the merger of the benefited and burdened estates, or (3) the condemnation of the burdened property. (See 7.5, supra.)
EQUITABLE SERVITUDES
Enforced against who?
Wb bona fide purchasers?
Relief?
Equitable servitude = Promise equity will enforce against successors of burdened land (regardless of whether it runs with the land at law).
An equitable servitude is a promise that equity will enforce against successors of the burdened land regardless of whether it runs with the land at law, unless the successor is a bona fide purchaser (meaning, a subsequent purchaser for value without notice of the covenant).
The equitable servitude is accompanied by which form of relief? INJUNCTIVE relief
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A single promise can create both a real covenant and an equitable servitude. For the bar exam, the main difference between the two will be the 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 require- ments for enforcement as an equitable servitude have been met.
Creation of Equitable Servitudes
Generally, as with real covenants, equitable servitudes are created by promises contained in a writing that satisfies the Statute of Frauds. To create an equitable servitude that will bind successors, remember W I T N E S:
• Writing: Generally, but not always, the original promise was in writ- ing (the common scheme doctrine, discussed below, is an excep- tion to this requirement)
• Intent: The original parties intended that the promise would be enforceable by and against successors
• Touch and concern: The promise affects the parties as landowners
• Notice: Subsequent purchasers of land burdened by the covenant had actual, inquiry, or record notice of the covenant when they acquired the land. (Note: This rule is part of the law of equitable servitudes, and exists apart from the recording acts, so notice is required to bind a subsequent purchaser regardless of whether they seek the 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
Equitable serrvitude, look for
Injunctrive relief.
DO NOT need horizontal privity.
