Tuesday, October 25, 2011

Property Law Outline : Covenants (Exam Outline)

I used this outline on my Property law exam, and received an A in the course. When the issue of Covenants came up, I worked through this outline quickly and wrote as much as I could applying the rules to the facts outlined on the exam.

A covenant is a promise to refrain from doing something, which arose out of landlord tenant law. Covenants can be found in leases, contracts or deeds. They are an interest in land and must satisfy the statute of frauds. Like other interests in land, real covenants and equitable servitudes, to be binding on subsequent bona fide purchasers must comply with the state’s recording statute.
Is there a k?
Consideration? Enforceable as a contract.
Is there a gratuitous transfer?
No consideration? Must be enforceable as a property interest.
Affirmative or Negative covenant?
Affirmative covenants require the owner of the burdened estate to perform some act or to pay money. For example, affirmative covenants include the duty to maintain a wall or dam.
Negative covenants restrict or prohibit the uses that can be made of the burdened property.
Does the covenant run with the land?

The purpose of the running with the land issue is whether subsequent purchasers can enforce or be obligated to honor the covenant, not whether the covenant constitutes a valid contract between the original parties.

Analyze BENEFIT and BURDEN for each.

A covenant will often both benefit and burden a piece of property.

1. Have we met the requirements of INTENT?

Express: “I intend this covenant to run”

Implied: “heirs/assigns” language meets intent requirement.

making a promise on behalf of heirs and assigns.

Rule in Spencer’s Case

A tenant under a lease covenanted to build a wall on his land. He assigned his tenancy to another person, without having built the promised wall. The landlord took action against the new tenant to compel him to built the wall. Despite the fact that there was no contractual relationship between the landlord and the new tenant, the landlord succeeded. It was held that a covenant contained in a lease could be enforced against the successor in title of the covenantor, provided that

  1. it was intended to bind successors in title, and
  2. it `touched and concerned the land', and
  3. there was privity of estate between the parties.

Subject matter of the covenant must be in existence at the time the covenant entered into.

In the example of a viewplain, if there is nothing existing that blocks the view at the time the covenant is entered into, the subject matter is said to be in existence. If there is a promise to build a fence, but the fence does not yet exist, the only way for there to be a covenant is if it is express. If the fence exists and the covenant is for repair, however, there would be subject matter (the fence) in existence.

2. Have we met the requirements of Privity of Estate?

a. Tenural privity

Do or more people own an interest in property simultaneously? LL/T relationship?

Tenural privity exists at common law and is recognized everywhere. It arises when two people own an interest in property simultaneously, such as in the landlord tenant relationship.

b. Mutual & Simultaneous privity.

Is there a TIC/JT/TbE b/t concurrent owners?

Mutual & simultaneous privity exists wherever there are concurrent owners, such as a concurrent estate, such as a tenancy in common, joint tenancy, or tenancy by the entirety.

A owns LE, B owns Rem. in F.S. -- M&S privity.

A to life, to Z (children do not exist) -- no M&S privity to children as they don’t exist.

Easement - Interest in same property where the easement is.

Regarding an easement, there is mutual & simultaneous privity, as there is an interest in the same property where the easement is.

c. Successive privity or grantor/grantee privity (not privity at C/L)

Did a party convey/transfer a CONTIGUOUS lot to another?

B --> C Privity b/t B/C @ transfer, some point where B and C both own lot C.

Does privity continue after B conveys to C?

Yes, as long as C holds CONTIGUOUS property. Privity is carved out of the other lot. There is a sharing of property rights at some level.

3. Does the covenant touch & concern the land?
When asking if the covenant touches and concerns the land, one is asking if the covenant effects property rights.

a. Burden

A viewplain would burden property A because w/o the covenant one could build to any height that they wanted. The covenant limits the use and where one can possess the property.

b. Benefit

Does the covenant increase/change/affect the property rights with respect to A?

Viewplain gives a property right in the nature of an easement. Lot 1 has a right to use (by seeing), like an easement for light and air.

(Doesn’t have to be a “true” benefit” or “burden”. Can increase value of burdened land, etc. For example, a covenant for residential purposes only could increase the value while burdening the land.

Does Covenant run with the land?

Benefit (Promisee)

Burden (Promisor)



Touch & Concern

Tulk v. Moxhay (1014) Equitable Servitude Theory
Tulk held that equity requires the parties intend the promise to run, a subsequent purchaser have actual or constructive notice of the covenant (the most important factor), and that the covenant touch and concern the land.
Neoponsit Reality (1019)
The rule in Neoponsit stated that the covenant should comply with certain legal requirements. 1. the grantor + grantee intended that the covenant should run with the land, 2. it must appear that the covenant is one “touching” or “concerning” the land with which it runs, and 3. It must appear that there is privity of estate between the promisee or the party claiming the benefit of the covenant and the right to enforce it, and the promisor or party who rests under the burden of the covenant.

Touch & Concern = ‘affect property rights’.

Eagle Enterprises (1030) Covenant that does not run with the land.
More contractual in nature, didn’t effect property rights in the retained land like in Neoponsit.
Eagle held that a promise to do an affirmative act contained in a deed is generally not binding upon subsequent grantees of the promisor unless certain legal requirements are satisfied.

In order for a covenant to run with the land, it must be shown that, 1. the original grantee and grantor must have intended the covenant to run with the land, 2. there must exist privity of estate between the party claiming the benefit of the covenant and the right to enforce it and the party upon whom the burden of the covenant is to be imposed, and 3. the covenant must be deemed to touch and concern the land with which it runs.

Does the covenant run with the land or is it personal?

Depends on the effect of the covenant on the legal rights which would otherwise flow from the ownership of land and which are connected with the land.

Does the covenant in purpose and effect substantially alter those rights?

Eagle held that an agreement for seasonal water supply does not relate in a substantial degree to ownership rights of owners in the subdivision. It resembled a personal, contractual promise to purchase water.

The obligation also imposed an undue restriction on alienation/onerous burden in perpetuity which binds all future owners regardless of use which land is put.

Sanborn v. Mclean (1034) Reciprocal Negative Servitudes.
Inquiry notice, gas station.
If not a real covenant, ask: enforceable as an equitable servitude?
Bolotin v. Rindge (1042) Has there been a change in conditions? Cov. no longer valid?
Bolotin held that a court will declare deed restrictions to be unenforceable when, by reason of changed conditions, enforcement of the restrictions would be inequitable or oppressive, and would harass the party without benefiting the adjoining owners.
Can the original purpose of the covenant still be retained?
If the original purpose of the covenant can still be retained, the covenant will still be enforced even though the unrestricted use of the property would be more profitable to its owner.
Look at purpose of deed restriction.
Peckham v. Milroy (1046) Neighborhood covenant prohibits home business.
Abandonment requires proof that the prior violations have eroded the general plan and enforcement is inequitable.
Laches and Estoppel?
Public Policy?

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