§8.2 - Running of Covenants in General

• Jurisdiction: Washington

§8.2 RUNNING OF COVENANTS IN GENERAL

Historically, there are two kinds of covenants. "Covenants real," now more commonly referred to as "real covenants," run with estates in the land at law if they meet the requirements evolving from the early English common law decision of Spencer's Case, (1583) 77 Eng. Rep. 72 (Q.B.). "Equitable servitudes," also referred to as "equitable covenants" or "equitable restrictions," on the other hand, allow a covenant to be enforced in equity if it satisfies the less stringent doctrine established in Tulk v. Moxhay, (1848) 41 Eng. Rep. 1143 (Ch.), even if the covenant would not run at law as a real covenant.

Although many American courts generally purported to follow the distinction between the two theories of running covenants, "the differences have all but disappeared in modern law." RESTATEMENT (THIRD) OF PROP.: SERVITUDES introductory note at 7 (2000). Likewise, in Washington, courts generally have not distinguished between the two types of covenants. See Hollis v. Garwall, Inc., 137 Wn.2d 683, 691, 974 P.2d 836 (1999); see also 17 William B. Stoebuck & John W. Weaver, WASHINGTON PRACTICE: REAL ESTATEPROPERTY LAW §§3.1 & 3.10 (2d ed. 2004). This lack of distinction, both in and outside of Washington, is for a variety of reasons, not the least of which is that most covenantees prefer the equitable relief they can obtain under the equitable servitude theory without having to satisfy the more stringent requirements for a real covenant. Despite the trend to disregard the distinction, it remains unsettled in Washington whether both doctrines should continue to be applied, and therefore the traditional requirements for each theory are set forth below, together with a discussion and comparison of the requirements in light of relevant Washington case law.

(1) Traditional requirements

This section discusses the traditional requirements governing the running of real covenants and equitable servitudes.

(a) Real covenants

In a majority of jurisdictions, the requirements for the running of a real covenant are as follows:

(1)	A writing sufficient to satisfy the statute of frauds regulating transfers of interests in land.
(2)	The covenant "touches and concerns" the land, meaning the covenant so relates to the land that the covenantor and covenantee may be said to have agreed to the covenant not as individuals, but as owners of interests in land. Accordingly, those who succeed to the covenantee's estate in land (dominant estate) or the covenantor's estate in land (servient estate) also should succeed to the benefit or burden of the covenant.
(3)	Intent of the covenanting parties that the covenant run with the land.
(4)	"Horizontal privity" between the original covenantor and covenantee, which in most jurisdictions means the covenant must have been made in connection with, and simultaneously with, the transfer of some interest in land between the covenanting parties (excluding the covenant itself).
(5)	"Vertical privity" between the covenantor or the covenantee and each of their respective successors, which means the covenantor's successor succeeded to the covenantor's estate in land and the covenantee's successor succeeded to the covenantee's estate in land.

See William B. Stoebuck, Running Covenants: An Analytical Primer, 52 WASH. L. REV. 861, 867-81 (1977); 17 William B. Stoebuck & John W. Weaver, WASHINGTON PRACTICE: REAL ESTATEPROPERTY LAW §3.1 (2d ed. 2004) .

(b) Equitable servitudes

For an equitable servitude to run with the land, the requirements are similar to those for a real covenant except as follows:

(1)	Horizontal privity is not required.
(2)	Vertical privity may be relaxed in the sense that the successor to the original covenantor or covenantee need not succeed to the precise estate that the predecessor had, as long as he or she acquires some possessory interest in the land burdened or benefited by the covenant. This means that an equitable servitude may run to a tenant, or to a contract purchaser without title, or possibly even to an adverse possessor. See §8.2(3)(e).
(3)	The successor of the covenantor must have actual or constructive notice of the equitable servitude at the time the successor acquired the property interest.

See Stoebuck, 52 WASH. L. REV. at 890-01; 17 William B. Stoebuck & John W. Weaver, WASHINGTON PRACTICE: REAL ESTATEPROPERTY LAW §3.10 (2d ed. 2004) .

To summarize, the major distinction between the running of real covenants and equitable servitudes under the traditional approach is that equitable servitudes require notice but not horizontal privity. Thus, it technically is possible for a covenant to run under one set of requirements without satisfying the other set. However, with the trend to abandon horizontal privity, and because the recording acts (state statutes that govern the recording of the existence or conveyance of interests in real property) generally will protect a subsequent bona fide purchaser without notice against a prior unrecorded real covenant, the difference largely is a theoretical one. RESTATEMENT (THIRD) OF PROP.: SERVITUDES §2.4 cmt. b (2000) ("As a matter of common law, horizontal privity between the covenanting parties is no longer required....").

(2) Washington approach

The Washington Supreme Court has stated that the distinctions between real covenants and equitable servitudes have largely vanished, and that Washington cases generally have not distinguished between these two kinds of covenants. See Hollis v. Garwall, Inc., 137 Wn.2d 683, 691, 974 P.2d 836 (1999); 1515 ‑ 1519 Lakeview Boulevard Condo. Ass'n v. Apartment Sales Corp., 146 Wn.2d 194, 203, 43 P.3d 1233 (2002). Despite this acknowledgment by the Washington Supreme Court, it has not expressly found the doctrine of real covenants inapplicable.

In Lake Limerick Country Club v. Hunt Manufactured Homes, Inc., 120 Wn.App. 246, 84 P.3d 295 (2004), the Court of Appeals, Division II, aptly noted that, under current Washington case law, there continue to be two theories, one for real covenants and one for equitable servitudes.

[A] "real covenant" runs with the land if the following conditions are met: (1) the covenant[] must have been enforceable between the original parties, such enforceability being a question of contract law except insofar as the covenant must satisfy the statute of frauds; (2) the covenant must "touch and concern" both the land to be benefitted and the land to be burdened; (3) the covenanting parties must have intended to bind their successors in interest; (4) there must be vertical privity of estate, i.e., privity between the original parties to the covenant and the present disputants; and (5) there must be horizontal privity of estate, or privity between the original parties.

Id. at 254 (citations omitted).

In Hollis, the court set forth as the requirements necessary for a covenant to run only those elements that traditionally have been associated with equitable servitudes. These elements are:

(1)	A promise, in writing, which is enforceable between the original parties;
(2)	Which touches and concerns the land or which the parties intend to bind successors; and
(3)	Which is sought to be enforced by an original party or a successor, against an original party or successor in possession;
(4)	Who has notice of the covenant.

Hollis, 137 Wn.2d at 691 (citations omitted).

Comment: In Lakeview, the court set forth these same requirements, except that it did not require the promise to be "in writing," and it separated the "touch and concern" and "intent to bind successors" elements into two different requirements without explaining the difference between them. 146 Wn.2d at 203-04 With regard to the "writing" requirement, it is unclear whether the court intentionally omitted this element, and whether, if presence of a writing were at issue, the Supreme Court would rely on the rule as stated in Lakeview or as stated in Hollis. Interestingly, when listing the elements for running covenants, subsequent Washington cases generally have cited Hollis rather than Lakeview. See, e.g., Dickson v. Kates, 132 Wn.App. 724, 732, 133 P.3d 498 (2006). With regard to separation of the "touch and concern" and "intent to bind successors" requirements, the difference may be that "if a covenant is found to touch and concern, this alone may often be enough to show an intent that it should bind successors. When that is the case, of course, intent is subsumed in touch and concern and loses significance as an independent element." 17 William B. Stoebuck & John W. Weaver, WASHINGTON PRACTICE: REAL ESTATEPROPERTY LAW §3.4 (2d ed. 2004).

The Court of Appeals, Division II, has continued to recognize the different requirements applicable to real covenants and equitable servitudes, even though this recognition sometimes appears not to have any practical effect. For example, in Lake Limerick, the court set forth both sets of elements, but then held that horizontal privity either was not required in this case, or was met by the original parties' relationship as grantor and grantee. Lake Limerick, 120 Wn.App. at 259. Furthermore, finding that the statute of frauds was satisfied, the court quickly disposed of the other elements, concluding the covenant did touch and concern the land, the original parties intended to obligate the land, and both vertical privity and constructive notice existed. The court held that the covenant ran, but because the court discussed both horizontal privity and notice, it is unclear under which theory.

In Dickson, the Court of Appeals, Division II, again examined the covenant under both theories. There, the court concluded that the covenant failed to run as a real covenant because it failed to satisfy the statute of...