Covenants

• Author: Christian Turner
• Pages: 269-351

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6. Covenants

AN INTRODUCTION TO SERVITUDES, Part II

Covenants

Recall that a covenant is a contract that imposes an obligation to do something or to refrain

from doing something on one’s own land. Examples we cited included: a promise by A to B that A

will not make commercial use of his property; a promise that A will not build a second story; a

promise that A will only build additions that meet with the approval of a homeowner association’s

architectural review committee; a promise that A will maintain a wall that separates his property

from B’s.

One can distinguish affirmative and negative covenants as, respectively, requiring or

prohibiting conduct on the part of the owner of the burdened land. Though some courts treat these

two types of covenants differently, we note this difference only in one respect below.

Another distinction, often seen in the case law, is between real covenants and equitable servitudes.

This distinction goes back to the difference between law and equity. To make a long and complex

story short, we will refer to a covenant as a real covenant when damages are sought for breach and

as an equitable servitude when an injunction is sought.

Running with the Land

We deal here with what a court will insist upon before it will decide that a covenant runs to

subsequent landowners. That is, when are people who buy land bound by a contract signed by prior

owners of that land. As you will see in the cases, this area of the law is in flux. Below we will discuss

the traditional requirements. But some courts, and the Third Restatement, are taking the view that

many of the traditional elements should be dropped in favor of finding covenants to run whenever

“reasonable,” which word applies to the agreement of the original parties and the impact of the

covenant today. Because such an analysis tends to replicate many of the features of the traditional

analysis, and because many courts adhere to the traditional analysis, we will start there.

As with easements we look separately at whether the burden of a covenant runs with the

burdened land and whether the benefit of a covenant runs with the benefitted land. For the burden of

a real covenant to run, the following elements, which will be defined below, must be found: (1)

writing, (2) intent, (3) notice, (4) horizontal privity, (5) vertical privity, and (6) touch and concern.

The privity elements are not required for the burden of an equitable servitude to run. For the benefit

of a real covenant to run, the following elements must be found: (1) writing, (2) intent, (3) vertical

privity, and (4) touch and concern. Again, privity is not required to enforce an equitable servitude, so

long as the plaintiff is an intended beneficiary of the covenant.

A successor of an owner of the servient, or burdened, land is only liable under a covenant if

the burden runs to that owner. Likewise, the successor of an owner of the dominant, or benefitted,

land may only enforce a covenant if the benefit of the covenant runs to that owner. These are two

separate questions, and the running of the benefit and the running of the burden must be analyzed

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separately.

Writing

This seems like a straightforward requirement. As with easements, we do not require that

every subsequent deed contain the covenant - only that the original covenant is in writing.

Covenants may be included in original deeds of conveyance, or may be contained in separate

agreements. They may also be contained in declarations, which are documents setting out covenants

applicable to a whole subdivision rather than just individual parcels. The important thing here is that

there is a writing. Whether that writing provides notice is a separate matter considered below.

Intent

Intent is not difficult to find. A covenant may use magic words - expressly declaring that it

binds future owners or that it runs with the land - but will often be found to be intended to run with

the land regardless. Most, but not all, courts will find intent to run where the touch and concern

element is satisfied.

Notice

As with easements, notice can be either actual, inquiry, or record. And what is needed to

show each is more or less identical to what is required there. Covenants contained in a declaration

applicable to an entire subdivision are determined by some courts to constitute record notice even

when the deeds of land in that subdivision do not reference the declaration. Other courts will insist

on a reference to the declaration in a deed of the individual parcel itself before determining that the

owner of that parcel had notice. The question comes down to whether a court (or legislature)

believes it is reasonable to require title searchers to look for declarations, rather than just looking at

the deeds of conveyance in the chain of title.

Horizontal Privity

This requirement measures the relationship between the two original contracting parties to a

covenant. So if the covenant was executed in 1850, we care only about the relation between the

parties that executed the agreement back in 1850, not about any subsequent owners. While the Third

Restatement would do away with this requirement altogether, many states retain it. Note, though,

that it is not required when seeking an injunction (i.e., enforcement of an equitable servitude).

The requirement can be satisfied in few ways. The original form of horizontal privity is

known as tenurial privity and exists only when the parties are in a landlord-tenant relationship. Later,

it was expanded to cover situations in which one party had an easement in the land of the other,

called substituted privity. Together, these two kinds of privity are called mutual privity, which exists,

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more generally, when the parties have a simultaneous interest in the same parcel of land.

By far the most common way to find horizontal privity is also the most recent. Instantaneous

privity is found when the covenant is created at the same time as a parcel is transferred. So, a

covenant contained in a deed of sale will meet the horizontal privity requirement, as the covenant is

created at the same instant as the parcel of land is deeded over.

There is no horizontal privity when neighbors simply come together and contract for

restrictions. Suppose a group of neighbors is concerned about preserving trees and wants to impose

reciprocal covenants on each of them not to cut trees unless certain conditions exist. They will not

be in horizontal privity with one another, and therefore will not create a covenant enforceable by

damages by simply contracting among themselves. They can get around this, however, by deeding

over their properties to a third party who deeds the properties back with the covenants. This straw

transaction creates horizontal privity.

Vertical Privity

Each of the above elements is purely formal. People who want to create a covenant that will

run can do so by observing the requirements and executing the covenant so as to comply with them.

Vertical privity, however, cannot be created where it does not exist. This requirement measures the

relationship between an owner of land and his or predecessor in interest. So a real covenant may

only be enforced, for damages, against an owner of burdened land if that owner is in vertical privity

with a predecessor who was bound.

There are two kinds of vertical privity: relaxed and strict. Strict vertical privity between a

predecessor and successor is found only if the predecessor retains no interest in the land. A

landlord-tenant relationship fails this test, because the landlord retains an interest when he or she

leases to a tenant. In a nutshell, sellers and buyers are generally in strict vertical privity but landlords

and tenants are not.

Relaxed vertical privity is found between any two possessors. A neighbor of the owner of a

piece of land is not in relaxed vertical privity with the predecessor of the owner. Also, an adverse

possessor is usually deemed not to be in vertical privity with a predecessor.

Only relaxed vertical privity is required on the benefit side. Courts differ over which form is

required on the burden side. The Third Restatement is a little more complex. It would eliminate the

vertical privity requirement on the burden side of negative covenants but require strict vertical privity on

the burden side of affirmative covenants. This means that the Restatement would not bind lessees with

affirmative obligations, only with negative obligations. However, there is an escape hatch: the Third

Restatement would require enforcement without strict vertical privity even of an affirmative

covenant where the burden is “more reasonably performed” by the person in possession (i.e., the

lessee).

Touch and Concern

This is the only requirement for a covenant to run with the land that looks at the substance

of the covenant. Like strict vertical privity, it cannot be created if it does not exist. But further, it is a

restriction on the kinds of covenants that will be deemed to run. There are at least three different

kinds of tests for touch and concern. Only a brief outline will be given here, with further elaboration

of the doctrine in the cases below.

First, under an older rule, courts will examine a covenant to see if provides physical benefits