Touch and Concern Is Dead, Long Live the Doctrine

• Publication year: 2021

77 Nebraska L. Rev. 804. Touch and Concern Is Dead, Long Live the Doctrine

804

A. Dan Tarlock*

Touch and Concern Is Dead, Long Live the Doctrine

TABLE OF CONTENTS

I. Introduction: ALI Bids Farewell to Touch and
Concern ................................................ 805
A. The Restatement (Third) of Property: Servitudes in
Context ............................................. 805
B. The Restatement (Third) of Property: Servitudes
and the Risks of Living in a Common Interest
Community ........................................... 807
C. Touch and Concern and Its Substitutes ............... 809
II. A Brief and Not Too Helpful History of Touch and
Concern ................................................ 813
A. What Little We Know About Spencer's Case ............ 813
III. The Futile Modern Search for a Simple Definition of
Touch and Concern ...................................... 817
IV. The Restatement (Third) of Property: Servitudes and
the Validity of Servitudes ............................. 821
A. The ALI Case for Judicial Scrutiny .................. 821
B. Common Interest Communities and State Action . . .... 822
C. Substitute State Action ............................. 824
V. A Consumer Protection Rationale for Touch and
Concern ................................................ 828
A. The Consumer Protection Theory: A Benefit-Burden
Nexus .................................................. 828
B. Some Possible Cases for the Use of Touch and
Concern ................................................ 830

805

1. Assessment Diversion ............................. 830
2. Excessive Product Bundling: The Problem Of
Compulsory Club Memberships ...................... 832
VI. Conclusion ............................................. 833

I. INTRODUCTION: ALI BIDS FAREWELL TO TOUCH

AND CONCERN

The pending Restatement (Third) of Property: Servitudes abandons the requirement, first articulated in Spencer's Case,(fn1) that to "run" with the land real covenants and equitable servitudes must touch and concern the benefitted and burdened land. The touch and concern requirement has been replaced with a series of non-constitutional standards which courts can use to invalidate real covenants and equitable servitudes. This Article criticizes the proposed new Restatement rules for jettisoning a vague, but useful, doctrine in favor of more unworkable and redundant invalidation standards. My criticism of the proposed Restatement is offered as part of a symposium honoring one of the most productive and thoughtful American property law scholars, Professor Lawrence Berger of the University of Nebraska College of Law. It is offered in the spirit of Professor Berger's work. He has always tried both to explain and illuminate the purpose of the law of real property, as well as public and private land use controls, and to ground legal doctrines in basic ideas of fairness and efficiency.(fn2)

A. The Restatement (Third) of Property: Servitudes in
Context

In comparison to the Restatements of Contracts and Torts, the history of the Restatement of Property has been a less happy story of the codification of the progressive reform efforts of common law judges.(fn3)

806

The Restatement (First) of Property has long been viewed as a partially failed reform exercise. This view has developed because of the Restatement's failure to "restate" the law of real covenants which run with the land in accord with the widespread acceptance of the utility of private land use control instruments. Prepared in the midst of the Great Depression, the Restatement (First) of Property took a dim view of covenants running with the land. Affirmative covenants that required the payment of money were viewed by the Reporter as potential engines of small landowner bankruptcy, and their use was discouraged. The law was "restated" to impose a number of restrictions on subsequent purchasers regarding enforcement of affirmative burdens and benefits. The primary restriction was an extremely restrictive definition of horizontal privity. The rules articulated in the Restatement (First) and their underlying assumptions were contested at every stage of discussion in the Institute (fn4) and savaged by commentators, such as Charles Clark, as ahistorical.(fn5) However, the restrictive theory of affirmative covenants prevailed and as a result of the covenant section, the Restatement (First) of Property was largely ignored by courts. Thus, it never enjoyed the prestige of the Restatements of Contracts and Torts and consequently, never became an important source of doctrinal reform.

The Restatement (First) did not curb the widespread use of real covenants and other private land use control devices. Private land use restrictions flourished in the decades following World War II. Private, or as they are now called, "common interest communities," were created throughout the country. A mix of legal and equitable restrictions were employed to create de facto constitutions for the governance of residential community associations (RCAs). Such restrictions are generically called covenants, conditions and restrictions (CCRs), or simply servitudes. Courts were very supportive of the use of real covenants, equitable servitudes and liens to tax homeowners for the

807

provision of community services and to regulate property use and individual behavior. This view was also supported by many scholars who praised the privatization of public services. The Restatement (First)'s concern with the use of real covenants to impose unjust private tax burdens proved largely unfounded, but a new set of concerns arose. Students of local government worried about the political relationship between RCAs and traditional public governments. Others worried that common interest community citizens were entitled to less protection from arbitrary RCA actions than citizens of public communities who are protected by the full force of the Constitution.(fn6)

In the 1970s, the American Law Institute (ALI) began the process of rehabilitating the Restatement (First) by bringing property law in line with changed social conditions. The Restatement (Second) of Property addressed the rapidly changing law of landlord-tenant. The common law granted tenants few rights and imposed few duties on landlords. The Kennedy-Johnson War on Poverty triggered the use of landlord-lord tenant law to impose affirmative maintenance duties on landlords to benefit tenants living in "slum" housing. The Restatement (Second) adopted most of the reforms of the law of landlord-tenant spawned by the War on Poverty, most notably the implied warranty of habitability.(fn7) The Restatement (Third) of Property has continued this reform tradition by validating the widespread creation of common interest communities by making it easy to create servitudes that create comprehensive regulation and taxation schemes. The Restatement (Third) also attempts to articulate non-Constitutional standards of judicial control which limit the use of servitudes that bump up against fundamental constitutional rights of individual expression and freedom from discrimination.

B. The Restatement (Third) of Property: Servitudes and the
Risks of Living in a Common Interest Community

Since the 1980s, the Restatement (Third) of Property: Servitudes, hereinafter referred to as the Restatement (Servitudes), has been aggressively reforming and unifying the law of easements, real covenants, equitable servitudes and profits a prendre in two not entirely consistent ways. The Restatement (Servitudes) both tries to correct

808

the mistakes of the Restatement (First) by liberalizing the rules for the creation and enforcement of real covenants, but at the same time carries forward the policy of the Restatement (First) that the enforcement of covenants should be rigorously policed by the judiciary. The Restatement (Servitudes) simplifies a confusing, but utilitarian, part of modern real property law. Privately negotiated instruments respecting the use of land are presumed to be an efficient and fair way for landowners to share the use of two or more tracts, to assume reciprocal burdens and benefits, and to assume the necessary financial burdens to effectuate the promises. Landowners are generally free to create any servitude arrangement that they clearly intend, unless there is a strong reason to restrain freedom of contract. However, the Restatement (Servitudes) also squarely situates the modern problems with servitudes in the context of the common interest community and the concern with the failure of these "private governments" to adequately protect minority rights.(fn8)

Common interest communities have been in place for over a century, but they are becoming more and more prevalent. After initial resistance, many people now choose condominium or town house living, either out of personal preference or economic necessity. The practice of sorting people by homogeneous architecture and behavior rules create islands of security and tranquility in the midst of a rapidly changing society. In addition to a desire for maintenance-free living, the fear of crime and social diversity is driving many people into planned, gated communities. In response, many architects and planners are trying to construct neo-traditional communities which offer the form of a smaller community. Neo-traditional communities offer more social interaction, but have less unpredictability and risk of "real" smaller communities. The regulation of the servitude regimes found in these communities is difficult because no consensus exists about the need for regulation.

Common interest communities are a mixed blessing because the benefits are tempered by legitimate concerns for their residents and for the larger society. Social commentators differ in their assessment of these communities. The views range...