(12) Covenants

What is a covenant?

A promise contained in a deed or lease that requires a party either to perform an affirmative act or refrain from certain conduct.

What types of obligations may a covenant impose?

It may require an affirmative act or require a party to refrain from certain conduct.

What are the two types of covenants?

Affirmative covenants and negative covenants.

What is an affirmative covenant?

A covenant requiring a party to perform an affirmative act.

What is a negative covenant?

A covenant requiring a party to refrain from specified conduct.

Is a covenant considered an interest in land?

Yes. Fleming states that a covenant is a legal interest in land, although jurisdictions are split.

Why does a covenant generally have to satisfy the Statute of Frauds?

Because it is a legal interest in land.

What issue should you always consider when determining whether a covenant was properly created?

Whether the covenant satisfies the Statute of Frauds.

When should you analyze only creation of a covenant and not whether it runs with the land?

When the original promisee (B) sues the original promisor (A).

When B (the original covenantee) sues A (the original covenantor), what is the only issue?

Whether the covenant was properly created (generally, whether there is a sufficient writing).

When B (the original covenantee) sues C (the successor to the covenantor), what issue must be analyzed?

Whether the burden of the covenant runs.

When D (the successor to the covenantee) sues A (the original covenantor), what issue must be analyzed?

Whether the benefit of the covenant runs.

When D (the successor to the covenantee) sues C (the successor to the covenantor), what issues must be analyzed?

Whether both the burden and the benefit run with the land.

What four elements must be satisfied for the burden of a covenant to run with the land?

Intent, Notice, Touch and Concern, and Privity of Estate.

What is the mnemonic for determining whether the burden of a covenant runs?

Intent, Notice, Touch and Concern, and Privity of Estate.

What is the first element required for the burden of a covenant to run?

The parties must intend the covenant to run with the land.

How is intent to have a covenant run with the land expressly shown?

By language such as "heirs, assigns, and successors."

What language commonly demonstrates express intent that a covenant run with the land?

"And his heirs, assigns, and successors."

How may intent that a covenant run with the land be implied?

From the purpose of the covenant and the surrounding circumstances.

When should you be cautious of Spencer's Case when analyzing intent?

Whenever determining whether intent exists for a covenant to run with the land.

What is the second element required for the burden of a covenant to run?

Notice.

What forms of notice satisfy the notice requirement?

Actual notice and constructive notice.

What is actual notice?

Personal knowledge of the covenant.

What is constructive notice?

Notice imputed by law, generally through proper recordation.

What is the third element required for the burden of a covenant to run?

The covenant must touch and concern the land.

What does it mean for a covenant to touch and concern the land?

It must affect the legal relationship of the parties as owners of a particular tract of land rather than affect them personally.

Must both the burden and the benefit touch and concern the land?

Yes.

How does the burden of a covenant touch and concern the land?

It restricts the use of the land, making it less valuable.

How does the benefit of a covenant touch and concern the land?

It enhances or increases the value of the land.

What is the final element required for the burden of a covenant to run?

Privity of estate.

Why should privity of estate generally be analyzed last on an essay?

Because it naturally transitions into the discussion of equitable servitudes.

What are the two types of privity relevant to the burden running?

Vertical privity and horizontal privity.

What is vertical privity?

Privity between an original party and that party's successor in interest.

Which relationship illustrates vertical privity in Fleming's diagram?

The relationship between A and C.

How is vertical privity created?

Through a grantor-grantee relationship when the deed is conveyed.

What estate must generally pass to establish vertical privity for the burden to run?

The entire estate.

What is horizontal privity?

Privity between the original covenantor and the original covenantee.

Which relationship illustrates horizontal privity in Fleming's diagram?

The relationship between A and B.

How is horizontal privity created?

By the parties sharing an interest in the land independent of the covenant at the time the covenant is created.

What independent property relationships satisfy horizontal privity?

Concurrent owners, landlord-tenant, grantor-grantee, and mortgagor-mortgagee relationships.

Does merely being neighboring landowners establish horizontal privity?

No.

Example: O conveys Lot 1 to A while reserving an easement, and A promises to build a fence. Is horizontal privity satisfied?

Yes. O and A share an independent property interest through the grantor-grantee relationship and reserved easement.

Example: Neighbor A promises Neighbor B that A's land will remain residential. Is horizontal privity satisfied?

No. They share no independent interest in land.

Example: A owns Blackacre and Whiteacre, conveys Whiteacre to B, and promises not to use Blackacre commercially. Does the burden run to C when A later conveys Blackacre to C?

Yes. Horizontal privity exists because A and B were in a grantor-grantee relationship independent of the covenant.

What three elements are required for the benefit of a covenant to run with the land?

Intent, Touch and Concern, and Vertical Privity.

Is notice required for the benefit of a covenant to run?

No.

How may intent be established for the benefit to run?

Expressly or impliedly when the covenant touches and concerns the land.

Must the covenant touch and concern the land for the benefit to run?

Yes.

What type of privity is required for the benefit to run?

Vertical privity only.

Which relationship illustrates vertical privity for the benefit running?

The relationship between B and D.

How is vertical privity established for the benefit to run?

By succession between the original covenantee and the successor.

Must the original covenantee transfer the entire estate for the benefit to run?

No. The original covenantee may transfer a lesser estate.

What is a party wall?

A wall constructed along the common boundary line of adjoining properties pursuant to a covenant.

In the classic party wall problem, what does the covenantee reserve?

The right to receive one-half of the construction cost from future owners.

In the classic party wall problem, what does the covenantor promise?

To pay one-half of the construction cost upon completion of the wall.

What property interest results from a party wall agreement?

Cross-easements.

Why are party wall easements considered appurtenant?

Because they involve two separate parcels of land.

Testable Issue: What four elements are required for the burden of a covenant to run?

Intent, Notice, Touch and Concern, and Privity of Estate.

Testable Issue: What three elements are required for the benefit of a covenant to run?

Intent, Touch and Concern, and Vertical Privity.

Testable Issue: What is the difference between vertical and horizontal privity?

Vertical privity exists between an original party and a successor; horizontal privity exists between the original covenantor and covenantee through an independent property relationship.

Testable Issue: Which lawsuits require analysis of burden, benefit, or both?

B v. A: creation only; B v. C: burden; D v. A: benefit; D v. C: both burden and benefit.

Testable Issue: What independent relationships satisfy horizontal privity?

Concurrent ownership, landlord-tenant, grantor-grantee, and mortgagor-mortgagee.

Testable Issue: Why are party wall agreements treated as appurtenant easements?

Because they create reciprocal easement rights involving two parcels of land.

Essay Rule: How should you analyze whether a real covenant runs with the land?

First determine who is suing whom, then analyze creation if necessary, determine whether the burden runs using Intent, Notice, Touch and Concern, and Privity, determine whether the benefit runs using Intent, Touch and Concern, and Vertical Privity, and conclude whether the covenant binds the parties.

Master Synthesis: What is the framework for analyzing real covenants?

Identify the parties, determine whether only creation or running is at issue, analyze the burden and/or benefit using the required elements, carefully distinguish horizontal from vertical privity, and conclude whether the covenant is enforceable against successors.