Real Covenants

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Types of Real Covenants

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restirctive or affirmative (prohibit use of property or require action by a property owner)

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Creation of real covenants

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"many jurisdictions apply statute of frauds to real covenants, but will allow estoppel and part performance to grant equitable relief with oral coveanants. They are intended to create a servitude upon the land for the benefit of another parcel of land
"

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Equitable servitudes

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Covenants may be implied in equity under some circumstances (equitable servitutdes)

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elements to demonstrate a real covenant

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enforceablility, intent to run, encoreability, touch and concern, privity of estate, notice

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What does not apply in Real Covenants?

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Equity

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Key to Real Covenants

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Notice

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Purpose of a covenant

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it is tied to and benefits the land for the benefited party. Not a promise to do entirely things that a person would have an interest in even if he DID NOT own the land. (an agreement to walk the dog from owner to renter does not qualify)

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Tying a covenant to a land

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"Covenant is enforceable

original parties intend the covenant to run with the land

the covenant touch and concern the land (directly relate to the land, and not merely personal in nature. Does not have to be physical, but affects the legal rights of the covenanting parties as landowners. This can apply to money payment if the money is going toward an interest (maintaining a common area) that benefits the land)

privity of estate exists between the original parties, as well as such parties and their successors

the purchaser of the burdened property have notice of the covenant (Benefited party does not need notice)

It also must be enforceable (not obscure and indecipherable)"

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Non-compete attached to land?

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courts are divided.... but most jurisdictions allow reasonable covenants of that nature to run with the land

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Prity and run with the land

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privity of estate must include both horizontal privity and vertical privity.

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Horizontal privity

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"transaction between covenantor and covenantee

used to be just landlord tenant (English), now can be a conveyance from one party to another. No continuing relationship is required"
"The horizontal privity of parties, must have an agreement AT THE TIME OF THE TRANSACTION. If a later agreement comes into being, then there is no horizontal privity, and the agreement won't transfer with the land.
"

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vertical privity

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"original party and the party’s successor

The only issue courts have with this is when less than all of the land is transferred through sale. The covenant would not apply to the recipient."

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Homeowner association

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"court will only interrupt if it is flagrant or biased against the recipient (aethetics)

If the homeowner’s declaration contains a provision to make amendments to the provisions, the court is likely to rule that any changes to the declaration will likely be held up if it is reasonable. (Reasonableness is key)"

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Purpose of restrictive covenants in homeowners groups

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to increase or maintain the value of the land by the joint undertaking of the neighbors

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Factors of reasonableness in restricitve covenants on alienation

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"the one imposing the restraint has some interest in the land that he is seeking to protect

The restraint is of limited uration

the enforcement of the restraint accomplishes a worthwhile purpose

the type of conveyances prohibited are ones not likely to be employed to a substantial degree by the one restrained

The number of persons to whom alienation is prohibited is small

The one upon whom the restraint is imposed is a charity
"

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Factors of unreasonableness in restricitve covenants on alienation

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"restraint i capricious

restraint is imposed for spite

one imposing the restraint has no interest in land that is benefitted by the restraint

restraint is unlimited in duration

number of persons to whom alienation is prohibited is large"

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Condominium special aspects

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"defined in spatial terms (each owner holds title to a unit)

An undivided interest in the space you hold title to, as well as common elements such as the parking lot and recreational areas.

Governed by statute. That makes it so the special laws needed for Condos to work exists (a unit can be mortgaged, taxed etc only if the statute provides for it. Additionally partition of the land and building might not be allowed in some areas)"

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Conversion of property to a condo

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may have to declare a moratorium on conversions, condition conversion upon approval by a percentage of the tenants, and requiring that tenants receive certain advance notice of the conversion

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Time-sharing

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"may take one of two forms; denancy in common or interval ownership

under a tenancy in common, each owner receives an undivided fee simple interest in a unit as a tenant in common. They receive exclusive right to use the unit for a certain time each year

under interval ownership formulation with two property interests 1 (tenancy is fixed for the same time each year over a designated number of years ) and 2(and undivided interest in a vested remainder in fee simple which becomes possessory at the end of the duration of the first property interest)"

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Ambiguity

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if language is not ambiguous, then 4 corners of the contract as a matter of fact. Otherwise, question of fact that parol evidence is used

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Time limits on restrictive covenants

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Usually have an end date, AND a section for renewal. Renewal can be either automatic, unless parties vote to end. Or they may be manual, where parties vote to extend and if they don't, it won't renew

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Changes outside a subdivision

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beyond the control of lot owners. When changed or altered conditions in a neighborhood render the terms of a restrictive covenant useless, the courts will refrain from enforcing restrictions. Courts worry about a domino effect of all neighboring restrictions falling however. The middle ground is a limited lifting of the restriction in a manner that makes the property valuable for another purpose (change from single family building purposes to multifamily, for example)

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When is an covenant enforceable

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i. Must be reasonable
ii. Unambiguous and reasonable, so that the parties know what is promised
iii. May violate public policy against unreasonable restraints on alienation or run afoul of constitutional or statutory provisions prohibiting discrimination on various grounds including race, religion, sex, or national origin
1. Such as Fair Housing Act of 1968, Civil Rights Act of 1868, Shelley v. Kramer
iv. Reasonableness issue is often entwined with the question of notice of the covenant

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Touch and Concern (Criticized)

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ii. Regardless of intent, a covenant will not run with the land to burden or benefit successors unless it touches and concerns the land
1. Best definition:
a. Requires that the covenant directly relate to the land in some way and not concern merely a collateral matter of a personal nature
b. Must affect relations, advantages, and burdens of parties to covenants, an owner of a particular parcel of land and not merely members of community, based on effect of covenant rather than on the technical difficulties
2. Ordinarily, touch and concern does not impede the running of a covenant at law once the court is satisfied as to the intent of the parties

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Does a covenant have to have a physical effect on the land?

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Covenant does not need to have a physical effect on the land, only some economic impact on the parties' ownership rights