IV. Land Use Restrictions (Servitudes)

IV. Land Use Restrictions (Servitudes)

• 
  Servient estate: the land “burdened” by the servitude
  
• 
  Dominant estate: the neighboring land “benefitted” by the servitude
  

1. 
   Negative easements
   
2. 
   Restrictive covenants
   
3. 
   Equitable servitudes
   

• 
  All obligations RESTRICTING what one can do with one’s own land are now just negative or restrictive covenants
  
• 
  AFFIRMATIVE rights to do something on someone else’s land are easements
  

1. 
   What are the formal requirements to create a right or obligation that will run with the land? When are informally created expectations enforceable by or against subsequent owners?
   
2. 
   When the meaning of a servitude is unclear, how should ambiguities be interpreted?
   
3. 
   What are the substantive requirements for the validity of servitudes? Question involves both
   
   1. 
      Determining when the land use restrictions are immediately void as against public policy
      
   2. 
      Determining when rights or obligations although valid as contracts will not be allowed to run with the land
      
4. 
   How can servitudes be modified or terminated?
   

A. LICENSES

• 
  Permission to enter property (typically temporary); informal and revocable at will by the owner of the land. No writing required to create a license. Not transferable nor can they be inherited or left by will.
  
• 
  Licenses are not classified as servitudes because they are revocable at will
  
• 
  Licenses cannot be freely revoked in at least 4 circumstances:
  

1. 
   License coupled with an interest: Owner sells personal property to another that is located on her own land generally gives permission enter the land to remove the property
   
2. 
   Promise to grant license (e.g. theatre and movie tickets) – transferrable
   
3. 
   Easement by estoppel
   
4. 
   Constructive trusts
   

• 
  Elements: (1) permission, (2) reasonable reliance, (3) substantial investment, and (4) to avoid injustice
  
• 
  Rationale is that to allow revocation would allow the grantor to commit a kind of fraud, whether intentional or negligent
  
• 
  Some courts will only find an easement by estoppel if the grantor intended to grant an easement rather than a license
  

• 
  Facts: Appellants purchased property and gave permission for haul road to be cut for purpose of moving coal from a newly opened mine. Appellees later bought building site and used haul road with permission of appellants.
  
• 
  Rule: Where a license includes right to erect structures and acquire an interest in the land in the nature of an easement by construction of improvements thereon, licensor may not revoke the license and restore premises to former condition after licensee has exercised privilege given by the license and erected improvements at considerable expense
  
• 
  Holding: Prior use of roadway sufficient to establish easement by estoppel
  

• 
  Elements: (1) breach of faith/trust, (2) deprivation of unowned property, and (3) unjust enrichment
  
• 
  This is done to prevent unjust enrichment of the legal holder by holding that party as trustee for the beneficial use of the wronged party
  
• 
  Some courts limit it to relationships between family members or others have a so-called confidential relationship
  

• 
  Facts: Owners built and improved summer homes around lake with consent of former landowner. Cabin owners signed “license agreements,” but were never served with notice of termination and breached many provisions of the licenses. New landowner entered into contract to purchase property and seeks to expel cabin owners from the property.
  
• 
  Rule: When the validity of the agreement is a fact in dispute, parol evidence is admissible, not to vary the terms of the instrument, but to show that what appears on its face as a valid, binding contract is in fact no such thing
  
• 
  Rule: Courts may find creation of a constructive trust where conduct of grantor gives grantee an implied assurance of a somewhat permanent tenure of rights so that substantial investment is made in reliance on that assurance
  
• 
  Holding: Result is equitable where cabin owners long-term rights and value of their improvements are recognized and landowner obtains method to eventual unimpeded title to property
  

D. EASEMENTS IMPLIED FROM PRIOR USE

• 
  Elements: (1) common ownership of claimed dominant and servient parcels and subsequent conveyance or transfer separating that ownership, (2) before the conveyance or transfer, common owner used part of the united parcel for the benefit of another part, and use was apparent and obvious, continuous, and permanent, and (3) claimed easement is necessary (or “important to”) and beneficial to the enjoyment of the parcel conveyed or retained by the grantor or transferor
  
• 
  Owner divides property and sells one parcel, retaining the other for herself
  

• 
  Owner intends to retain an easement over the property conveyed to the buyer; burdened property (servient estate) is subject to an easement by reservation
  
• 
  Owner intends to grant the buyer an easement over the property she is retaining; benefited property (dominant estate) is attached to an easement by grant
  

• 
  Granted only if:
  

1. 
   Two parcels were previously owned by a common grantor
   
2. 
   Parcel was previously used for the benefit of the other parcel in a manner that was visible and continuous
   
3. 
   Use is reasonably necessary or convenient for the enjoyment of the dominant estate
   

• 
  Most litigation is on this third issue.
  
• 
  Absolute necessity is NOT needed for an easement implied from prior use
  

• 
  Facts: Plaintiff and predecessors in title owned 3 parcels of land and then convey the middle parcel to defendant. A shopping center on the east parcel and an apartment complex on the western parcel were both developed prior to the sale. Plaintiffs claim an easement providing access to the rear of the shopping center on the eastern parcel used by trucks for delivery. Plaintiffs claim a second easement in a driveway providing entry to the apartment complex on the western parcel.
  
• 
  Rule: in absence of an expressed agreement to the contrary, the conveyance or transfer imparts a grant of property with all the benefits and burdens which existed at the time of the conveyance of the transfer, even though such grant is not reserved or specified in the deed
  
• 
  Rule: in the case of an easement implied from pre-existing use, proof of the prior use is evidence parties probably intended an easement
  
• 
  Holding: Affirmed; evidence of prior use of driveways sufficient to fulfill elastic necessity requirement
  

• 
  Requires ABSOLUTE NECESSITY
  
• 
  Some courts though will not grant an easement by necessity if the owner intended to sell and the grantee knew she was buying a landlocked parcel. Others though say the ultimate goal is promoting the development of property and prevent the property from becoming landlocked.
  

• 
  Facts: Plaintiffs inherit tract of land and defendant inherits another tract, from what was once a single tract of land. Plaintiffs claim only available means of entry to their land from highway is by means of a right of way through defendant’s tract.
  
• 
  Rule: Where an owner of land conveys a parcel which has no outlet to a highway except over the remaining lands of the grantor or over the land of strangers, a way by necessity exists over the remaining lands of the grantor
  
• 
  Holding: When no other way of entry exists, subsequent grantees may avail themselves of the dormant easement implied in the deed severing the dominant and servient estates.
  

• 
  Created by deed (normally signed only by grantor)
  
• 
  Can be created by a deed conveying easement alone or at same time parcel of property is sold
  

• 
  Exceptions (prescriptive, by estoppel, implication, necessity, constructive trusts)
  

• 
  Land use restrictions not within these traditional categories can still be created through covenants
  
• 
  Justification for limiting recognized negative easements is that covenants that become overly burdensome or of insubstantial benefit can be wiped out through doctrines of changed conditions and undue hardship, which are not traditionally available to easements
  

1. 
   In writing. This requirement is met even if it is not included in the subsequent deeds, subsequent owners are on notice if it is in the “chain of title”
   
2. 
   Intent. Original grantor who created the easement intended it to run with the land.
   

• 
  If the conveyance is ambiguous, the intent may be implied
  
• 
  If easement appears not to be personal, but to convey a permanent right, courts ordinarily will hold it was intended to bind future owners
  

3. 
   Notice. Three types of notice:
   

• 
  Actual: subsequent owners in fact know of the existence
  
• 
  Inquiry: visible signs would indicate such an easement and would trigger a reasonable buyer to do further investigation to discover if such a deed exists
  
• 
  Constructive: deed conveying the easement is in the proper registry of deeds in the proper place and the deed is in the chain of title, this means subsequent owners should know of its existence.
  

• 
  Appurtenant easement: benefit runs with the land, and if it does, it is treated as if it were attached to that particular parcel of land
  

• 
  Can be indicated by recitation in the deed calling easement “appurtenant” or stating it is intended to benefit future owners of buyer’s property
  

• 
  Easement in Gross: benefit does not run with the land and there is no “dominant estate”, belongs specifically to the grantee (e.g. right of way for utility lines)
  

• 
  Facts: Defendants requested easement to section of north tract of plaintiffs’ property. Plaintiffs agreed in return for promise of an easement along the southern portion of defendants’ tract. Express terms were contained in written agreement. Occupants of plaintiffs’ mobile home development used easement as a practice motorcycle runway and defendants refused to grant easement as promised.
  
• 
  Rule: Parol evidence may always be used to explain ambiguities in written instruments and ascertain the intent of the parties
  
• 
  Rule: Strong presumption (in WA) that easements are appurtenant to land; not in gross when there is anything in the deed or situation indicating it was intended to be appurtenant
  
• 
  Rule: Servient owner is entitled to impose reasonable restraints on a right of way to avoid a greater burden on the servient owner’s estate than that originally contemplated in the easement grant, so long as such restraints do not unreasonably interfere with dominant owner’s use
  
• 
  Holding: Reversed and remanded; decree to be modified to declare easement for ingress and egress for road and utility purposes to be appurtenant to property
  

• 
  Courts prefer appurtenant easements because they limit the number of people with easements and easements in gross create more uncertainty about land use rights
  

• 
  Facts: Defendants propose to divide property into one acre parcels for residential development. Plaintiff owns adjoining property and operates a resort business. The road to the proposed development is narrow and unpaved, often wide enough for only a single car.
  
• 
  Rule: owner of an easement may prepare, maintain, improve, or repair the way in a manner and to an extent reasonably calculated to promote the purposes for which it was created, but may not cause an undue burden upon the servient estate, nor an unwarranted interference with the independent rights of others who have a similar right to use
  
• 
  Holding: Privilege of use of roads is appurtenant to dominant estate; owners may not widen the road and may not cause an undue burden on the servient estate having a similar right of use
  

• 
  Facts: Plaintiffs’ predecessors granted right to establish telephone service on or over rear five feet of all lots in subdivision and necessary easements. Easements conveyed to present holder.
  
• 
  Rule: Where servient owner retains privilege of sharing benefit conferred by easement, it is said to be “common” or non-exclusive and therefore not subject to apportionment by owner
  
• 
  Rule: owner of easement may license or authorize third persons to use its right of way for purposes not inconsistent with principal use granted
  
• 
  Rule: easements in gross for commercial purposes are particularly alienable and transferable
  
• 
  Holding: Narrow interpretation rejected, purpose of previous easements was acquisition and maintenance of electrical power and communications
  
• 
  #Singer – court’s ruling here is wrong, if you agree with court, you support a broader reading of easements than has historically been followed
  

1. 
   Is the use a kind contemplated by the grantor?
   
2. 
   Is the use so heavy that it is an unreasonable burden on the servient estate?
   
3. 
   Can the easement be subdivided?
   

• 
  Non-exclusive easement in gross: when grantor (owner of servient estate) retains right to use easement in conjunction with grantee, easement is generally held to be non-apportionable
  
• 
  Exclusive easement in gross: grantor has no right to use easement in conjunction, easement is generally held to be apportionable
  

1. 
   By agreement in writing (release)
   
2. 
   By their own terms (ex: easement states it will last for only 10 years)
   
3. 
   By merger (when the owner of the servient estate becomes the owner of the dominant)
   
4. 
   By abandonment if the owner shows by conduct the intent to abandon it
   
5. 
   By adverse possession or prescription by the owner of the servient estate or third party
   
6. 
   (Sometimes courts terminate) By frustration of purpose where the purpose of the easement is impossible to fulfill or that the easement no longer serves its purpose because of changed conditions,
   

A. COVENANTS

• 
  Horizontal privity: relation between the original convenanting parties,where one piece of property is burdened for the benefit of another. There are two types of horizontal privity:
  

• 
  Mutual: exists when two owners have a simultaneous interest in the same parcel of land, such as in landlord-tenant relationships. Can also be established when one parcel has an appurtenant easement over another’s parcel (Whitinsville) Mutual privity is missing if an owner sells land to another and the grantor retains no interests in the land being sold.
  
• 
  Instantaneous: a covenant intended to burden one parcel for the benefit of another can become attached to both parcels if it is created at the moment the owner of one parcel sells the other parcel. Thus, a covenant contained in a deed of sale transferring a property interest will satisfy horizontal privity. This is demonstrated in Whitinsville when Kotseas granted the deed to Trust.
  

• 
  Vertical privity: relation between the original covenanting parties and their successors in interests, exists when an owner succeeds to the interest held by an original covenanting party. In other words, the benefits and burdens are meant to run to succeeding owners of both parcels. The owner must transfer the entire estate that he owns, for example one who owns a fee simple and conveys a life estate has not created vertical privity. There are two types of vertical privity:
  

• 
  Relaxed: imposes burden on any future possessor of the burdened land and the benefit of the covenant on any future possessor of the benefited land
  
• 
  Strict: includes technical requirement that grantor not retain any future interests in the land
  

• 
  Many courts make exceptions to policy restricting enforcement of covenants whose benefit is held in gross when the covenant is held by a homeowners association on behalf of owners in the neighborhood, by a government entity, or by a charity
  
• 
  Prior owner is not legally responsible for actions off subsequent owners of the burdened land
  
• 
  Leases are treated differently from ales because landlords retain substantial powers to control the use of leased premises
  

1. 
   Writing. Ordinarily reduced to writing as part of a lease or deed
   

• 
  Developers may record a declaration of restrictions applicable to entire subdivision and/or a plat (map showing restrictions) before any lot is sold
  
• 
  Most states find that a covenant in a prior-recorded declaration or plat meets writing requirement
  
• 
  Representations in sales literature do not count as writings; must be in document transferring property interest or prior recorded document in chain of title
  

2. 
   Notice. Three kinds of notice:
   

• 
  Actual: subsequent owners actually informed or otherwise made aware
  
• 
  Inquiry: any condition on premises indicated property burdened by covenant
  
• 
  Constructive: covenant recorded in the registry of deeds
  

3. 
   Intent to run with the land. Deed or lease including restrictive covenant deemed to show intent to run with land if it recites (1) covenant made to grantor or grantee and “their heirs or assigns” and/or (2) it “is intended to bind future owners” of the parcel or explicitly states covenant “intended to run with the land”
   

• 
  Covenant benefiting owner of neighboring land presumptively intended to run with land so long as it touches and concerns the land
  

4. 
   Touches and concerns. Obligation intended to and legitimately benefits current and future owners of the dominant estates.
   

• 
  Burden side: obligation relates to use of the land and is intended to benefit current and future owners of the dominant estates
  
• 
  Benefit side: obligation improves enjoyment of that land or increases its market value
  
• 
  Restatement (Third) would abolish touch and concern test and provide covenants will run with land unless they are unconscionable, without rational justification, or otherwise violate public policy
  

5. 
   Privity of estate. (see above)
   

• 
  Four of the five requirements are formalities, while only one (touch and concern test) is substantive
  

• 
  Formal requirements: regulate manner in which right or obligation is created; designed to ensure actors clearly communicate their intentions
  

B. CREATION OF COVENANTS

• 
  Facts: Winn-Dixie operates as anchor tenant of shopping center and lease grants exclusive right to sell groceries in the shopping center. Exception permits other stores to sell groceries, provided they devote no more than 500 square feet to groceries. Defendant begins operating a Dollar General store violating exclusive grocery provision.
  
• 
  Rule: Covenant running with the land differs from a personal covenant in that former concerns property conveyed and occupation and enjoyment thereof, while latter is collateral or not immediately concerned with the property
  
• 
  Holding: Grocery exclusive was a real property covenant that ran with the land and not a personal contract obligation
  

• 
  Facts: Defendants owned land that they sold subject to restrictive covenant promising not to use retained land in competition with discount store contemplated by grantee, and to only use it for enumerated business purposes. Defendants later leased portion of retained land to CVS for discount department store and pharmacy.
  
• 
  Rule: Anticompetitive covenants do “touch and concern” the burdened land, because they limit land use
  
• 
  Rule: Anticompetitive covenants do “touch and concern” benefited land, because they enhance its market value
  
• 
  Rule: Covenant restraining competition will be enforced if it is reasonably limited in time and space and consonant with the public interest
  
• 
  Holding: Both benefit and burden of covenant ran with land; remanded to determine whether anti-competitive covenant was reasonable
  

• 
  Facts: Plaintiff operated supermarket and sold property subject to a restrictive covenant running with the land providing land would not be used as a supermarket or grocery store for 40 years. Closing imposed a hardship on nearby residents who were denied access to grocery store. Housing Authority purchased property and sought to rent it as a grocery store.
  
• 
  Rule: Covenants will run with the land if they are reasonable; reasonableness determined by fact sensitive inquiry into present business conditions and other factors such as (1) covenant’s impact on considerations exchanged, (2) reasonableness concerning area and duration, (3) whether it violates public policy as unreasonable restraint on trade or otherwise interferes with public interest
  
• 
  Holding: Remanded to determine whether enforcement would be reasonable
  

• 
  Keep in mind that in property law, damages are often though to be inadequate because of the unique value attached to the LOCATION of land and the desire to use particular unique structures. Granting injunctions though has always been discretionary.
  

• 
  Benefits of injunction: (1) parties get to bargain to determine who values entitlement the most, and (2) avoid expense of litigation and inaccuracy of damage awards set by unknowledgeable third party
  
• 
  Benefits of damages: litigation can produce a result where transaction costs might prevent the parties from bargaining to a mutually beneficial result
  

• 
  Many states require developers to file a declaration prior to selling individual lots that will describe the area covered by the common plan and recite the covenants applicable to the lots. If there is a common scheme, then covenants restricting land in a subdivision are mutually enforceable by and against all owners of the properties.
  
• 
  Common plan applies to each owner partly because this is the intent of the developer/grantor and partly because of reliance on it by buyers
  

1. 
   Presence of restrictions in all or most deeds
   
2. 
   Recorded plat (map) showing restrictions
   
3. 
   Presence of restrictions in the last deed (suggests intended beneficiaries are other lots of development)
   
4. 
   Observance by owners of similar development of their land and conformity to the written restrictions
   
5. 
   Language stating covenants are intended to run with the land
   
6. 
   Recording of a declaration stating covenants are intended to be mutually enforceable
   

1. 
   Some deeds are unrestricted
   
2. 
   Restrictions are non-uniform
   

• 
  Facts: Plat for subdivision divides property into seven blocks A-G, does not further subdivide blocks C, D, E, and F, but does divide blocks A, B, and G into 31 lots. Deeds contain restrictive covenants prohibiting business or commercial use, restricting land to residential use, and providing that restrictions could be changed by vote of ¾ of the owners, with voting rights based on front footage holdings. Developers later attempted to sell block F and lots from block G for purpose of building marina, private club and condo.
  
• 
  Rule: Provisions allowing waiver or modification of restrictive covenants by majority vote constitute strong evidence of general scheme or plan of development
  
• 
  Holding: Restricted district need not be the whole subdivision nor include the whole retained tract; hilltop and block G were outside scope of restricted development plan
  

• 
  Facts: Defendant sought to build gas station on land. Adjacent land had once been owned by a single owner who imposed restrictive covenants on 53 of the 91 lots, limiting them to residential purposes. No restrictions appear in chain of title to McLean lot.
  
• 
  Rule: Uniform residential character of surrounding properties puts owner on inquiry notice to determine whether there were restrictive covenants on neighboring lots that might be interpreted to create a plan to restrict entire neighborhood to residential use
  
• 
  Holding: Court imposed implied reciprocal negative servitude restricting McLean lot to residential purposes
  

• 
  Facts: Defendants built a snow tunnel on their lot without approval of architectural control committee acting under recorded declaration regulating land use. Declaration containing restrictions was not recorded until after they had purchased their lot and because of a mistake, their deed did not mention the restrictions.
  
• 
  Rule: Restrictions must be in writing (statute of frauds) or referred to in the deed of the land sought to be restricted or appear in the chain of title to that parcel; evidence of knowledge of grantor’s intent is not admissible under parol evidence rule
  
• 
  Holding: Defendants not subject to restrictions because there was no writing in their deed limiting the use of their land
  
• 
  Dissent: Buyer cannot take deed with actual knowledge of a general plan of mutual restrictions applicable to entire subdivision and thereafter violate all restrictions with impunity merely because of inadvertent omission from individual deed
  

A. INTERPRETATION OF AMBIGUOUS COVENANTS

• 
  Facts: Appellant plans to establish group home for 8 unrelated mentally retarded persons. Appellees protest under restrictive covenant in subdivision, limiting property to residential purposes only, specifying single or double family dwellings.
  
• 
  Rule: When there is any ambiguity of substantial doubt as to the meaning, restrictive covenant will be read narrowly in favor of the use of free property
  
• 
  Holding: Reversed; intended use is residential and appellant does not intend to alter the existing structure, which is consistent with a single family home and thus does not violate the covenant
  

• 
  Intent must be shown by express language in deed or declaration, supplemented with extrinsic evidence where necessary to interpret an ambiguity
  
• 
  Restatement (Third) suggests it is no longer generally acceptable that courts should err on the side of unburdening property from restrictions; new approach favors security and reliance interests of those purchasing in reliance on restrictive covenants and limitations on land use may promote alienability
  

• 
  Some courts, like Blevins, hold restricting property to “single-family dwellings” was intended to regulate architectural style rather than relationship among occupants
  
• 
  Other courts hold such restrictions express clear intent to regulate use of dwelling as well as structure
  

• 
  Some courts hold a group home provides an environment therapeutically designed to emulate a more conventional family environment and constitutes a “family” or define a “family” as “a stable housekeeping unit of two or more persons emotionally attached to each other and share a relationship that emulates traditional family values, promotes mutual protection, support, happiness, physical well-being and intellectual growth and is not in violation of the penal laws”
  
• 
  Other courts have held “family” means “nuclear or extended” family and group home does not constitute a family because its occupants are unrelated by blood, marriage, or adoption
  

• 
  Several courts have held that covenants against operation of group homes are unenforceable because they violate strong public policies prohibiting discrimination against people with disabilities
  
• 
  Other courts have held it is neither unreasonable nor against public policy as it does not impede furtherance of the public’s interest in developing alternative residential care for the elderly; it does prohibit the location of that care facility when it violates the contractual rights of the parties
  

• 
  Common interest element is based on the fact that owners are burdened (or benefited) by servitudes that require them to pay fees to maintain commonly owned property or to finance the operations of the association
  
• 
  Common conflicts: (1) unit owners vs. developers, and (2) owners vs. owners
  

• 
  Greater financial interdependence of cooperative owners makes this a more fragile structure than the condominium structure
  

• 
  Community land trusts: nonprofit corporation that generally has an elected board of directors and an open members that buys and holds title to property and while retaining title to the land, the trust sells the building located on the land to a low-income purchaser. This separation of owning the land and building requires a ground lease that as owner of the land, grants possessory rights to the owner of the building and often lasts a long period such as 99 years. A crucial aspect of this is the agreement that the building will be sold only to the community land trust or to another low-income owner at a price well below market value.
  
• 
  Limited equity cooperative: similar to a community land trust, but organized like a regular cooperative; contracts allow sale of owner’s shares at a fixed price, preventing owner from benefiting from increases in the market value of the unit; often gives cooperative right of first refusal to purchase shares at the prearranged price
  

• 
  Facts: Defendant recorded restrictive covenants on subdivision that were used as sales tool plaintiffs relied on in purchasing a lot and constructing their home. Majority of owners have power to change membership of subdivision’s association, restore to it any of its powers and duties, and association may make amendments and/or exceptions to these restrictions, covenants and reservations without consent of owners.
  
• 
  Rule: Restrictive covenants must be reasonable, with due regard for the property rights and investments of the persons who relied upon the residential covenants
  
• 
  Holding: Reversed and remanded; exceptions applied in unreasonable manner, breaching covenants
  

• 
  Many states have also passed statutes regulating these contracts, often providing ability to reject to supermajority vote
  

• 
  Such covenants are unenforceable under constitutional, statutory and common law and may even subject those who enter into them to monetary liability under civil rights statutes.
  
• 
  Covenants that prohibit sale or lease of dwellings to, or occupancy by persons on the basis of race violate federal civil rights statutes including the federal Fair Housing Act and the Civil Rights Act of 1866. Today it is also likely they would be held to violate public policy under common law.
  

• 
  Those who defend doctrine argue that it acts as a vital protector of individual liberty and privacy by exempting private conduct from regulation by constitutional doctrine
  
• 
  Those who oppose doctrine argue that it raises the specter of government regulation of virtually all “private” conduct
  
• 
  Constitutional right to equal protection of the law may be outweighed by a countervailing constitutional right to privacy and freedom of association
  

• 
  Facts: 30 of 39 owners signed an agreement providing “no part of property or any portion thereof shall be, for said term of Fifty-years, occupied by any person not of the Caucasian race.” Plaintiffs, African-Americans, received for consideration a warranty deed to a parcel subject to said covenant. Trial court found that plaintiffs had no actual knowledge of restrictive covenant at time of purchase.
  
• 
  Rule: Fourteenth Amendment erects no shield against merely private conduct, however discriminatory and wrongful, thus restrictive agreements alone cannot be regarded as a violation of any rights guaranteed by the Fourteenth Amendment
  
• 
  Rule: Enforcement by state courts in imposing penalties or depriving parties of other substantive rights through restrictive covenants, without providing adequate notice and opportunity to defend, has long been regarded as a denial of the due process law guaranteed by the Fourteenth Amendment
  
• 
  Holding: State action was present in the case as parties were willing participants in transaction that would have been completed absent intervention of the state courts
  

• 
  Facts: US Senator Bacon conveyed a park in trust to City of Macon, for use of white residents only. When city allowed African Americans to use the park, board of the managers sued to remove city as trustee and replaced by private board that could operate park on discriminatory basis.
  
• 
  Rule: Public character of parks requires they be treated as a public institution subject to command of the Fourteenth Amendment, regardless of who has title under state law
  
• 
  Rule: Closure of a city’s public pool to prevent integration is not a violation of the equal protection clause because it treats all races equally by denying everyone access to the pool (Palmer)
  
• 
  Holding: Court initially ruled sole purpose of trust had failed and title reverted to grantor’s heirs. When appealed to Supreme Court again, Court held closing did not constitute a violation of equal protection clause because impetus to close park came from a private party and not state officials.
  
• 
  Dissent (Brennan): Even when reverted to private owners, state statutes and court enforcement permits the closing of a public park for discriminatory reason after having been operated for nearly half a century, permeating the situation with state action
  

1. 
   Anticompetitive
   
2. 
   Discriminatory
   
3. 
   Restraint on alienation
   
4. 
   Speech, religion, association
   

• 
  Most cases concerning anticompetitive covenants occur in the context of shopping center leases
  
• 
  Most claims proceed on the basis of federal antitrust policy contained in the Sherman Antitrust Act
  
• 
  The rule of reason requires the court to examine the circumstances to determine whether the operation of the covenant actually effectuates an unreasonable restraint on competition. The court will first define the relevant product/service market and the effective geographic area in which competition is likely to be present
  
• 
  Second it will compare the anticompetitive effect of the covenant with its pro-competitive effect. An anticompetitive covenant may increase competition because it provides security that induces a new competitor to enter the market, thereby generating new business and competition.
  

• 
  Facts: Plaintiff operated supermarket and sold property subject to a restrictive covenant running with the land providing land would not be used as a supermarket or grocery store for 40 years. Closing imposed a hardship on nearby residents who were denied access to grocery store. Housing Authority purchased property and sought to rent it as a grocery store.
  
• 
  Rule: 8 factors to be used in determining reasonableness of anticompetitive covenant: (1) intention of parties, (2) impact on considerations exchanged, (3) clear and expressly stated restrictions, (4) writing, recorded and actual notice, (5) reasonable concerning area, time, and duration, (6) imposes unreasonable restraint on trade or secures monopoly, (7) interferes with public interest, and (8) “changed circumstances”
  
• 
  Holding: Affirmed; covenant was so contrary to public policy that it should not be recognized as a valid, enforceable obligation
  

• 
  Touch and concern.
  

• 
  NJ (“reasonableness”). Obligations reasonable if they benefit other owners in the community or if all owners are benefited by reciprocal obligations imposed on all owners in the community
  
• 
  Cal (“unless unreasonable”). Enforceable unless unreasonable
  
• 
  Restatement (Third) notes that servitudes are presumptively valid
  

B. RULES AND BY-LAWS

O’Buck v. Cottonwood Village Condominium Association Inc., Alaska (1998)

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  Facts: Condo board adopts rule prohibiting mounting of television antennae on building to protect roof and made cable system available as alternative. Condo declaration empowers board to adopt rules as long as they are non-discriminatory and to preserve uniform exterior appearance
  
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  Rule: Unit owners may not rely on courts to strike down reasonable rules on grounds of differences in aesthetic tastes
  
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  Holding: Board interests in enhancing marketability of units justifies small financial burden placed on owners
  

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  Facts: Members of condo complain to Board about repeated use of common auditorium for religious services. Majority vote imposes prohibition of religious services “of any kind” in auditorium or other common elements
  
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  Rule: Right to peaceably assemble has traditionally been interpreted to apply to right of citizens to meet to discuss public or governmental affairs
  
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  Holding: Affirmed; prohibition is reasonable
  

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  Rationale: threatens stability of common living arrangement, hampers board effectiveness
  

El Di, Inc. v. Town of Bethany Beach, Del. (1984)

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  Facts: Chain of title for lot includes restrictive covenants prohibiting both sale of alcoholic beverages on property and non-residential construction. Since purchase of lot 15 years ago, BYOB policy permitted at restaurant on lot.
  
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  Rule: Court will not enforce restrictive covenant where a fundamental change has occurred in the intended character of neighborhood that renders the benefits underlying imposition of the restrictions incapable of enjoyment
  
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  Holding: Changed conditions in surrounding district make it unreasonable and inequitable to enforce restrictive covenant
  
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  #Singer – Be prepared to address 3 possible interpretations on exam
  

1. 
   FS determinable (“shall cause said lot to revert”)
   
2. 
   FS condition subsequent (“condition”)
   
3. 
   Covenant
   

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  Restatement (Third): relief granted only if purpose of servitude can no longer be accomplished
  
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  Restatement (Third): alters changed condition doctrine by (1) extends doctrine to easements, (2) uses termination rules to substitute for controls traditionally applied through “touch and concern” test, and (3) suggests modification of covenant in lieu of termination if modification will allow covenant to serve original purpose
  
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  #Singer – ALWAYS ON EXAM – Don’t get this wrong – Not All changes in condition qualify to render covenant unenforceable
  

D. RELATIVE HARDSHIP

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  Restatement (Third): treats relative hardship as a factor to consider in determining availability and selection of remedies
  

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  P violated the covenant himself (unclean hands)
  
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  P has tolerated previous violations of the covenant by the owner of the servient estate (acquiescence)
  
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  P has tolerated violations of the covenants by owners of other restricted parcels in the neighborhood covered by the covenant (abandonment)
  

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  Language in the instrument that states it will terminate after a certain number of years
  
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  Merger where the burdened and benefited estates come under ownership by the same person
  
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  Release where all involved parties agree in writing to terminate or release the property from it
  
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  Prescription where open and notorious violation of the covenant without permission for the statutory period may terminate the covenant by operation of the statute of limitations.
  

Blakeley v. Gorin, Mass. (1974)

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  Facts: Commonwealth filled in tidal flats and sold lots for residential use, subject to restrictions in conformity with a comprehensive land use plan.
  
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  Rule: Denial of specific enforcement of covenant may be warranted where: (a) changes in the character of the properties affected reduce need for restriction, (b) continuation of restriction impedes reasonable use of land and impairs growth of neighborhood or municipality inconsistent with public interest, (c) enforcement, except by money damages, is for any reason inequitable or not in the public interest
  
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  Holding: Reversed and remanded; restriction not specifically enforced and damages awarded