4. Relation b/t equitable servitudes and negative easements?
C. Covenants Running with the Land
1. Why they arose?
a. covenants are frequently used as land planning tools and if the covenants did not run with the land it would be impossible to determine how the land will be used in the future
i. you may rely on the promise to develop your land in a certain way -- the covenant is no good if the person can get out of the covenant by selling the land
ii. transaction costs of recontracting with each owner and uncertainty of each owner agreeing
2. Common Law Roadblocks?
a. common law set up lots of roadblocks to the runing of the burden and benefit with the land
i. if you clutter up the land with all of these restrictions then sooner or later you are going to place restrictions on alienation
3. Rules from Spencer's case about the running of the burden of covenants
a. a covenant relating to something not in esse (e.g., to build a wall) will not bind assignees of the covenantor unless the covenantor expressly agrees not only for himself but also for his assigns so as to show an intent to bind successors
b. for the burden to run it must touch and concern the land
i. privity of estate b/t the original contracting parties is not required for the benefit to run. But privity of estate between the promisee and the assignee is required
6. Intention of the parties
a. usually contained in the words of the deed or contract
b. if the instrument is unclear, the court will look at the purpose of the covenant and all the circumstances to ascertain the parties probable intent
c. touch and concern
7. Privity of estate
a. Horizontal privity
i. Running of the burden -- for the burden of a covenant to run to assignees, the majority rule is that the original parties must be in privity of estate
a) Mutual interest: the burden will run if one party has an interest (apart from the covenant) in the land of the other.
i) in effect the covenant must be coupled with an easement under this view
b) Successive relationship: (majority rule) present where the promise is contained in a conveyance of the fee simple, that is where one of the original parties to the promise succeeds to an estate previously owned by the other party
i) the promise must be conveyed in the conveyance or made at the same time --- one week later does not do
c) restatement: privity of estate is satisfied by either mutual or successive relationship
ii. Running of the benefit
a) horizontal privity is not required for the benefit to run with the land -- common law view and adopted by the restatement
iii. Horizontal privity is only established through LL/T relationship and successive owners -- one bundle of sticks owned by different people or created through the sale of land
b. Vertical Privity
a) for an assignee to sue on a covenant at law, the assignee must be in privity of estate with the original purchaser. Likewise, for an assignee to be sued on a covenant, the assignee must be in privity of estate with the original promisor
ii. Running of the burden: when assignment of the burden is at issue, vertical privity means succession to the estate of one of the original parties
a) the covenant attaches with the estate and runs with the estate and not with the land -- must be the identical estate owned by the promisor
iii. Running of the benefit: when the running of the benefit is at issue, the benefit will run to assigns of the original estate or of any lesser estate, such as a life estate
8. Touch and Concern the land
i. to permit courts to stop covenants from running when the social utility of the covenant is outweighed by the fettering of the burdened property
ii. cost benefit analysis?
b. General Rule?
i. in order for the benefit and burden to run they must touch and concern the land
ii. the closer you come to having something to do with the land, then the more sure you can be that it touches and concerns the land
a. A bona fide purchaser of the burdened land is not bound at law if he has no notice of the covenant -- see Runyon v. Paley
10. Runyon v. Paley -- Supp 293
a. covenants at law
i. In order for covenant to be enforceable at law:
ii. For a covenant to touch and concern the land, it is not necessary that the covenant have a physical effect on the land. It is sufficient that the covenant have some exonomic impact on the parties ownership rights, for example, enhancing the value of the dominant estate and decreasing the value of the servient estate. It is essential, however, that the covenant in some way affect the legal rights of the covenanting parties as landowners.
b. Equitable servitudes
i. In certain circumstances, a party unable to enforce a restrictive covenant as a real covenant running with the land may nevertheless be able to enforce the covenant as an equitable servitude
ii. In order to enforce a restrictive covenant on the theory of equitable servitude, it must be shown:
a) that the covenant touches and concerns the land of both parties
i) but see R3d of property -- public policy?
b) and the original covenanting parties intended the covenant to bind the person against whom enforcement is sought and to benefit the person seeking to enforce the covenant
i) it is presumed that covenants may be enforced only b/t the original covenanting parties. However, presumption can be overcome by a showing that (1) the covenanting parties intended that the covenant personally benefit the party seeking enforcement, or (2) the covenanting parties intended that the covenant benefit property in which the party seeking enforcement holds a present interest
i. It is well settled in NC that a restrictive covenant is not enforceable, either at law or equity, against a subsequent purchaser of property burdened by the covenant unless notice of the covenant is contained in an instrument in his chain of title. Thus a purchaser is chargeable with notice of the existence of the restriction only if a proper search of the public records would have revealed it.
a) if the restrictive covenant is contained in a separate instrument or rests in parol and is not referred to in a deed in the chain of title, a subsequent purchaser will take the property free of restrictions