§ 33.01 The Birth of Private Land Use Planning [538-539]

 

Under early English law, a promise concerning land use could not burden or benefit the successors of the original contracting parties.  Two methods were developed to address this problem: the real covenant and the equitable servitude.  The rules governing the real covenant are confusing and intricate, while those governing the equitable servitude are relatively straightforward.

 

§ 33.02 What Is a Real Covenant? [539-540]

 

A real covenant is a promise concerning the use of land that (1) benefits and burdens the original parties to the promise and also their successors and (2) is enforceable in an action for damages.  A real covenant may be either affirmative (a promise to perform an act) or negative (a promise not to perform an act).

 

§ 33.03 Policy Implications of Private Land Use Restrictions [540-541]

 

English courts restricted the real covenant due to fear that it would limit the marketability of land, and thus impair productivity.  Modern American courts acknowledge that the real covenant can help to ensure that land is used efficiently.  In other words, such restrictions may enhance productive use.

 

§ 33.04 Creation of a Real Covenant [541-552]

 

                        [A]       Perspectives on the Real Covenant

 

Two points are vital to understanding.  First, the law distinguishes between the original parties to the covenant and their successors.  Second, each real covenant has two “sides”—the burden (the promissor’s duty to perform the promise) and the benefit (the promissee’s right to enforce the promise).

 

                        [B]       Requirements for the Burden to Run

 

                        [1]        Generally

 

In order for the successor to the original promissor to be obligated to perform the promise (that is, for the “burden to run”), the law traditionally requires that six elements must be met: (1) the promise must be in a writing that satisfies the Statute of Frauds; (2) the original parties must intend to bind their successors; (3) the burden of the covenant must “touch and concern” land; (4) horizontal privity must exist; (5) vertical privity must exist; and (6) the successor must have notice of the covenant.

 

                        [2]        “Touch and Concern”

 

In order to touch and concern land, the covenant must relate to the direct use or enjoyment of the land.  For example, a covenant that restricts the height of future buildings on a parcel meets this requirement.  In contrast, a covenant that requires an act having no connection whatsoever to the particular parcel of land (e.g., dancing a jig in the village square) does not “touch and concern.”

 

                        [3]        Horizontal Privity

 

The law traditionally requires that the original parties have a special relationship in order for the burden to run, called horizontal privity.   In some states, horizontal privity exists between the promissor and the promissee who have mutual, simultaneous interests in the same land (e.g., landlord and tenant).  Other states extend horizontal privity to the grantor-grantee relationship as well.

 

                        [4]        Vertical Privity

 

Vertical privity concerns the relationship between an original party and his successors.  Vertical privity exists only if the successor succeeds to the entire estate in land held by the original party.   

 

                        [C]       Requirements for the Benefit to Run

 

The law requires only four elements for the benefit of a real covenant to run to successors: (1) the covenant must be in a writing that satisfies the Statute of Frauds; (2) the original parties must intend to benefit their successors; (3) the benefit of the covenant must touch and concern land; and (4) vertical privity must exist.

 

§ 33.05 Termination of Real Covenants [552-553]

 

Two of the major defenses to enforcement of a real covenant are abandonment and changed conditions.  Abandonment occurs when the conduct of the person entitled to the benefit of the covenant demonstrates the intent to relinquish her rights.  Under the changed conditions doctrine, a covenant becomes unenforceable when conditions in the area of the burdened land have so substantially changed that the intended benefits of the covenant cannot be realized.

 

§ 33.06 Remedies for Breach of Real Covenants [553]

 

This historic remedy for breach of a real covenant is damages, measured by the difference between the fair market value of the benefitted property before and after the defendant’s breach.

 

§ 33.07 Scholarly Perspectives on Real Covenants [553-554]

 

The real covenant has attracted much scholarly attention in recent years.  Most scholars agree that the requirements of touch and concern, horizontal privity, and vertical privity should be either abolished or greatly relaxed.

 

§ 33.08 The Restatement (Third) of Property: Servitudes [554-555]

 

The new Restatement (Third) of Property: Servitudes would greatly simplify this area by combining the real covenant and the equitable servitude into one doctrine: the servitude.   Under this approach, a contract or conveyance creates a servitude if: (1) the parties so intend; (2) it complies with the Statute of Frauds; and (3) it is not illegal, unconstitutional, or violative of public policy.