Gallagher v. Bell - 69 Md. App. 199, 516 A.2d 1028 (1986)

Rule:

Covenants made by parties to the conveyance of an interest in land may be regarded as being either personal in nature or as running with the land. The difference hinges upon whether the original covenanting parties' respective rights or duties can devolve upon their successors.

Facts:

The sellers, who owned a house in the middle of a larger tract belonging to the developers, entered into an agreement with the developers to dedicate some of their land for public streets to be built adjacent to their property and to pay a pro rata share of the cost of installing those streets and certain utilities. The sellers conveyed their property to another party, with an indemnity provision as to the payment agreement, before any streets or utilities were installed. The trial court held that the sellers had a continuing liability on their promise to pay. The sellers sought review of the judgment. 

Issue:

Did the sellers have a continuing liability on their promise to pay?

Answer:

No.

Conclusion:

The court found that the agreement was a covenant that ran with the land because it touched and concerned the land and was intended to run with the land. Hence, the developers should have sought to enforce the covenant against the sellers' assignee, and any liability of the sellers was to their assignee under the indemnity agreement, not to the developers. The court held that the continuing liability of an original covenantor on a covenant that ran with the land ended upon conveyance of the burdened property where that was the parties' intent. Accordingly, the court reversed the lower court's judgment for the developers.