Restrictive Covenants

Inquiry Notice

all McLean had to do was walk around the neighborhood and look at the plots

Restrictive Covenants Policy

restricting the use of land for the benefit of all - A common plan for development can be indicated by: o Grantor representations to buyers, statements in sales brochures, maps/advertisements, recorded declarations of restrictive covenants

Neponsit Property Owners v. Emigrant Industrial

Property owners' association suing to enforce lien arising under covenant running with the land (for common maintenance charges) Q: can the P, though not the original owner or covenantor of any part of the land benefited by the covenant, enforce the covenant? Result: yes - property owners' assoc. may enforce real covenant despite not owning any of the property sought to be benefited; departure from strict rules of privity Court: touch and concern IS satisfied, privity NOT satisfied, BUT it was perfectly understandable that this action benefiting homeowners, so it DOES run with the land

Recriprocal Negative Easement

When seller of multiple lots of land sells them w/restrictions of benefit to the land that operate upon the use of the land by any owner having actual or constructive notice thereof "negative" b/c it restricts my use of my own property for the benefit of the other owners in a subdivision 1) RNE is an easement passing its benefits and carrying its obligations to all purchasers of land, subject to its affirmative or negative mandates 2) A party could be held to follow these even if not placed on their deed b/c he may have constructive notice from looking at the surrounding properties 3) Only applies if common plan at the time of the original deed is granted b/c of privity

First Deed Out Rule

can be liable for easement w/o constructive notice if it's recorded on first deed in chain of title in the same original tract, or on different tracts

Intent of the Parties

usually found in the language of the deed/contract ("assigns" not usually req'd)

Privity of Estate

(only VERTICAL privity is req'd) - Vertical Privity: the interest transferred to an assignee means the party suing or being sued succeeded to the estate of the original promisee or promisor o Requires only that the person presently claiming benefit/burden is successor to estate of original person o Chain of Title OR Succession of Interest - EXCEPTION: Homeowner's Association an HA may sue to enforce benefit of covenant even though the association succeeds to no land owned by original promisee (as agent of real properties in interest who own land)

Cowling v. Colligan

(where no zoning requirements, only restrictive covenants) P's brought class action to assert restrictive covenants mandating land be used for residential purposes ONLY, to enjoin D from building a commercial building 1. D: b/c there were churches in the subdivision, the area has lost its character, ALSO that his plot is on the edge of an extremely busy Houston street, which makes it unfair to force him to keep his land residential and lose significant property value 2. Result: in favor of P's there was NOT a substantial change in the area from the churches, so as to render it improper to enforce the residential-only restriction 3. Do NOT want to give D an exception b/c slippery slope - the edge would always be out there somewhere, avoid the DOMINO EFFECT 4. When a neighborhood is restricted to residential use only, non-complaint of property owners when churches are built on restricted lots will be considered to not constitute a waiver or abandonment of the restriction

Liability of Original Promisor after Assignment

- After promisor assigns the land, does he remain personally liable for the contract? o Covenant is promise to do/not do some act on burdened land, covenantor has NO LIABILITY after assignment; no control over the land after the assignment, unfair to hold them liable for performance by the assignee(s) o Courts imply that the parties intended covenantor liability to cease with the assignment (Gallagher)

Restrictive Covenant = Equitable Servitudes

- Equitable Servitude: a promise concerning the use of the land that 1) benefits and burdens the original parties to the promise and their successors, and 2) is enforceable in equity o Essentially a tool that allows a promise to be enforced by or against a successor party under limited circumstances

Racially Discriminatory Covenants

- May NOT be enforced by courts on either the federal or state level, b/c DPC of the 14thA - 14thA prohibits enforcement of restrictive covenants only when there is a state action, but will look at it broadly, so that if P tries to get court to enforce unlawful restriction, it won't be enforceable as that state action

Writing Requirement

- Sprague in order to be enforceable, a restrictive covenant must be in writing, signed by the party against whom enforcement is sought, and executed contemporaneously to the sale of the land upon which the restriction is sought to be enforced - ANY interest in land must be in writing to satisfy the SoF

Unenforceability

1) Generally, courts don't let the grantor re-enter and take forfeited land for a breach of covenant 2) ACQUIESCENCE: A court may refuse to enforce covenants if the landowners have acquiesced to substantial violations so it amounts to an abandonment of the covenant a. EXCEPTION: when it's on the edge of an area of residential restrictions, courts WILL NOT allow the domino effect to destroy the neighborhood 3) May refuse to enforce when there has been such a change of condition in the restricted area or surrounding area that it is no longer possible to secure the benefits sought by the covenants 4) ESTOPPEL: if P manifests intention not to enforce land use promise, D reasonably relies to detriment REMEDY FOR RESTRICTIVE COVENANTS = INJUNCTION REMEDY FOR REAL COVENANTS = DAMAGES

Shelley v. Kraemer

30/39 landowners enter into a covenant to prevent African-American fam from living there, try to get court to enforce on others and Supreme Court says the court enforcement is state action under the 14thA and strikes down the restriction Judicial enforcement by state courts of restrictive covenants not allowing African Americans to live in certain residential areas was a denial of challengers' equal protection rights Covenant-in-question: 50 year term, no part of the property shall be occupied by a non-Caucasian Racially restrictive covenants NOT legal

Notice

: A BFP of the burdened land is NOT bound at law if he has NO notice of the covenant 1) Constructive Notice: a BFP can be bound by a restrictive covenant not contained in the deed if he has actual or constructive notice 2) RNE: when the seller of multiple lots has recorded a restriction on some lands, it can be binding on other lands from the same grantor even if it's not on their specific deed

What are Covenants?

Agreement b/w landowners to do something or refrain from doing something (i.e. a promise to maintain a fence) benefits and burdens the original parties to the promise and also their successors - Enforceable in an action for damages - Creation: must be in writing, can't be implied or by prescription - Transferrable to new owners if they RUN WITH THE LAND o Runs with an estate in land promisor's successors in title are able to enforce the promise in an action to recover compensatory damages

Gallagher v. Bell

D and P made covenant with the intent to develop a subdivision, which provided that in exchange for a right of way, D agreed "for themselves, their heirs and assigns, that they will dedicate ½ of the streets bounding their property and shall share pro-rate the cost of installation of said streets and the utilities by the Ps" Camalier bought from Gallagher (D), got an indemnification against Gallagher's agreement to pay for the streets/utilities did the covenant run with the land or personal b/w P and D? Result: Ran with the land, Camalier must pay or bring separate suit against Gallagher Reasonable Reading: Camalier recognized that by taking title w/knowledge of agreement, she would become liable, so covenant DID run

Sprague v. Kimball

D granted P property with an oral restrictive covenant setting back the land - P asserting that D seller's oral agreement to impose restrictions was not enforceable 1. No instrument recorded the restrictions to Lot 5, which is what Grossmann is buying 2. Q: do setback requirements apply when they're not in writing in the deed to the grantee, though they had been in a few deeds in the same neighborhood? 3. Result: nothing in writing raised these restrictions, any interest in land must be in writing to satisfy the SoF restrictions held not to be valid on P's sale

Sanborn v. McLean

D purchases a lot in a subdivision, which is sold w/o restrictions, and the lot owner attempts to build a gas station on it, P suing to stop this i. Neither McLean deed, nor predecessors say anything about the RNE -> subdivision map silent on restrictions as well - subsequent buyers will be deemed to have constructive notice anyway ii. Subdivision was planned for residential purposes, developer sold this plot w/o residential restrictions, and title passed to the D - P's are other residential owners in the subdivision iii. Deeds to other houses in the area DID have RNE, which traces back to original owner/first deed iv. HELD: D was on inquiry notice/can be bound very obvious to naked eye/reasonable observer v. Reason: all they had to do is look around to see that many neighbors were the same 1. CONTRAST: Sprague only 5 lots were impacted, this one was 53 lots all the same

Covenants Running with the Land

Elements (4): - The covenant must "touch and concern" the land (affect the value or use in some way) o Whether the burden of the covenant will run to the successor owners of the promisor's land, o Whether the benefit will run to the successor owners of the promisee's land o If promisor's legal interest is rendered LESS valuable, and promisee's legal interest MORE valuable, than it does T&C the land o Looks objectively at nature/quality of covenant & measure relationship b/w performance and enjoyment - The original covenanting parties must have intended for the covenant to run o Focuses on the subjective state of mind of the original covenanting parties - There must be some vertical privity of estate - The covenant must be in writing (to satisfy the SoF)