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Property I
Wayne State University Law School
Bartell, Laura B.

 
Real Covenants & Equitable Servitudes
           
I.       Overview of Real Covenants.
A.    Covenants are a promise/agreement. 
1.      Affirmative – promise to do something
2.      Negative/restrictive– promise not to do something
B.     Compare to easements.
1.      Similarities
a.       benefit burden side is just like easements. There are always two sides.
2.      Difference
a.       Instead of promise to allow owner of easement to enter land, there is a burden on owner to act/refrain from acting on his own land.
b.      I.e., burden confines owner’s rights, rather than allow 3rd party to enter land.
C.     Compare to K
1.      Covenants are enforceable by party benefited against party burdened. 
2.      Covenants can run with the land. I.e., can bind people not originally making the promise. 
D.    2 types
1.      real covenants – historically enforceable at law.
2.      equitable servitude – historically enforceable in equity.
 
II.    Real Covenants –
A.     Real covenant à promise that relates to real property and runs with the land. See 5 requirements below.
·         Real Covenant cannot be created by implication. Can only be created expressly.
 
 
(1)   Creation by Enforceable Agreement.
·         A real covenant can only be created by a written instrument. A deed signed only by the grantor suffices to create a real covenant on the part of the grantee, because the grantee is held to have made the deed his own by accepting it. Real covenants may not be created by implication or prescription.
 
(2)   Intent that Covenant run with the land.
·         Usually determined by instrument of writing. I.e., look for express intent for covenant to run with the land. E.g., benefit/burden intended to affect parties, successors and assigns. 
·         Note, express language alone is not necessarily enough, since all 5 requirements must be met.
·         If no express statement, courts may imply intent based on surrounding circumstances. If it seems like the covenant is related to land, then the court may infer intent. But, benefit/burden may be split to land/person…
1.      Note: covenants also have 2 sides: burden and benefit side. 
2.      The benefit may be to person or to land. Also, the burden may be to person or to land. 
3.      So, how to infer intent of parties if one side is to land and other to person? See case below
4.      Caullett v. StanleyStilwell & Sons ACNJ 1961pg. 888
a.       Facts: A developer deeded a lot to Caullett for 4,000 and the deed included a covenant giving the developer the right to build the first structure (covenant that only he can build a house on it).
b.      Issue: Can a covenant which imposes a burden on land, but creates a benefit personal to one of the parties, be enforced? (is there intent that it runs with the land?)
c.       No. A covenant will not run at law or in equity if the benefit it creates is in gross, because such a benefit would not touch and concern the land. The agreement would be a mere personal covenant. If enforced, it would give the grantor (D) a commercial advantage only and would not affect the use or value of any land retained.
q Rest.of Property- rule linking running of benefit and burden; benefit may run even if burden is in gross..Burden cannot run in benefit is in gross
q Modern trend: Benefit may run even if burden is in gross and burden can run even if benefit is gross
 
(3)   Touch and Concern
·         Negative/restrictive – limits use of land by landowner
q [Generally] always T&C the land.
·         Affirmative
q Usually much more difficult to find that it T&C the land.
q Typical example: promise to pay $.
q Old rule: affirmative burden cannot T&C the land.
q New Rule: if there is economic value to the property b/c of covenant, then covenant T&C the land.
q An affirmative convenant only touches and concerns the burdened (servient) estate if the holder promises to perform a stated act or undertake a stated use of the burdened land that reduces its use or value.
 
q Rest. 3rd of Property § 3.1 purports to discard touch and concern and asserts that the function of touch and concern

l to or less than estate original owner had.
3.      Thus, a lessee could possibly enforce.
 
Rest.3rd of Property, Servitudes 5.2- discards the vertical privity requirement for both the burden and the benefit. Rather, as to both real covenants and equitable servitudes it distinguishes between negative (restrictive) promises and affirmative ones. NEGATIVE promises= all owners and possessors of burdened land are bound by negative covenants regardless of the extent of their interest or the manner in which they obtained their interest. Likewise, all owners and possessors of benefitted land are entitled to enforce the covenant. For affirmative covenants look at pg. 745.
 
C.     Neponsit Property Owners Association v. Emigrant Savings Bank pg. 875
1.      Facts: association fees created by deed. Intent is clear to run. But, is there VP?
2.      Neither party is an original covenantor/ee. Plus, association doesn’t own any land at all (it is just made up of all of the owners). The association received by assignment the right to collect the fees. 
3.      On the burden side, there is VP since Neponsit Realtor was the original promisee and they sold to owner, who gave to bank. 
4.      On the benefit side, there is no estate so how to determine if there is VP?  Court says should NO be VP, but nevertheless finds VP since association is an agent for all individual members, where each individual member would have been in VP. (court really stretching here). 
[1] Note: this is consistent with our view of tacking discussed earlier w.r.t. AP
[2] As described below, whether estate is “appropriate” depends on whether it is on the burden or benefit side.