1. introduction: the power of legislature to allocate wealth


Requirements of Covenants Running with the Land



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2. Requirements of Covenants Running with the Land

  1. Grantor and Grantee both intend that covenant runs with land

  2. Covenant "touches" or "concerns" land. If this is unclear, intentions of party always govern.

        • Touching and concerning requirement goes back to Spencers Case

        • "Touching" might just be another manifestation of intent of parties

        • Positive covenants that agree to do something on the land do not run with the land, negative covenants that restrict the use of the land do run with the land and is considered to touch and concern it

        • But it appears that the rule in NY is that a covenant runs with the land if the parties intended it to do so and touching and concerning doesn’t matter

  1. Privity of estate between party claiming benefit of covenant and party who is burdened by covenant. This requires balancing the burden of the estate vs. the benefit of the estate. (Neponsit)


Note on Privity of Estate

  • Not only must parties intend the covenant to run and not only must it touch and concern the land, there must also be privity of estate

  • To identify whether there is privity of estate must draw distinction between enforcing the benefit of the covenant and enforcing the burden of the covenant

A ----- B

Ι Ι


C D

  • Enforcing the burden of the covenant = burden of the covenant is being enforced against a successor in interest of one of the original contracting parties (C enforcing against B or D enforcing against A)

  • Enforcing the benefit of the covenant = successor in interest of one of the parties enforcing the covenant against one of the original parties (A enforcing against D or B enforcing against C)

  • Horizontal privity = exists between A and B (original parties)

    • Horizontal privity exists when in addition to contract, there has been a transfer of real property between A and B to which a covenant is attached = parties who each own their own pieces of land

    • Horizontal privity not required to enforce the benefit of a covenant



  • Vertical Privity = exists between A and C (original party and successor

    • Vertical privity = to enforce the benefit of the covenant it is sufficient that the person seeking to enforce the benefit have acquired some interest in the land

  • If you want to enforce the burden, the person enforcing must have the SAME interest in the property that the original owner did

    • i.e. if. D is a subtenant of B, and A is trying to enforce the covenant against B.

    • D has acquired an interest in the property as B, but it is not the same interest that B had. If B had assigned all the rights and interests in the land to D, then A could enforce the burden against D, but in this case vertical privity does not exist so the covenant cannot be enforced against D

  • To enforce the benefit of the covenant any interest in the property will suffice


Note on Covenants in Gross

Cases

  • Spencer’s Case (1583) – Covenant to build brick wall does not run with the land because it doesn't touch and concern the land

  • Miller v. Clary (1913) – Covenant that owner of mill will build & maintain power shaft  an affirmative covenant does not run with the land, and can't be enforced against a subsequent owner of the servient estate

        • this case is technically overruled but courts distinguish it so still good law

  • Neponsit Property Owners’ Ass’n v. Emigrant Indus. Sav. Bank (1938) – Easement to use common facilities, and attached to the easement is a covenant promising to pay the fees to use the facilities

        • Exception to affirmative covenants that are not supposed to run with land

        • Distinguish from Miller because not a commercial interest

  • Nicholson v. 300 Broadway Realty Corp. (1959) – property owner agrees to supply heat to a neighboring property  affirmative covenant to provide heat through pipes adequately touches or concerns the land and thus runs with it

        • distinguishing from Miller is very hard

  • 165 Broadway Bldg. v. City Investing Co. (1941) – Building owner paid money to the elevated railway to build connections and is to be repaid. Does the money get returned to the successor of the corporation who paid the money originally, or does it get refunded to the current new owner of the building = does it run with the land?

        • This is an affirmative covenant since it is a covenant to pay money, so Miller v. Clary would tell us it doesn’t matter

        • Court gets rid of "touching or concerning" requirement because the court is clear that all that is needed is intention and privity

        • Court seems to think that the only thing that matters is intent, which is supported by the Neponsit case

  • Bill Wolf Petroleum Corp. v. Chock Full of Power Gasoline Corp. (1972) – P gas-station operator enters into 10 year contract w/ Amoco, After 6 years, successor in interest decides to buy gas elsewhere, Amoco argues covenant runs with the land

        • Court holds even though there's intent & privity, it has nothing to do with land, so it does not run with land

        • Relies on Miller v. Clary which says that affirmative covenants do not run with the land, and other cases were clarified as mere exceptions to that rule


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