covenant

Related to land

In property law, land-related covenants are called "real covenants", " covenants, conditions and restrictions " (CCRs) or "deed restrictions" and are a major form of covenant, typically imposing restrictions on how the land may be used (a negative covenant) or requiring a certain continuing action (an affirmative covenant). These may also "run with the land" (called a covenant appurtenant), meaning that any future owners of the land must abide by the terms, or may apply to a particular person (called a covenant in gross or of a purely personal nature). Under English law, affirmative covenants typically do not run with the land; in the United States such covenants are examined more closely, but with exceptions affirmative covenants have been permitted to run with the land.

The covenant may be shown in the deed and should be disclosed to prospective purchasers; it may also be recorded, or in the case of Commonwealth countries shown in Torrens title. Real covenants and easements or equitable servitudes are similar and in 1986, a symposium discussed whether the law of easements, equitable servitudes, and real covenants should be unified. As time passes and the original promisee of the covenant is no longer involved in the land, enforcement may become lax.

Covenants may be imposed through homeowner associations, and controversy has arisen over selective enforcement. Historically, particularly in the United States, exclusionary covenants were used to exclude racial minorities. Some covenants exist for safety purposes, such as a covenant forbidding the construction of tall buildings in the vicinity of an airport or one restricting the height of fences/shrubs at street corners (so as not to interfere with drivers' sight lines). Covenants may restrict everything from the height and size of buildings to the materials used in construction to superficial matters such as paint color and holiday decorations. In residential areas, covenants may forbid "dirty" businesses (such as feedlots or chemical production facilities) or business use entirely, or modifications such as amateur radio antenna. Amateur radio restrictions have been particularly controversial; in 1985 the U.S. Federal Communications Commission issued PRB-1 preempting state and local restrictions, but not private restrictions; in 2012 after Congress passed a law requiring study of this issue (at the urging of amateur radio group ARRL), the FCC declined to extend this preemption. Some US states have enacted legislation requiring homeowners' associations to provide reasonable accommodations for amateur radio antennas under the rationale that amateur radio provides public service communications in the event of an emergency, major disaster, or special event.

Application by jurisdiction

Canada

In Canada, governmental authorities may use restrictive covenants as well as zoning. For instance, the City of Calgary's requirement that buildings in the general vicinity of Calgary International Airport be under a certain height is registered against virtually every title in the northeast quadrant of the city as a restrictive covenant, not as a zoning by-law.

England and Wales

At common law, the benefit of a restrictive covenant runs with the land if three conditions are met:

The covenant must not be personal in nature – it must benefit the land rather than an individual

The covenant must 'touch and concern' the land – it must affect how the land is used or the value of the land

The benefited land must be identifiable.

At common law, the burden of a restrictive covenant does not run except where strict privity of estate (a landlord/tenant relationship) exists.

The burden can be enforced at law in limited circumstances under the benefit/burden test - that is, whoever takes the benefit must also shoulder the burden. In Halsall v Brizell [1957] Ch 169, a covenant requiring the upkeep of roads was found to bind the successor in title to the original covenantor because he had elected to take the benefit. The rule in Halsall v Brizell is limited to cases where the benefit can be linked to a specific burden and where the covenantor's successors in title can physically elect to take the benefit. For example, a restrictive covenant to contribute to the maintenance costs of a common area will not be binding if the covenantor's successors in title have no legal right to use them. Rules for ascertaining whether the benefit of a covenant has been passed to another person who wishes to enforce the covenant were summarised in Small (Hugh) v Oliver & Saunders (Developments) Ltd. in 2006, namely by an express assignment of the benefit, through a building scheme arrangement, usually for a new development of multiple properties, or through the application of section 78 of the Law of Property Act 1925, which only applies for covenants made since 1 January 1926.

A positive burden can run in law, but not in equity, as it is deemed to be analogous to a contract, to which equitable principles do not apply (Rhone v Stephens (1994)).

The burden of a restrictive covenant will run in equity if these prerequisites are met:

Requirements in US law

The covenant will typically be written in the deed, and must be in writing due to the statute of frauds. Although scholars have argued that some of the following should be significantly relaxed, in order for the burden to run with the land the following must apply:

The covenant must be in writing to satisfy the Statute of Frauds.

The original parties to the agreement must have intended that successors be bound by the agreement.

A subsequent owner must have had actual notice, inquiry notice, or constructive notice (record) of the covenant at the time of purchase.

The covenant must touch or concern the land. The covenant must relate to the use or enjoyment of the land.

There must be horizontal privity between the original parties.

Horizontal privity is found if, at the time the original parties enter into the agreement, those parties share some interest in the subject land independent of the covenant (e.g., landlord and tenant, mortgagee and mortgagor, or holders of mutual easements). Individual state statutes can alter the requirements of horizontal privity of estate. Privity may be instantaneous and mutual; instantaneous privity is present when the restrictive covenant is within the deed initially conveyed from the grantor to the grantee.

There must be strict vertical privity of estate.

Vertical privity characterizes the relationship between the original party to the covenant and the subsequent owner. To be bound by the covenant, the successor must hold the entire estate in land held by the original party (strict vertical privity of estate). Note that because strict vertical privity is required for a burden to run, a lessee could not have a burden enforced against them. However, a benefited party could sue the owner of the reversion of the estate, and the owner could possibly sue the lessee for waste.

Exclusionary covenants

Covenants have been used to exclude certain classes from owning real estate based on race, religion or ethnicity. These groups are generally marginalized groups.

United States

In the United States, in the early 20th century zoning laws were used to prevent integrating neighborhoods but were struck down in Buchanan v. Warley. Thus, deed restrictions and restrictive covenants became an important instrument for enforcing racial segregation in most towns and cities, becoming widespread in the 1920s and proliferating until they were declared unenforceable in 1948 in the Supreme Court case Shelley v. Kraemer. They prohibited a buyer of real property from allowing use or occupancy by members of a given race, ethnicity, or religion as specified in the title deed. Such covenants were employed by many real estate developers to "protect" entire subdivisions, with the primary intent to keep "white" neighborhoods "white". Ninety percent of the housing projects built in the years following World War II were racially restricted by such covenants. Cities known for their widespread use of racial covenants include Chicago, Baltimore, Detroit, Milwaukee, Los Angeles, Seattle, and St. Louis.

Said premises shall not be rented, leased, or conveyed to, or occupied by, any person other than of the white or Caucasian race.

Often the restrictions applied only to African Americans wishing to buy property or rent a house or apartment, but other populations might also be banned, such as Asians, Jews, Indians, and some Latinos. For example, a restrictive covenant covering a large neighborhood in Seattle declared that "no part of said property hereby conveyed shall ever be used or occupied by any Hebrew or by any person of the Ethiopian, Malay or any Asiatic Race", thus banning Jews and anyone of African, Filipino, or Asian ancestry. The exclusionary language varied widely. Some neighborhoods were reserved for the "White or Caucasian race". Others enumerated banned populations. One subdivision near Seattle specified that "This property shall not be resold, leased, rented or occupied except to or by persons of the Aryan race." The Lake Shore Club District in Fairview, Pennsylvania sought to exclude various minorities, including "Negroes", "Mongolians", Hungarians, Mexicans, Greeks, and various other European ethnicities.

In Montgomery County, Maryland, covenants excluded Black Americans and sometimes included language excluding Jews, Armenians, Iranians, Syrians, Turks, Greeks, Indians, Chinese, Japanese, Mongolians, Asians in general, or "non-Caucasians" in general.

Covenants in Massachusetts localities excluded Black Americans and sometimes Irish, Italian and Polish people as well. One 1881 deed from Lowell, Massachusetts stated that "land shall never be deeded or conveyed to any person born in Ireland". A 1916 covenant in Springfield, Massachusetts, stated that "said lot shall not be resold to a colored person, a Polander or an Italian."

Outside the US

Although most commonly associated with the United States, racially or ethnically restrictive covenants have been used in other countries:

Canada – Subdivisions such as Westdale, Ontario employed racial covenants to bar a diverse array of ethnic groups, such as Armenians and foreign-born Italians and Jews. Opposition to exclusionary covenants was significant in Canada, culminating in the 1945 Re Drummond Wren ruling by the Ontario High Court which invalidated their use. This judgment was influential in guiding similar decisions in the United States and elsewhere.

France – During World War II, under the Vichy regime in the Free Zone outside the Nazi occupied area, some condominiums inserted clauses forbidding selling to Jews.

South Africa – racial covenants emerged in Natal during the 1890s as an attempt to prevent Indians from acquiring properties in more expensive areas, and were commonplace across the country by the 1930s. They were later used as a tool to further the cause of apartheid against the black population.

Zimbabwe – Asians and coloured people were excluded from purchasing or occupying homes in European areas by restrictive racial covenants written into most title deeds.

Title covenants

Title covenants serve as guarantees to the recipient of property, ensuring that the recipient receives what he or she bargained for.

In England and Wales

Since 1989, the main covenants implied in England and Wales on "limited" or "full title guarantee" (unless expressly overridden) are:

that the person making the disposition has the right (with the concurrence of any other person conveying the property) to dispose of the property as he purports to, and

that that person will at his own cost do all that he reasonably can to give the person to whom he disposes of the property the title he purports to give.

[In the case of a disposition of an existing legal interest] (a) where the title to the interest is registered, it shall be presumed that the disposition is of the whole of that interest; (b) [if unregistered and not leasehold, then the presumption it is of the fee simple]

[If involving a lease] (a) that the lease is subsisting at the time of the disposition, and

(b) that there is no subsisting breach of a condition or tenant's obligation, and nothing which at that time would render the lease liable to forfeiture.

Others as to charges, incumbrances, and third-party rights vary depending on whether full or limited title guarantee is agreed.

Outside of England and Wales

Outside of England and Wales, the English covenants of title, sometimes included in deeds to real property, are (1) that the grantor is lawfully seized (in fee simple) of the property, (2) that the grantor has the right to convey the property to the grantee, (3) that the property is conveyed without encumbrances (this covenant is frequently modified to allow for certain encumbrances), (4) that the grantor has done no act to encumber the property, (5) that the grantee shall have quiet possession of the property, and (6) that the grantor will execute such further assurances of the land as may be requisite (Nos. 3 and 4, which overlap significantly, are sometimes treated as one item). The English covenants may be described individually, or they may be incorporated by reference, as in a deed granting property "with general warranty and English covenants of title...".