A covenant, in its most general and historical sense, is a solemn promise to engage in or refrain from a specified action. Under historical English common law, a covenant was distinguished from an ordinary contract by the presence of a seal. Because the presence of a seal indicated an unusual solemnity in the promises made in a covenant, the common law would enforce a covenant even in the absence of consideration. In United States contract law, an implied covenant of good faith is presumed.
A covenant is an agreement like a contract. A covenantor makes a promise to a covenantee to perform an action (affirmative covenant in the United States or positive covenant in England and Wales) or to refrain from an action (negative covenant). In real property law, the term real covenants refers to conditions tied to the ownership or use of land. A "covenant running with the land", meeting tests of wording and circumstances laid down in precedent, imposes duties or restrictions upon the use of that land regardless of the owner.
A covenant for title that accompanies a deed or title to the property assures the purchaser that the grantor has the ownership rights the deed purports to convey. Non-compete clauses in relation to contract law are also called restrictive covenants.
Landlords may seek, and courts may grant forfeiture of leases, such as in leasehold estates for breach of covenant, which, in most jurisdictions, must be relatively severe breaches; however, the covenant to pay rent is one of the more fundamental covenants. The forfeiture of a private home involves interference with social and economic human rights. In the case of leases commuted to a large sum payable at the outset (a premium), this has prompted lobbying for, and government measures for leasehold reform, particularly in the law of ground rents and service charges.
Restrictive covenants are somewhat similar to easements and equitable servitude."Integration of the Law of Easements, Real Covenants and Equitable Servitudes". Washington Law Review. In the US, the Restatement (Third) of Property merges the concepts into servitudes.Hernandez MV. (2005). "Restating Implied, Prescriptive, and Statutory Easements". Real Property, Probate and Trust Journal. Real covenant law in the US has been referred to as an "unspeakable quagmire" by one court.Lucas D. (2004). "There is a Porn Store in Mr. Roger's Neighborhood: Will You Be Their Neighbor? How to Apply Residential Use Restrictive Covenants to Modern Home Businesses". Campbell Law Review.
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.New York has been one such exception; see Nicholson v. 300 Broadway Realty Corp., 7 NY 2d 240 - NY: Court of Appeals 1959.
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 similarSchnably. Easements, Covenants, and Equitable Servitudes. 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.Expanded outline on covenants Harvard Law School.
Covenants may be imposed through homeowner associations, and controversy has arisen over selective enforcement.Neighbors At War!, by Ward Lucas; Hogback Publishing (2012). 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:Gray et al., Property Law in New South Wales, second edition, p 547 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 runAusterberry v Oldham Corporation (1885) 29 Ch D 750 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 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.Thamesmead Town Ltd v Allotey (2000) 79 P & CR 557 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.UK Legislation, Law of Property Act 1925, section 78(2), accessed on 4 October 2024
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:Tulk v Moxhay (1848) 41 ER 1143) The burden cannot be a positive burden (that is, it requires expenditure to meet it); The purchaser must have notice of the covenant The covenant must benefit the covenantee's land The covenant must be intended to run with the covenantor's land.
The leading case on restrictive covenants in equity is generally regarded as that of Tulk v Moxhay, in which it was determined that the burden could run in equity subject to the qualifications listed above.
The risk of an undisclosed restrictive covenant coming to the notice of a buyer or developer after they have acquired a site has been seen as especially high in regard to infill residential development. Restrictive covenant indemnity insurance is often available to mitigate this risk.Edwards, L., Restrictive covenants - are they enforceable?, RICS, published on 15 November 2006, archived on 28 March 2007, accessed on 26 September 2024
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:Ch. 33 Real Covenants. LexisNexis Study Outline. 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.
Enforcement and modification US courts interpret covenants relatively strictly and give the words of the agreement their ordinary meaning. Generally if there is any unclear or ambiguous language regarding the existence of a covenant courts will favor free alienation of the property. Courts will not read any restrictions on the land by implication (as is done with easements for example). A covenant can be terminated if the original purpose of the covenant is lost. In some cases property owners can petition a court to remove or modify the covenants, and homeowner associations may include procedures for removing the covenants.