Covenants and Privity. Privity between original parties in context of a transfer of estate in land (known as horizontal privity ) (e.g.

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1 Covenants and Privity A sells to D A Promisee; benefit to Whiteacre Privity between original parties in context of a transfer of estate in land (known as horizontal privity ) (e.g., B sells to A) B Promisor; burden on Blackacre B sells to C Privity between promisee and assignee (known as vertical privity ) Privity between promisor and assignee (known as vertical privity ) D C Real Covenants 1. Must be in writing to satisfy the Statute of Frauds. 2. Must be what the parties intended. 3. Must touch and concern (T&C) the land with which it runs. 4. Must have horizontal privity of estate. 5. Must have vertical privity of estate. 1

2 Real Covenants 3. Must touch and concern (T&C) the land with which it runs, that is it must have a logical connection to the use and enjoyment of land, or it must physically affect the use and enjoyment of the land, or the promisor s legal interest as an owner must be rendered less valuable by the promise and the promisee s legal interest as an owner must be made more valuable by the promise. Real Covenants Cont d 4. Must have horizontal privity of estate: the relationship among (a) the original promisor (owner of burdened land), (b) the original promisee (owner of benefited land), and (c) the affected estate in land. 2

3 Real Covenants Cont d 5. Must have vertical privity of estate: the relationship among (a) the original promisor or promisee under a covenant, (b) the promisor s or promisee s successor in interest, and (c) the affected estate in land. Equitable Servitudes To be enforceable against a successor in interest Intent Notice (unless successor gave no consideration) T&C [Writing maybe] 3

4 Tulk v. Moxhay, 41 Eng. Rep (1848), Casebook p. 746 Tulk Grantor/ Promisee NO horizontal privity of estate between Tulk and Elms in England Elms Grantee/ Promisor Benefit to Tulk and his tenants Burden on Leicester Square Garden Elms sells to B and B sells to C and C sells to Moxhay with NO covenant in the deed Vertical Privity Between Tulk sues to stop Moxhay. Elms and Moxhay Moxhay Tulk v. Moxhay Cont d Intent Notice T&C Other considerations Fairness/Equity Benefit of the bargain Value of retained land

5 Leicester Square Garden Through the Years Wyld s Monster Globe 1910 Modern Times Modern Times Neponsit Property Owners Association, Inc. v. Emigrant Industrial Savings Bank, 15 N.E.2d 793 (N.Y. 1938), Casebook p The Deyers Horizontal Privity Neponsit Realty Mesne Conveyances Emigrant Bank buys at judicial sale Vertical Privity Emigrant Bank Neponsit assigns right to enforce to HOA Vertical Privity?!?! HOA 5

6 Neponsit Cont d Does the Covenant Run with the Land? Writing Intent T&C Privity (horizontal and vertical) Neponsit Cont d Does the Covenant Run with the Land? T&C Negative Covenant Affirmative Covenant Old English Rule Modified English Rule Reluctance Neponsit Rule 6

7 Neponsit Cont d Does the Covenant Run with the Land? Privity Horizontal Vertical Shelley v. Kraemer, 334 U.S. 1 (1948), Casebook p. 876 Enforcing Racial Segregation Social norms Violence Nuisance law Racial zoning Racially restrictive covenants* 7

8 Shelley v. Kraemer Cont d Missouri Covenant Michigan Covenant Term of 50 years Until 1960 (34 years) Restricting the use and occupancy of the property By any person not of the Caucasian race Intended to restrict use and occupancy by people of the Negro or Mongolian race Restricting the use and occupancy of the property By any person not of the Caucasian race Shelley v. Kraemer Cont d Missouri Ruling Restrained the Shelleys from taking possession Ordered divestment of title and revesting of title in the immediate grantor or another as the court directed Michigan Ruling Ordered Petitioners to move from the property within 90 days Enjoined and restrained Petitioners from using or occupying the premises in the future 8

9 Shelley v. Kraemer Cont d Enforceable Covenant? Writing Intent Touch & Concern Horizontal Privity Vertical Privity The Shelley s House National Register of Historic Places in Apr and dedicated as a historic site on May 1, 1988, the 40 th anniversary of the case. Shelley v. Kraemer Cont d Older Common Law Alienability RAP 9

10 The Fourteenth Amendment If the restrictions against the right of occupancy were imposed by state statute or local ordinance, they would be in violation of the Fourteenth Amendment. Does judicial enforcement of private restrictions equal state action? YES. The judicial action in each case bears the clear and unmistakable imprimatur of the State. Other Possible Answers to the State Action Puzzle Judicial overreaching Private takeover Enforcement of custom 10