RIGHTS IN THE LAND OF ANOTHER—EASEMENTS, PROFITS, COVENANTS, AND SERVITUDES

IV. RIGHTS IN THE LAND OF ANOTHER—EASEMENTS, PROFITS, COVENANTS, AND SERVITUDES

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D.    COVENANTS RUNNING WITH THE LAND AT LAW (REAL COVENANTS)

A real covenant, normally found in deeds, is a written promise to do something on the land (e.g., maintain a fence) or a promise not to do something on the land (e.g., conduct commercial business). Real covenants run with the land at law, which means that subsequent owners of the land may enforce or be burdened by the covenant. To run with the land, however, the benefit and burden of the covenant must be analyzed separately to determine whether they meet the requirements for running.

1.    Requirements for Burden to Run

If all requirements are met for the burden to run, the successor in interest to the burdened estate will be bound by the arrangement entered into by her predecessor as effectively as if she had herself expressly agreed to be bound.

a.    Intent

The covenanting parties must have intended that successors in interest to the covenantor be bound by the terms of the covenant. The requisite intent may be inferred from circumstances surrounding creation of the covenant, or it may be evidenced by language in the conveyance creating the covenant (e.g., “this covenant runs with the land,” or “grantee covenants for herself, her heirs, successors, and assigns”).

b.    Notice

Under the common law, a subsequent purchaser of land that was subject to a covenant took the land burdened by the covenant, whether or not she had notice. However, under American recording statutes, if the covenant is not recorded, a bona fide purchaser who has no notice of the covenant and who records her own deed will take free of the covenant. Hence, as a practical matter, if the subsequent purchaser pays value and records (as will nearly always be true), she is not bound by covenants of which she has no actual or constructive notice.

c.    Horizontal Privity

This requirement rests on the relationship between the original covenanting parties. Specifically, horizontal privity requires that, at the time the promisor entered into the covenant with the promisee, the two shared some interest in the land independent of the covenant (e.g., grantor-grantee, landlord-tenant, mortgagor-mortgagee).

Examples:      1) A and B are neighboring landowners, neither having any rights in the other’s land. For good consideration, A promises B, “for herself, her heirs, successors, and assigns,” that A’s parcel “will never be used for other than residential purposes.” The horizontal privity requirement is not met, and successors in interest to A will not be bound because at the time A made this covenant, she and B shared no interest in land independent of the covenant.

2) A, the owner of Blackacre in fee, promised B, the holder of a right-of-way easement over Blackacre, “always to keep the right-of-way free of snow or other impediment to B’s use of the right-of-way.” Horizontal privity is met because, at the time the covenant was made, A owned the parcel in fee and B held the benefit of an easement in it.

3) A, the owner of Blackacre and Whiteacre, deeds Whiteacre to B, promising “not to use Blackacre for other than residential purposes.” Horizontal privity exists here by virtue of the grantorgrantee relationship between A and B.

d.    Vertical Privity

To be bound, the successor in interest to the covenanting party must hold the entire durational interest held by the covenantor at the time she made the covenant.

Example:        A, who owns Blackacre and Whiteacre in fee simple absolute, sells Whiteacre to B and, in the deed, covenants for herself, her heirs, successors, and assigns to contribute one-half the expense of maintaining a common driveway between Blackacre and Whiteacre. A then transfers Blackacre to C “for life,” retaining a reversionary interest for herself. B cannot enforce the covenant against C because C does not possess the entire interest (fee simple absolute) held by her predecessor in interest, A, at the time A made the promise.

e.    Touch and Concern

The covenant must be of the type that “touches and concerns” the land. The phrase “touch and concern the land” is not susceptible to easy definition. It generally means that the effect of the covenant is to make the land itself more useful or valuable to the benefited party. The covenant must affect the legal relationship of the parties as landowners and not merely as members of the community at large. Therefore, as a general matter, for the burden of a covenant to run, performance of the burden must diminish the landowner’s rights, privileges, and powers in connection with her enjoyment of the land.

1)    Negative Covenants

For the burden of a negative covenant to touch and concern the land, the covenant must restrict the holder of the servient estate in his use of that parcel of land.

Examples:    1) A, who owned Blackacre and Whiteacre, covenanted with B, the grantee of Whiteacre, that she would not erect a building of over two stories on Blackacre. The burden of the covenant touches and concerns Blackacre because it diminishes A’s rights in connection with her enjoyment of Blackacre.

2) A, who owned Blackacre and Whiteacre, covenanted with B, the grantee of Whiteacre, that she would never operate a shoe store within a radius of one mile of Whiteacre. The covenant does not touch and concern Blackacre because its performance is unconnected to the enjoyment of Blackacre.

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2)    Affirmative Covenants

For the burden of an affirmative covenant to touch and concern the land, the covenant must require the holder of the servient estate to do something, increasing her obligations in connection with enjoyment of the land.

Examples:    1) A, who owned Blackacre and Whiteacre, covenanted with B, the grantee of Whiteacre, to keep the building on Blackacre in good repair. The covenant touches and concerns Blackacre because it increases A’s obligations in connection with her enjoyment of Blackacre.

2) A owned Blackacre and Whiteacre, which were several miles apart. A covenanted with B, the grantee of Whiteacre, to keep the building on Whiteacre in good repair. The covenant does not touch and concern Blackacre because its performance is unconnected to the use and enjoyment of Blackacre.

3) A, the grantee of a parcel in a residential subdivision, covenants to pay an annual fee to a homeowners’ association for the maintenance of common ways, parks, and other facilities in the subdivision. At one time, it was thought that such covenants, because physically unconnected to the land, did not touch and concern. The prevailing view today is that the burden will run because the fees are a charge on the land, increasing A’s obligations in connection with the use and enjoyment of it.

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II. LANDLORD AND TENANT

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E.    ASSIGNMENTS AND SUBLEASES

Absent an express restriction in the lease, a tenant may freely transfer his leasehold interest, in whole or in part. If he makes a complete transfer of the entire remaining term, he has made an assignment. If he retains any part of the remaining term, the transfer is a sublease.

Example:        L leases property to T for a 10-year term. One month later, T transfers his interest to T1 for nine years, retaining the right to retake the premises (reversion) after nine years. The effect of his transfer is to create a sublease between T (sublessor) and T1 (sublessee).

If, on the other hand, T had transferred to T1 for the remaining period of the lease, reserving no rights, the transfer would constitute an assignment of the lease from T (assignor) to T1 (assignee). (Note: It is not controlling that the parties denominate the transfer an “assignment” or “sublease.” The court still examines what interest, if any, is retained by T to determine the nature of the transaction.)

1.    Consequences of Assignment

The label given to a transfer—an assignment or sublease—determines whether the landlord can proceed directly against the transferee or only against the transferor. To be an assignment, the transfer must be on the same terms as the original lease except that the tenant may reserve a right of termination (reentry) for breach of the terms of the original lease that has been assigned; e.g., “to A for the balance of the leasehold term. However, should A fail to make the rental payments to the landlord, the right to reenter and reclaim the premises is reserved.” If the transfer is an assignment, the assignee stands in the shoes of the original tenant in a direct relationship with the landlord. The assignee and the landlord are in “privity of estate,” and each is liable to the other on all covenants in the lease that “run with the land.”

a.    Covenants that Run with the Land

A covenant “runs” if the original parties to the lease so intend, and if the covenant “touches and concerns” the leased land; i.e., it benefits the landlord and burdens the tenant (or vice versa) with respect to their interests in the property. (These requirements are discussed in detail at IV.D., infra.) Covenants held to run with the land (unless the parties specify otherwise) include: covenants to do or not do a physical act (e.g., to repair, to conduct a business on the land in a specified manner, to supply heat); covenants to pay money (e.g., rent, taxes, etc.); and covenants regarding the duration of the lease (e.g., termination clauses).

b.    Rent Covenant Runs with the Land

Because the covenant to pay rent runs with the land, an assignee owes the rent directly to the landlord. He does not owe rent for the period before the assignment, but only for the time that he is in “privity of estate,” i.e., from the time of assignment until the end of the lease or until the assignee himself reassigns.

1)    Reassignment by Assignee—Privity of Estate with Landlord Ends

If the assignee reassigns the leasehold interest, his privity of estate with the landlord ends, and he is not liable for the subsequent assignee’s failure to pay rent. However, if the first assignee specifically promised the landlord that he would be liable for the rent for the remainder of the lease term, he may be obligated to pay based on privity of contract, even though his reassignment ended the privity of estate.

a)    Effect of Assignee Assuming Rent Obligation

If the assignee made no promise to the landlord but did promise the original tenant that he would pay all future rent, the landlord may be able to sue the assignee as a third-party beneficiary of the contract between the original tenant and the assignee.

2)    Original Tenant Remains Liable

After assignment, the original tenant is no longer in privity of estate with the landlord. However, if (as is likely) the tenant promised to pay rent in his lease with the landlord, he can still be held liable on his original contractual obligation to pay, i.e., on privity of contract. This allows the landlord to sue the original tenant where the assignee has disappeared, is judgment-proof, etc.

Example:        L rents to T for three years at $9,400 per year. After one year, T assigns to T1. T1 pays the rent for one year, and then assigns to T2. T2 fails to pay rent. L can collect from T or T2 but not from T1 (unless T1 made some promise on the basis of which L can sue him).

2.    Consequences of Sublease

In a sublease, the sublessee is considered the tenant of the original lessee, and usually pays rent directly to the original lessee, who in turn pays rent to the landlord under the main lease.

a.    Liability of Sublessee for Rent and Other Covenants

The sublessee is liable to the original lessee for whatever rent the two of them agreed to in the sublease. However, the sublessee is not personally liable to the landlord for rent or for the performance of any other covenants made by the original lessee in the main lease. The reason is that the sublessee has no contractual relationship with the landlord (no privity of contract), and does not hold the tenant’s full estate in the land (no privity of estate); therefore, the covenants in the main lease do not “run with the land” and bind the sublessee.

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V. ADVERSE POSSESSION

A.    IN GENERAL

Title to real property may be acquired by adverse possession. (Easements may also be acquired by prescription.) Gaining title by adverse possession results from the operation of the statute of limitations for trespass to real property. If an owner does not, within the statutory period, take legal action to eject a possessor who claims adversely to the owner, the owner is thereafter barred from bringing suit for ejectment. Moreover, title to the property vests in the possessor.

B.    REQUIREMENTS

To establish title by adverse possession, the possessor must show (i) an actual entrygiving exclusive possession that is (ii) open and notorious, (iii) adverse (hostile), and (iv) continuous throughout the statutory period.

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5.    Continuous Possession

The adverse claimant’s possession must be continuous throughout the statutory period. Continuous possession requires only the degree of occupancy and use that the average owner would make of the property.

a.    Intermittent Periods of Occupancy Not Sufficient

Intermittent periods of occupancy generally are not sufficient. However, constant use by the claimant is not required so long as the possession is of the type that the usual owner would make of the property. For example, the fact that the adverse possessor is using the land for the intermittent grazing of cattle will probably not defeat continuity if the land is normally used in this manner.

b.    Tacking Permitted

There need not be continuous possession by the same person. Ordinarily, an adverse possessor can take advantage of the periods of adverse possession by her predecessor. Separate periods of adverse possession may be “tacked” together to make up the full statutory period with the result that the final adverse possessor gets title, provided there is privity between the successive adverse holders.

1)   “Privity”

Privity is satisfied if the subsequent possessor takes by descent, by devise, or by deed purporting to convey title. Tacking is not permitted where one adverse claimant ousts a preceding adverse claimant or where one adverse claimant abandons and a new adverse claimant then goes into possession.

2)    Formalities on Transfer

Even an oral transfer of possession is sufficient to satisfy the privity requirement.

Example:        A received a deed describing Blackacre, but by mistake built a house on an adjacent parcel, Whiteacre. A, after pointing the house out to B and orally agreeing to sell the house and land to her, conveyed to B, by a deed copied from her own deed, describing the property as Blackacre. The true owner of Whiteacre argues that there was no privity between A and B because the deed made no reference to Whiteacre, the land actually possessed. Nonetheless, the agreed oral transfer of actual possession is sufficient to permit tacking.

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