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1. Real Covenants – & Equitable Servitudes – Part III Non-enforcement, Termination & Remedies for Breach Property II
3. Real Covenants & Equitable Servitudes - General Means of Termination Initial invalidity –
Defective formation – covenant invalid ab initio
Noncompliance with technical rules - eg no required horizontal privity
Initial invalidity of certain servitudes –
Restatement (3d) Property – Servitudes § 3.1
4. Real Covenants & Equitable Servitudes - General Means of Termination Initial invalidity of certain servitudes –
Restatement (3d) § 3.1
Violates public policy
Arbitrary, spiteful capricious
Imposes an unreasonable restraint on alienation
Imposes an unreasonable restraint on trade
5. Real Covenants & Equitable Servitudes - General Means of Termination Subsequent termination
1. Self-Terminating Covenants
a. Termination after a stated period of years
b. Termination upon the happening of an event
When specific event occurs
Provision for modification or termination by majority vote of affected landowners
6. Real Covenants & Equitable Servitudes - General Means of Termination 2. Termination by release –
By party owning land benefited by covenant
NB release must be in form of deed & meet SOF
7. Real Covenants & Equitable Servitudes - General Means of Termination 3. Termination by Eminent Domain
If State takes title to burdened land and condemns the
covenant as well:
MAJORITY (MODERN) RULE: RC or ES is an interest in land like an easement – hence Government must pay compensation to owner of benefited land - when taken.
DAMAGES = FMV of benefited land with covenant
- FMV of benefited land without covenant.
8. Real Covenants & Equitable Servitudes - General Means of Termination 3. Termination by Eminent Domain
MINORITY (OLDER) RULE: RC or ES is similar
to a contractual right - hence Government not
obligated to pay compensation to covenant
9. Real Covenants & Equitable Servitudes - General Means of Termination 4. Termination by Merger
If title to land burdened and title to land benefited
come into the hands of one owner, real covenants,
equitable servitudes (and easements) merge into a
fee simple and cease to exist.
Logic: one cannot sue himself for damages or
If land is later severed – no revival of the servitudes
10. Real Covenants & Equitable Servitudes - General Means of Termination 5. Termination by abandonment
Abandonment occurs when conduct of the party
entitled to the benefit of a covenant demonstrates
that party’s intent to relinquish rights under the
11. Real Covenants & Equitable Servitudes - General Means of Termination 6. Termination by Abandonment
Example: Rolling Rock is a subdivision of 70 lots – with one unsold,
vacant lot. The deeds to the 69 other lots have a uniform set of covenants
that require inter alia 1) lots shall be used solely for residential purposes
and 2) the exterior walls of all houses built in the subdivision must be clad
in cedar shakes. But 10 years after the subdivision is founded, 40 lots
have brick or stone exteriors. The purchaser of Lot 70 - is justified in
concluding that 1) variation in the development of the subdivision and 2)
the failure to enforce the cedar exterior covenant is evidence of an intent
to abandon the covenant.
12. Real Covenants & Equitable Servitudes - General Means of Termination 6. Termination by Abandonment
But … sporadic, non-compliance is not abandonment.
1, 5 or 10 homes within Rolling Rock – without cedar shakes are insufficient to evidence abandonment
13. Real Covenants & Equitable Servitudes - Means of Termination Non-enforcement by
Change in (neighborhood) condition
. Traditional defense against enforcement of an ES
. Emerging defense against enforcement of RC
14. Real Covenants & Equitable Servitudes - Means of Termination Non-enforcement by:
Change in (neighborhood) condition
Required proof: 1) change outside the subdivision is so pervasive as to make all lots in subdivision unsuitable for the permitted use or 2) substantial change has occurred within subdivision itself
Border lot problem: change outside subdivision that affects only a border lot is not sufficient to prevent enforcement of the subdivision
15. Real Covenants & Equitable Servitudes - Means of Termination Change in (neighborhood) condition:
Depot Town is an urban block of parcels of land once owned by Carrie
Nation. Nation, as a common grantor, deeded out the lots to purchasers
with a uniform restriction that no alcohol shall be consumed on the
premises. All deeds were recorded and later deeds expressly refer to the
restriction. Initially the restriction was no problem because the lots were
used for manufacturing purposes. After a period of urban decay, Depot
Town is being gentrified through the conversion of factories into new
restaurants and fashionable loft apartments. Depot Town is surrounded
by “wet” land – with competing restaurants. Depot business owners and
residents wish to challenge the deed restriction.
16. Real Covenants & Equitable Servitudes - Means of Termination Effect of a successful defense of change in (neighborhood)
Debate Re Application of Doctrine To ES and RC?:
All jurisdictions employ Change-In-Condition defense to deny injunction to enforce an equitable servitude
Some jurisdictions employ Change-in-Condition defense only to deny injunction but permit covenant to run at law for a damage award.
Scholar dispute the wisdom of this last view
Some say it is illogical to negate a covenant in equity but let it run at law
Others say it is a sound judgment that p deserves damages but not the full prohibitory effect on injunction
17. Real Covenants & Equitable Servitudes - Means of Termination Effect of a successful defense of change in (neighborhood)
Non-enforcement vs termination debate:
If successfully raised, what is the legal effect of a C-in-NC defense?
Does is simply deny enforcement to the servitude?
Or does it actually terminate the servitude?
Does this matter?
18. Equitable Servitudes - Defenses to Enforcement Traditional equitable defenses – may lead to
non-enforcement of ES
Relative hardship - burden disproportionate to benefit
19. Real Covenants Remedies for Breach Breach of real covenant:
Traditional remedy: compensatory damages
Measure of damages: Difference between FMV of
(benefited) land before and after the breach
20. Real Covenants Remedies for Breach Damage calculation for breach of Real Covenant:
Example: A and B own adjacent property subject to a valid
and enforceable covenant that restricts their respective land
to residential use. B uses his property as an auto junk yard.
Before the breach of covenant A’s land has a FMV of
$ 250,000. After the breach its FMV is $80,000.
A’s damage award = $ 170,000 ($ 250,000 - $80,000)
21. Equitable Servitudes Remedies for Breach Breach of equitable servitude:
Traditional remedy: Injunction against future injury + temporary damages for past injuries.
22. Real Covenants & Equitable Servitudes Remedies for Breach Election of remedies –
Practically almost any restriction that can be
enforced as a RC can be enforced as an ES - so p
Can choose between: 1) full compensatory damages
and 2) an injunction – with appropriate temporary damages
Which remedy is most often sought???
Enough for now!