Covenants - Bar Exam Uniform

1. What is the best advice to give your client regarding the effect of the zoning variance on the covenant? Select one.
   Answer: The zoning variance is irrelevant to the enforceability of the private covenant, which remains a separate and binding restriction. When you encounter questions about conflicts between zoning laws and private covenants, remember that these represent two separate legal frameworks that generally operate independently of each other. Private covenants are contractual obligations that run with the land, creating enforceable restrictions between property owners. Zoning laws are governmental regulations that establish minimum standards for land use. The key principle is that property owners can impose stricter private restrictions than what zoning requires, and obtaining government permission to do something doesn't automatically void private contractual obligations. The zoning variance here permits three-story construction, but it doesn't eliminate the neighbor's separate contractual duty under the recorded covenant to limit buildings to one story. Your client can still seek an injunction because the covenant remains fully enforceable as a private contract matter. Answer A is wrong because government acts don't automatically supersede private contracts - the variance simply removes one regulatory barrier but doesn't affect contractual obligations. Answer B misunderstands the relationship between zoning and private rights; cities can grant variances without improperly interfering with contracts, since these are separate legal domains. Answer C incorrectly assumes the variance affects remedies available for covenant enforcement - injunctive relief remains appropriate since the covenant is still valid and enforceable. Remember this fundamental distinction: zoning sets governmental minimums, while private covenants can impose additional restrictions. A zoning variance relaxes governmental requirements but doesn't release parties from their private contractual commitments to stricter standards.
2. Which issue is most likely to be dispositive in determining whether the owner must pay the dues? Select one.
   Answer: Whether a covenant requiring membership in a club touches and concerns the land. The central legal question is whether this specific covenant is of a type that can run with the land. For a covenant to run (either at law or in equity), it must "touch and concern" the land. This means it must affect the legal rights of landowners in their capacity as landowners. A covenant to pay dues for the upkeep of common areas touches and concerns the land. However, a covenant to pay dues to a private social club, even if located nearby, is much more tenuous. Courts are split on this, but it is the most significant hurdle for the yacht club. If the court finds the covenant does not touch and concern the land, it is merely a personal promise of the original grantee and unenforceable against successors. (B) is a real issue (benefit in gross), but many modern courts allow it. (A) is more fundamental. (C) is unlikely to be an issue as the covenant was in the deed (record notice). (D) would be relevant for a suit for damages, but the touch and concern issue is primary for any enforcement against a successor.
3. What is the homeowner's strongest argument that the ACC's decision is unenforceable? Select one.
   Answer: The ACC's decision was unreasonable and made in bad faith because it was based on a standard not contained in the covenants. While covenants giving discretionary approval power to an architectural committee are generally valid, the committee must exercise its power reasonably and in good faith, not arbitrarily. Here, the ACC invented a new "open-concept" standard not found in the recorded covenants. A court is likely to find this decision unreasonable and arbitrary, as it is not based on any standard of review provided to the homeowners. This is the homeowner's strongest argument. (A) is incorrect because restrictions on fences are common and generally valid. (C) is a weaker argument; courts often uphold covenants that lack specific standards, so long as the committee's subsequent decisions are reasonable. (D) is irrelevant to the enforcement of an equitable servitude by an HOA or its committee.
4. Will the owner of Lot 2 be able to enforce the covenant? Select one.
   Answer: No, because the covenant was extinguished by the doctrine of merger when the original landowner reacquired Lot 1. A covenant is terminated by merger if the ownership of the burdened and benefited estates comes into the hands of one person. Here, the original landowner, who owned the benefited Lot 2, reacquired the burdened Lot 1. At that moment, she owned both the benefit and the burden, and the covenant was extinguished. The covenant is not automatically revived when the properties are later severed. It would need to be newly created in the subsequent deed to be enforceable. (A) and (B) are incorrect because recording and notice do not prevent termination by merger. (D) is incorrect because lack of horizontal privity between subsequent owners is not the reason for termination; the issue is merger.
5. What is the likely outcome of the homeowner's action? Select one.
   Answer: Failure, because the changed conditions have occurred outside the subdivision, and the covenant may still benefit the interior lots. The doctrine of changed conditions requires that the changes be so radical and pervasive as to defeat the essential purpose of the restriction for all properties within the restricted area. Courts are reluctant to apply the doctrine when the changes have occurred only on the borders of the development, as the covenant may still provide substantial benefit to the homeowners on the interior lots (e.g., by preventing commercial encroachment). The change must affect the entire subdivision. Therefore, the action is likely to fail. (A) is incorrect because the standard is very high, and change on the periphery is usually insufficient. (B) is incorrect because mere economic hardship or the land being more valuable for a prohibited use is not a defense to enforcement. (D) is incorrect because having notice of a covenant does not estop a party from later challenging its enforceability under a doctrine like changed conditions.
6. What is the likely result of the neighbor's action? Select one.
   Answer: The injunction will be granted because the private covenant is an independent restriction and is more restrictive than the zoning ordinance. When you encounter a question involving both private restrictive covenants and zoning ordinances, remember that these are two separate layers of land use control that operate independently. Private covenants are contractual agreements between property owners, while zoning is governmental regulation. The injunction will be granted because private restrictive covenants and zoning ordinances can coexist, and property owners must comply with whichever restriction is more stringent. Here, the agricultural-use covenant is more restrictive than the light industrial zoning, so the manufacturer cannot build the factory even though it would comply with zoning laws. The covenant remains valid and enforceable against the current owner, regardless of the rezoning. Option A incorrectly assumes that zoning supersedes private covenants. This is a common misconception—zoning laws establish minimum standards, but private covenants can impose additional, more restrictive requirements that remain enforceable. Option B misapplies the "changed conditions" doctrine. This doctrine only terminates covenants when neighborhood changes make the covenant's purpose impossible to achieve or meaningless. Rezoning alone doesn't automatically create changed conditions sufficient to terminate a covenant. Option C wrongly focuses on public nuisance law. The neighbor's right to enforce the covenant doesn't depend on proving the factory would be a public nuisance—the covenant violation itself provides grounds for an injunction. Remember this key principle: Property owners must satisfy both zoning requirements AND any applicable private restrictive covenants. When they conflict, the more restrictive standard controls. Always analyze these as separate, coexisting limitations rather than competing regulations.
7. What is the buyer's best defense against the lawsuit? Select one.
   Answer: The oral agreement is unenforceable because it violates the Statute of Frauds. A restrictive covenant, which creates an interest in land (specifically, a negative servitude), is subject to the Statute of Frauds and must be in writing to be enforceable. The agreement here was purely oral. Therefore, it does not create a valid, enforceable covenant that runs with the land. (B) is incorrect because actual notice is sufficient to bind a successor to an equitable servitude, but only if the servitude was validly created in the first place. Notice of an invalid covenant does not make it valid. (C) is incorrect because an agreement to preserve trees for shade and privacy clearly touches and concerns the land. (D) is incorrect because this is a negative covenant (a promise not to do something), not an affirmative one.
8. The buyer's strongest defense against the suit for damages is that: Select one.
   Answer: the hiking club owns no adjacent land, so the benefit of the covenant is in gross. The hiking club is seeking money damages, which requires the covenant to run at law. For the burden of a real covenant to run, all elements (writing, intent, notice, touch & concern, horizontal and vertical privity) must be met. However, there is a significant issue with the benefit. Traditionally, for a real covenant, the benefit must be tied to a dominant estate and cannot be held in gross (by a party who owns no benefited land). Because the hiking club owns no land, the benefit is in gross. While modern trends may allow enforcement of such benefits in equity (as a servitude), courts are very reluctant to allow the benefit to run at law to permit a suit for money damages. This is the buyer's strongest defense. (B) is incorrect; affirmative covenants do run with the land. (C) is also true (no horizontal privity) and would defeat a damages claim, but the benefit-in-gross issue is also a powerful and often-tested defense. (A) is arguably a stronger conceptual defense in this context. (D) is incorrect; a written grant of a right-of-way for a trail is an easement, not a license.
9. Is the court likely to grant the injunction? Select one.
   Answer: Yes, because all requirements for the burden of an equitable servitude to run to the buyer have been met. The neighbor is seeking an injunction, which is an equitable remedy. This means the covenant must be enforceable as an equitable servitude. The requirements for the burden of an equitable servitude to run are: (1) a writing, (2) intent for the restriction to be enforceable by and against successors, (3) the restriction must touch and concern the land, and (4) the successor must have notice of the restriction. Here, the agreement was written and recorded, it expressly stated intent to run, a height restriction touches and concerns the land by affecting its use and enjoyment, and the buyer had actual notice. Therefore, the injunction should be granted. (C) is incorrect because horizontal privity is not required for an equitable servitude. (B) is incorrect because while the effect is similar to a negative easement for light or air, it was created as a covenant. (D) is incorrect because restrictions on the size and type of structures are classic examples of covenants that touch and concern the land.
10. Is the court likely to grant the injunction? Select one.
    Answer: No, because the covenant was breached by the original buyer, and the breach does not run with the land. The covenant was a promise to perform a single act: build a wall within one year. The original buyer breached this covenant by failing to build the wall within the specified time. This was a one-time breach that was complete before the land was sold to the new owner. The liability for that breach remains with the original buyer. The covenant itself does not 'run' to the new owner as a continuing obligation to build the wall, as the time for performance has already passed and the breach is complete. (A) is incorrect because even with notice, the new owner is not liable for the predecessor's completed breach. (C) is generally incorrect; courts will enforce affirmative covenants by injunction in many cases. (D) is incorrect because the covenant is in writing in the prior recorded deed, satisfying the Statute of Frauds and providing constructive notice.
11. How should the court rule on the homeowner's defense? Select one.
    Answer: For the HOA, because it has standing to enforce the covenants as the designated representative of the property owners. The homeowner's defense focuses on standing and privity. Modernly, HOAs are recognized as having standing to enforce subdivision covenants, either as the assignee of the developer's rights or as the agent and representative of the collective homeowners, who are the ultimate beneficiaries of the covenants. The argument that the HOA itself lacks privity of estate is not a winning defense. (A) is incorrect because courts do not apply traditional privity rules to bar enforcement by an HOA acting on behalf of the community. (B) is incorrect because covenants to pay money to an HOA for maintenance of common areas are universally held to touch and concern the land. (C) is a true statement about the covenant, but (D) directly addresses and refutes the homeowner's specific defense regarding the HOA's standing and privity.
12. On which grounds is the buyer of the 16th lot most likely to prevail? Select one.
    Answer: The buyer did not have record or actual notice of the restriction, and there was insufficient evidence for inquiry notice. This case involves an implied reciprocal negative servitude. For the servitude to be enforced against the buyer of Lot 16, the buyer must have notice of the common scheme. The deed did not contain the restriction, so there is no record notice. The facts state there was no actual notice. The final question is inquiry notice. While the 15 lots had houses, the facts state the surrounding area was mixed-use. A court could find that the appearance of the subdivision was not so uniform as to put the buyer on inquiry notice that there was a residential-only restriction. This lack of notice is the buyer's strongest defense. (A) is a weaker argument; a scheme applied to 75% of the lots could be seen as a common plan. (C) is incorrect because the Statute of Frauds does not bar this doctrine; the writing in the other deeds is sufficient. (D) is irrelevant because horizontal privity is not needed for an equitable servitude.
13. What is your client's best defense against the threatened lawsuit? Select one.
    Answer: The covenant is unenforceable against the client because the client lacked actual or record notice of the restriction. The neighbor is likely proceeding under a theory of an implied reciprocal negative servitude based on a common scheme. For the servitude to be enforceable against the client's lot, the client must have had notice of the restriction when they took the property. The facts state the client's deed did not contain the restriction (no record notice) and the client was not aware of it (no actual notice). While inquiry notice is possible if the subdivision had a uniform appearance, the facts do not establish this. Therefore, the strongest defense is the lack of notice. (A) is incorrect because the Statute of Frauds is satisfied by the writing in the prior deeds under a common scheme theory; the restriction does not need to be in every deed. (C) is incorrect because horizontal privity is not required to enforce an equitable servitude. (D) is incorrect because this type of building restriction is a common and permissible use restriction, not an unreasonable restraint on alienation.
14. What is the daughter's best defense to the action for damages? Select one.
    Answer: The burden of the real covenant does not run to her because she does not hold the entire estate that the original grantee held. For the burden of a real covenant to run at law (allowing for money damages), strict vertical privity is required. This means the successor must hold the entire durational estate held by the original covenantor. The original grantee held a fee simple absolute. The daughter holds only a life estate. Because she did not succeed to the entire estate, strict vertical privity is lacking, and the burden will not run to her at law. She may be bound in equity to comply with the covenant, but she cannot be sued for money damages. (A) is incorrect as affirmative covenants, like maintaining a fence, do run with the land if they touch and concern it. (C) is incorrect because the benefit was attached to the grantor's retained land, not held in gross. (D) is incorrect as the facts suggest an intent for the covenant to run with the land, not be merely personal.
15. What is your client's strongest defense against a potential lawsuit by the HOA? Select one.
    Answer: The covenant has been terminated by abandonment due to widespread and un-remedied violations. A restrictive covenant can be terminated by abandonment if the party seeking to enforce it has acquiesced in widespread violations by other owners in the subdivision. The fact that over half the homes are non-conforming is strong evidence that the original plan has been abandoned. This is the client's strongest defense. (B) is a weak argument, as courts often uphold stylistic covenants if they can be applied reasonably. (C) describes waiver or estoppel as to a particular homeowner, which is a good defense, but abandonment is stronger because it addresses the unenforceability of the entire covenant due to the widespread violations throughout the community. (D) is incorrect because the changed conditions doctrine typically applies to changes outside the subdivision that defeat the covenant's purpose, not to violations within it.
16. For the owner of Lot 2 to succeed, he must demonstrate that the benefit of the covenant runs with the land. Which of the following is required for the benefit to run? Select one.
    Answer: The covenant must touch and concern Lot 2, and there must be intent for the benefit to run. For the benefit of a covenant to run to a successor (here, the owner of Lot 2), the requirements are: (1) a writing (the original deed), (2) intent for the benefit to run to successors, (3) the benefit must touch and concern the benefited land, and (4) vertical privity (which is relaxed for benefits, meaning the successor need not take the entire estate). The most accurate statement of these requirements is (C). A residential-use-only covenant on an adjacent lot clearly benefits and thus "touches and concerns" the retained residential lot. (A) is incorrect; the benefit does not need to be mentioned in the successor's (Lot 2's) deed. (B) is incorrect; horizontal privity is never required between subsequent owners. (D) is incorrect because strict vertical privity is generally required for the burden to run at law, not the benefit.
17. What is the homeowner's most likely successful defense? Select one.
    Answer: Laches, because the neighbor unreasonably delayed in bringing the lawsuit, causing prejudice to the homeowner. Laches is an equitable defense that applies when a plaintiff unreasonably delays in asserting a right, and this delay causes prejudice to the defendant. Here, the neighbor waited three years after becoming aware of the violation before suing. During this time, the homeowner relied on the neighbor's inaction. This delay is likely to be found unreasonable, and the prejudice is the cost and effort of now having to remove an established structure. (B) is incorrect because abandonment requires widespread violations, not just one instance of non-enforcement. (C) is incorrect as merger is a doctrine related to common ownership of benefited and burdened estates. (D) is incorrect because the neighbor merely considering a violation does not constitute unclean hands; the plaintiff must have actually engaged in related misconduct.
18. To prevail in the suit for money damages, which of the following is it most critical for the owner of Lot B to establish? Select one.
    Answer: There was horizontal privity between the original covenanting parties. To enforce the burden of a real covenant at law (for money damages), all elements must be met: writing, intent, touch and concern, notice, horizontal privity, and vertical privity. The facts establish writing, intent, touch and concern, and vertical privity on both the benefit and burden side. However, the critical element that distinguishes a real covenant from an equitable servitude is the requirement of horizontal privity—a specific relationship (here, grantor-grantee) between the original covenanting parties. The facts state the original owner sold Lot A to a buyer, creating grantor-grantee privity. The owner of Lot B must establish this fact. The other choices, while necessary elements, are either more easily established by the facts (A, D) or not the most critical distinguishing factor for a suit for damages versus an injunction (B, as constructive notice is sufficient).
19. Is the city likely to obtain the injunction? Select one.
    Answer: Yes, because the corporation had notice of the covenant, and the covenant touches and concerns the land by controlling its use. The city is seeking an injunction, so the rules for equitable servitudes apply. The burden runs to a successor if there was writing, intent, the covenant touches and concerns the land, and the successor has notice. All these elements are present. The corporation had notice, and a covenant dictating the use of land (for a park) clearly touches and concerns it. (A) is the most plausible distractor. While traditionally the benefit of a covenant could not be held in gross, modern courts and the Restatement (Third) of Property have moved to allow enforcement, especially by governments or charitable organizations. More importantly, the city is the original covenantee, so the issue of the benefit running is not present. The city is enforcing the original promise against a successor to the burdened party. (B) is incorrect; affirmative covenants can and do run with the land. (D) is incorrect because privity is not required for an equitable servitude, and piercing the corporate veil is not necessary when the corporation itself had notice of the restriction.
20. Will the court grant the injunction? Select one.
    Answer: No, because judicial enforcement of a racially restrictive covenant constitutes state action that violates the Fourteenth Amendment. Under the U.S. Supreme Court case Shelley v. Kraemer, court enforcement of a racially restrictive private covenant constitutes state action and thus violates the Equal Protection Clause of the Fourteenth Amendment. While the covenant may exist on paper, it is legally unenforceable. Therefore, the court will not grant the injunction. (A) and (B) are incorrect because even if the technical requirements for a covenant to run are met, its enforcement is unconstitutional. (D) is also incorrect; while demographic changes have occurred, the primary reason for non-enforcement is the constitutional bar established in Shelley, not the real property doctrine of changed conditions.

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