Covenants — Apply covenant rules

Historical Context & Motivation

The law of real covenants and equitable servitudes developed to solve a fundamental problem in property law: how can a landowner make a binding promise about the use of land that will obligate not only the promisor but also all future owners of that parcel? At early common law, the doctrine of privity of contract meant that only the original parties to an agreement could sue or be sued on a promise. When land changed hands, subsequent purchasers were strangers to the original deal, and promises about land use evaporated with each conveyance. The resulting uncertainty undermined large-scale land development and neighborhood planning, because no buyer could rely on neighbors' commitments to maintain setbacks, building heights, or permitted uses.

The central question that covenant law addresses is this: under what circumstances should a promise about land use run with the land so that it binds and benefits successors in interest? The answer depends on whether the plaintiff seeks damages at law (real covenant) or injunctive relief in equity (equitable servitude), and it turns on a set of elements that bar examiners test with meticulous precision.

Core Principles & Definitions

A covenant is a promise respecting the use of land that may be enforced against subsequent owners of the burdened parcel and by subsequent owners of the benefited parcel. The doctrine splits into two parallel tracks depending on the remedy sought. A real covenant is enforced at law for money damages, while an equitable servitude is enforced in equity, typically through an injunction. Although courts often blur the line between these two categories, the bar exam consistently tests them as distinct doctrines with overlapping but non-identical elements.

Visual Explanation — Elements Comparison

Notice in the diagram that the doctrinal divergence centers on the trade-off between privity and notice. At law, the court demands a formal property-transfer nexus between the original parties (horizontal privity) and full estate succession for successors (vertical privity), but it does not care whether the defendant knew about the covenant. In equity, the chancellor dispenses with these technical privity requirements but insists on fairness: a purchaser cannot be bound by a restriction she had no way of discovering. This structural difference is the single most important distinction to internalize for the bar examination.

How Covenants Run — Deep-Dive Mechanism

Running of the Burden vs. Running of the Benefit

A covenant has two sides. The burden is the obligation to perform (or refrain from performing) some act — for example, the duty to maintain a fence or the prohibition against operating a business on the lot. The benefit is the right to enforce the covenant. For a plaintiff to prevail, two independent analyses must be satisfied: the benefit must run to the plaintiff's parcel, and the burden must run to the defendant's parcel. If either side fails to run, the successor lacks standing (benefit side) or cannot be held liable (burden side).

Horizontal Privity — The Grantor-Grantee Nexus

Horizontal privity exists when the original covenanting parties share a simultaneous interest in the land at the time the covenant is created. The most common example is a grantor-grantee relationship: A sells Lot 1 to B and, in the deed of conveyance, includes a restrictive covenant. Because the covenant is embedded in the instrument that simultaneously conveys the property interest, horizontal privity is satisfied. By contrast, if A and B are merely neighbors who sign an agreement across a back fence, there is no simultaneous property transfer and hence no horizontal privity. This is why most real covenants are created in deeds rather than stand-alone contracts.

Vertical Privity — Estate Succession

Vertical privity concerns the relationship between an original covenanting party and a successor. For the burden to run, strict vertical privity is required: the successor must have acquired the entire estate held by the original covenantor (e.g., fee simple to fee simple). A tenant or adverse possessor generally does not satisfy this standard because they hold a lesser estate. For the benefit to run, relaxed vertical privity suffices: the successor need only hold some possessory estate carved out of the original covenantee's interest (e.g., a life estate or leasehold).

Touch and Concern — The Substantive Filter

The touch and concern requirement filters out promises that are merely personal in nature. A covenant touches and concerns the land on the burden side if it restricts the use the owner can make of the burdened parcel or requires the owner to do something related to the land (e.g., maintain a shared driveway). It touches and concerns the land on the benefit side if the promised performance increases the use, utility, or value of the benefited parcel. A classic example of a covenant that fails this test is a promise to pay money unrelated to land maintenance — such as a covenant to pay a personal debt — which remains enforceable only between the original parties.

Classification — Affirmative vs. Negative Covenants & Defenses

Covenants can be classified along two critical axes. The first distinguishes affirmative covenants — promises to do something (maintain a fence, pay HOA dues) — from negative (restrictive) covenants — promises to refrain from doing something (no commercial use, no structures above two stories). The second axis, already discussed, distinguishes real covenants from equitable servitudes based on the remedy sought. Bar examiners frequently test scenarios involving termination or modification of covenants, so understanding the defenses is equally important.

Defenses to Enforcement

Worked Example — Applying Covenant Rules

Consider the following fact pattern, which illustrates a typical bar exam covenant question. Developer Devlin owns a 50-lot subdivision. In 2010, Devlin conveys Lot 12 to Abel by deed that includes the following language: "Grantee covenants, for herself, her heirs, and assigns, that Lot 12 shall be used solely for residential purposes." Similar restrictions appear in 40 of the 50 deeds. In 2015, Abel conveys Lot 12 to Baker by general warranty deed that does not mention the covenant. Baker, who did not examine the chain of title, opens a dog-grooming business on Lot 12. Neighbor Carter, who owns Lot 14 (also subject to the residential-only covenant from Devlin), sues Baker. Carter seeks (a) an injunction and (b) damages.

Covenants vs. Easements vs. Zoning

Bar examiners frequently test a student's ability to distinguish covenants from other land-use control devices. Covenants, easements, and zoning regulations all restrict how an owner may use property, but they differ in origin, enforcement mechanism, and the legal framework that governs them. The following table distills the essential distinctions.

Connection to the Restatement (Third) & Modern Trends

The traditional two-track analysis — real covenants for damages, equitable servitudes for injunctions — has been challenged by the Restatement (Third) of Property: Servitudes (2000), which advocates a unified approach. Under the Restatement, the concept of a "covenant that runs with the land" replaces the separate categories. The Restatement eliminates the horizontal privity requirement entirely and reconceptualizes touch and concern as a reasonableness standard, asking whether the covenant imposes an unreasonable restraint on trade, is unconscionable, or violates public policy. While several jurisdictions have moved toward the Restatement approach, the majority of bar exam questions still test the traditional framework. Understanding both is essential.

Looking forward, the trend in American property law is toward simplification. The Common Interest Community (CIC) model — governed by recorded declarations, bylaws, and HOA governance structures — has become the dominant vehicle for private land-use regulation in new residential developments. Under this model, the declaration functions as a mini-constitution, and courts increasingly evaluate restrictions under a reasonableness standard rather than the traditional elements. The bar exam, however, remains anchored in the traditional framework, and test-takers should master the historical elements while being aware that a question may occasionally reference the Restatement approach.

Practice Problems

Summary — Applying Covenant Rules