Facts: DF purchased the land at a judicial sale. Lien arose in the deed of conveyance
from PL’s assignor to a predecessor of title to DF. Every deed in the chain of title since
the conveyance mentions this covenant.
Original grantees, the Deyers, were conveyed deed that said land was subject to an annual
charge as will be fixed by the par on the first part (grantee), which may be a Property
Owners’ Association to be paid the first of May every year. The charge would be
considered a lien and considered paid off. The grantees accepted by this deed and to all
successors and assigns of parties of the first part to bring action on those who do not pay.
The covenant shall run with the land. Same provision was in every deed on down the
chain of title.
Issue(s): Under NY property law, may DF landowners have their property foreclosed
upon by PL’s assignee for failure to pay a yearly service charge on their land as set for in
the original conveyance of the land?
Holding: Yes. The covenant touches & concerns the land, runs with the land, and there
is privity, and so there is a covenant which has been passed down to grantee who had the
duty to pay but did not. “In substance, if not form, the covenant is a restrictive covenant
which touches and concerns the DF’s land, and in substance, if not in form, there is
privity of estate between PL and DF….”
Court’s Rationale/Reasoning:
– Regardless of the intention of the parties, a covenant will only run with the land
and be enforceable against subsequent purchaser only if the covenant complies
with the four ancient standards: “Essential elements of a real covenant: (1) must
appear grantor & grantee intended that the covenant should run with the land; (2)
covenant touches or concerns the land which it runs; (3) privity of estate between
the promisee or party claiming the right to enforce it, and the promisor or party
who rests under the burden of the covenant.”
– English law it and NY law combine to hold that the burden of a covenant which
requires the covenanter to so an affirmative act, even on his own land, for the
benefit of the owner of a “dominant estate,” does not run with his land so as to
change the burden of performance on a subsequent grantee.
– For the covenant to “touch and concern,” it must affect legal relations — the
advantages & burdens — of the parties to the covenant, as owner of particular
parcels of land and not merely as members of the community in general, such as
taxpayers or owners of other land. The distinction between covenants which run
with the land and covenants which are personal, must depend upon the effect of
the covenant on the legal rights which otherwise would flow from ownership of
land and which are connected with the land.
– So even as the covenant is partially to pay for lands which are not touching the
covenant, the land on which the lien is paid is also part of the lands touching the
covenant. So it touches and concerns. The burden of such a promise to pay dues
touched and concerned the lot owner’s land, because the dues were necessary to
maintain the roads, beaches, parks and other common areas
– As to privity, it is based upon a distinction between the corporate property owners
association and the property owners for whose benefit the association was
created. Enforcement of technical principles is necessary to enforce the equitable
associated with privity (Tulk v. Moxhay). Here, the association is acting as an
instrument of the assignor property owner’s corporation. The common rights of
all the residents were preserved through such an organization. The corporate
entity cannot be disregarded, nor can the separate interests of the members of the
corporation. Only blind adherence to an ancient formula devised to meet entirely
different conditions could constrain the court to hold that a corp. formed as a
medium for the enjoyment of common rights of property owners owns no
property which would benefit by enforcement of common rights and has no cause
of action in equity to enforce the covenant upon which such common rights
depend.
– Every reason which in other circumstances may justify the ancient formula may
be urged in support of the conclusion that the formula should not be applied in
this case. In substance in form the covenant in s a restrictive covenant which
touches and concerns the D’s land, and in substance, if not in form, there is privity
of estate between the P and D