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17. Who is likely to prevail?
A landowner lawfully subdivided his land into 10 large lots. The recorded subdivision plan imposed no restrictions on any of the 10 lots. Within two months after recording the plan, the landowner conveyed Lot 1 to a buyer, by a deed that contained no restrictions on the lot's use. There was then a lull in sales. Two years later, the real estate market in the state had generally improved, and during the next six months, the landowner sold and conveyed eight of the remaining nine lots. In each of the eight deeds of conveyance, the landowner included the following language: «It is a term and condition of this conveyance, which shall be a covenant running with the land for the benefit of each of the 10 lots [with an appropriate reference to the recorded subdivision plan], that for 15 years from the date of recording of the plan, no use shall be made of the premises herein conveyed except for single-family residential purposes.» The buyer of Lot 1 had actual knowledge of what the landowner had done. The landowner included the quoted language in part because the municipality had amended its zoning ordinance a year earlier to permit professional offices in any residential zone. Shortly after the landowner's most recent sale, when he owned only one unsold lot, the buyer of Lot 1 constructed a one-story house on Lot 1 and then conveyed Lot 1 to a doctor. The deed to the doctor contained no reference to any restriction on the use of Lot 1. The doctor applied for an appropriate certificate of occupancy to enable her to use a part of the house on Lot 1 as a medical office. The landowner, on behalf of himself as the owner of the unsold lot, and on behalf of the other lot owners, sued to enjoin the doctor from carrying out her plans and to impose the quoted restriction on Lot 1.
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For intent to be present, the parties must have intended that successors in interest be bound by the terms of the covenant. This intent can be inferred from circumstances surrounding the creation of the covenant, or actual language in the conveyance itself. In common law jurisdictions, a purchaser of land that was subject to a covenant takes the land burdened by the covenant. It does not matter whether the purchaser had notice of the covenant prior to purchasing. However, in recording statute jurisdictions, if the covenant is not recorded, a bona fide purchaser who has no notice of the covenant and records their own deed will take possession of the land free of the covenant.
To touch and concern the land, the covenant must have an effect that makes the land itself more useful or valuable to the benefitted party. The performance of the burden must diminish the rights, privileges, or powers of the landowner in order to run.
Finally, horizontal and vertical privity must be present for the covenant to run. Horizontal privity exists when, at the time the promisor entered into the covenant with the promisee, the two shared some interest in the land independent of the covenant. Vertical privity exists when the successor in interest to the covenanting party holds the entire durational interest held by the covenantor at the time they made the covenant.
Both restrictive covenants and zoning ordinances may affect legally permissible uses of land. Both must be complied with, and neither provide an excuse for violating the other. However, they are enforced differently. Covenants can be enforced by nearby property owners at all or in equity. Zoning is not subject to enforcement by private suit; it can only be enforced by local government officials.
A is correct. To be binding, a restrictive covenant must be placed on the property at the time it is conveyed. Here, neither the deed to the first buyer nor the deed to the doctor contains the restrictive covenant. The burden cannot be attached to Lot 1 at a later time by someone who has no interest in Lot 1. Therefore, the doctor may proceed with her plan to use part of the property as a medical office.
B is incorrect. This option correctly concludes that the doctor will prevail, but it misstates the reason why this is so. Zoning ordinances do not automatically override a private restrictive covenant. The stricter of either the zoning ordinance or the covenant will prevail. In this case, the doctor will prevail because the restrictive covenant was not in the deed to the first buyer of Lot 1, nor was it in the deed to the doctor.
C is incorrect. Public land use controls and private land use controls are separate issues. Zoning may be changed. In this case, the zoning was changed a year after the first buyer purchased Lot 1. The doctor's use of Lot 1 is governed by the zoning in existence during the time of the doctor's ownership, and the previous zoning of the property is irrelevant. The doctor may proceed with her plan to use part of the property as a medical office, because the restrictive covenant was not in the deed to the first buyer of Lot 1, nor was it in the deed to the doctor.
D is incorrect. To be binding, a restrictive covenant must be placed on property at the time when it is conveyed. Here, the burden was not placed on Lot 1 when the first buyer accepted the deed. The first buyer's actual knowledge of the covenant two years later is irrelevant, and does not incorporate Lot 1 into the common scheme of the subdivision. A common scheme argument may prevail as to subsequent purchasers of other lots in the subdivision. As to Lot 1, however, the doctor may proceed with her plan to use part of the property as a medical office, because the restrictive covenant was not in the deed to the first buyer, nor was it in the deed to the doctor.