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9. If judgment is for the businessman, it will be because
The friend expended $3,500 on the retaining wall. Then he obtained all of the original deeds in the chain from the owner to him. Shortly thereafter, the friend discovered the covenant in the owner's deed to the veterinarian. He demanded that the businessman pay $1,750, and when the businessman refused, the friend instituted an appropriate action to recover that sum from the businessman. In such action, the businessman asserted all defenses available to him.
Lot 2 is now owned by a businessman, who took by intestate succession from the owner, now dead.
The deed from the owner to the veterinarian was never recorded. All other deeds were promptly and properly recorded.
All conveyances by deeds were for a consideration equal to fair market value.
There is no statute that applies to any aspect of the problems presented except a recording act and a statute providing for acquisition of title after 10 years of adverse possession.
The veterinarian conveyed Lot 1 in fee simple to a woman by warranty deed in usual and regular form. The deed omitted any reference to the retaining wall or any covenant. 50 years after the owner's conveyance to the veterinarian, the woman conveyed Lot 1 in fee simple to her friend by warranty deed in usual form; this deed omitted any reference to the retaining wall or the covenant.
«Grantor, for himself, his heirs and assigns, does covenant and agree that any reasonable expense incurred by grantee, his heirs and assigns, as the result of having to repair the retaining wall presently situated on Lot 1 at the common boundary with Lot 2, shall be reimbursed one-half the costs of repairs; and by this provision the parties intend a covenant running with the land.»
An owner owned in fee simple two adjoining lots, Lot 1 and 2. He conveyed in fee simple Lot 1 to a veterinarian. The deed was in usual form of a warranty deed with the following provision inserted in the appropriate place:
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A real covenant is a written promise to either do something on the land (like maintain a fence, or cut the grass) OR a promise NOT to do something on the land (like build commercial buildings). Real covenants «run with the land,» so subsequent owners of the property can enforce them or be burdened by them. However, not all real covenants are able to run with the land. There are four elements that must be met for a covenant to run with the land at law: (i) intent that it runs with the land; (ii) notice; (iii) «touch and concern» of the covenant to the land; and (iv) privity of estate.
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. 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.
D is correct. In this question's fact pattern, the covenant is expressly stated that it is intended to run with the land, so the intent requirement is fulfilled. The businessman is not a bona fide purchaser because he inherited the land, so notice is not required for the covenant to run. The inheritance also establishes privity between the parties. Finally, it touches and concerns the land, because it serves to make the land more useful or valuable. Because all the requirements for the covenant to run with the land are met, the covenant will run with the land.
The covenant in this question states that the grantee and his heirs shall be reimbursed for half of the REASONABLE cost of repairs for a retaining wall that is a common boundary between Lots 1 and 2. The key piece of information in this covenant is that the repairs must be a reasonable cost. This question asks you why the businessman would be successful in an action against him by the friend who owned Lot 1 for half of the $3,500 the friend paid to repair the retaining wall. Only this answer provides a reason why the businessman would be successful: because a court could find that $3,500 was not reasonable to repair a retaining wall.
A is incorrect. Adverse possession allows for an adverse possessor to gain title to a property by being in continuous, hostile, open, notorious, actual, and exclusive possession of a property. The fact pattern in this question does not present any party gaining title through adverse possession, so it is incorrect.
B is incorrect. A recording act is a statute regulating the recording of deeds and other interests in property. Recording is irrelevant in this question because the businessman was not a bona fide purchaser of the lot. He inherited the land, so he could not be a bona fide purchaser, and only bona fide purchasers are protected by recording acts.
C is incorrect. As explained above, a covenant is enforceable when it runs with the land. Thus, reliance is irrelevant to determining if a covenant can be enforced.