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Acovenant, in its most general andhistorical sense, is a solemn promise to engage in or refrain from a specified action. Under historical Englishcommon law, a covenant was distinguished from an ordinary contract by the presence of aseal.[1] Because the presence of a seal indicated an unusual solemnity in the promises made in a covenant, the common law would enforce a covenant even in the absence ofconsideration.[2] In United States contract law, animpliedcovenant of good faith is presumed.
A covenant is an agreement like acontract. Acovenantor makes a promise to a covenantee to perform an action(affirmative covenant in the United States orpositive covenant inEngland and Wales) or to refrain from an action (negative covenant). Inreal property law, the termreal covenants means that conditions are tied to the ownership or use of land. A "covenant running with the land", meeting tests of wording and circumstances laid down inprecedent, imposes duties or restrictions upon the use of that land regardless of the owner.
A covenant for title that comes with adeed ortitle to the property assures the purchaser that the grantor has the ownership rights that the deed purports to convey.[3]Non-compete clauses in relation to contract law are also called restrictive covenants.
Landlords may seek and courts may grantforfeiture of leases such as inleasehold estates for breach of covenant, which in most jurisdictions must be relatively severe breaches; however, the covenant to pay rent is one of the more fundamental covenants. The forfeiture of a private home involves interference with social and economichuman rights. In the case of leasescommuted to a large sum payable at the outset (apremium), that has prompted lobbying for and government measures ofleasehold reform particularly in the law ofground rents andservice charges.
Restrictive covenants are somewhat similar toeasements andequitable servitude.[4] In the US, theRestatement (Third) of Property takes steps to merge the concepts as servitudes.[5] Real covenant law in the US has been referred to as an "unspeakable quagmire" by one court.[6]
Inproperty law, land-related covenants are called "real covenants", " covenants, conditions and restrictions " (CCRs) or "deed restrictions" and are a major form of covenant, typically imposing restrictions on how the land may be used (a negative covenant) or requiring a certain continuing action (an affirmative covenant). These may also "run with the land" (called acovenant appurtenant), meaning that any future owners of the land must abide by the terms, or may apply to a particular person (called acovenant in gross orof a purely personal nature).[7] Under English law, affirmative covenants typically do not run with the land; in the United States such covenants are examined more closely, but with exceptions affirmative covenants have been permitted to run with the land.[8]
The covenant may be shown in thedeed and should be disclosed to prospective purchasers; it may also berecorded, or in the case ofCommonwealth countries shown inTorrens title. Real covenants andeasements orequitable servitudes are similar[9] and in 1986, a symposium discussed whether the law of easements, equitable servitudes, and real covenants should be unified.[4] As time passes and the original promisee of the covenant is no longer involved in the land, enforcement may become lax.[10]
Covenants may be imposed throughhomeowner associations, and controversy has arisen over selective enforcement.[11] Historically, particularly in the United States, exclusionary covenants were used to exclude racial minorities. Some covenants exist for safety purposes, such as a covenant forbidding the construction of tall buildings in the vicinity of an airport or one restricting the height of fences/shrubs at street corners (so as not to interfere with drivers' sight lines). Covenants may restrict everything from the height and size of buildings to the materials used in construction to superficial matters such as paint color and holiday decorations. In residential areas, covenants may forbid "dirty" businesses (such asfeedlots or chemical production facilities) or business use entirely, or modifications such asamateur radio antenna. Amateur radio restrictions have been particularly controversial; in 1985 theU.S. Federal Communications Commission issued PRB-1preempting state and local restrictions, but not private restrictions; in 2012 after Congress passed a law requiring study of this issue (at the urging of amateur radio groupARRL[12]), the FCC declined to extend this preemption.[13] Some US states have enacted legislation requiring homeowners' associations to provide reasonable accommodations for amateur radio antennas under the rationale that amateur radio provides public service communications in the event of an emergency, major disaster, or special event.
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In Canada, governmental authorities may use restrictive covenants as well as zoning. For instance, theCity of Calgary's requirement that buildings in the general vicinity ofCalgary International Airport be under a certain height is registered against virtually every title in the northeast quadrant of the city as a restrictive covenant, not as a zoning by-law.
At common law, the benefit of a restrictive covenant runs with the land if three conditions are met:[14]
At common law, the burden of a restrictive covenant does not run[15] except where strict privity of estate (a landlord/tenant relationship) exists.
The burden can be enforced at law in limited circumstances under the benefit/burden test - that is, whoever takes the benefit must also shoulder the burden. InHalsall v Brizell [1957] Ch 169, a covenant requiring the upkeep of roads was found to bind the successor in title to the original covenantor because he had elected to take the benefit. The rule inHalsall v Brizell is limited to cases where the benefit can be linked to a specific burden and where the covenantor's successors in title can physically elect to take the benefit. For example, a restrictive covenant to contribute to the maintenance costs of a common area will not be binding if the covenantor's successors in title have no legal right to use them.[16] Rules for ascertaining whether the benefit of a covenant has been passed to another person who wishes to enforce the covenant were summarised inSmall (Hugh) v Oliver & Saunders (Developments) Ltd. in 2006, namely by an expressassignment of the benefit, through a building scheme arrangement, usually for a new development of multiple properties, or through the application ofsection 78 of the Law of Property Act 1925,[17] which only applies for covenants made since 1 January 1926.[18]
A positive burden can run in law, but not in equity, as it is deemed to be analogous to a contract, to which equitable principles do not apply (Rhone v Stephens (1994)).
The burden of a restrictive covenant will run in equity if these prerequisites are met:[19]
The leading case on restrictive covenants in equity is generally regarded as that ofTulk v Moxhay, in which it was determined that the burden could run in equity subject to the qualifications listed above.
The risk of an undisclosed restrictive covenant coming to the notice of a buyer or developer after they have acquired a site has been seen as especially high in regard toinfill residential development. Restrictive covenant indemnity insurance is often available to mitigate this risk.[17]
The covenant will typically be written in the deed, and must be in writing due to thestatute of frauds. Although scholars have argued that some of the following should be significantly relaxed, in order for the burden to run with the land the following must apply:[20]
US courts interpret covenants relatively strictly and give the words of the agreement their ordinary meaning. Generally if there is any unclear or ambiguous language regarding the existence of a covenant courts will favor free alienation of the property. Courts will not read any restrictions on the land by implication (as is done with easements for example). A covenant can be terminated if the original purpose of the covenant is lost. In some cases property owners can petition a court to remove or modify the covenants, andhomeowner associations may include procedures for removing the covenants.
The covenant may be negative or affirmative. A negative covenant is one in which property owners are unable to perform a specific activity, such as block a scenic view. An affirmative covenant is one in which property owners must actively perform a specific activity, such as keeping the lawn tidy or paying homeowner's association dues for the upkeep of the surrounding area.
An agreement not to open a competing business on adjacent property is generally enforceable as a covenant running with the land. However, under the federalSupreme Court's holding inShelley v. Kraemer, 334U.S. 1 (1948), a covenant that restricts sale to a minority person (commonly used during theJim Crow era) isunenforceable, as enforcement would require the court to act in a racially discriminatory manner, contrary to theEqual Protection Clause of theFourteenth Amendment.
In contemporary practice in the United States, a covenant typically refers to restrictions set on contracts like deeds of sale. "Covenants, conditions, and restrictions," commonly abbreviated "CC&Rs" or "CCRs", are a complicated system ofcovenants, known generically as "deed restrictions", built into thedeeds of all the lots[21] in a common interest development, particularly in the tens of millions of American homes governed by ahomeowner association (HOA) orcondominium association. There are some office or industrial parks subject to CCRs as well.
These CCRs might, for example, dictate the types of structures that can be built (e.g., a CCR may prohibit any type of modular, prefabricated, or mobile home or may require the structure to be a minimum size), appearance (e.g., no junk cars), or other uses (e.g., no operation of home-based business, no pets except traditional household animals). The purpose of this is to maintain a neighborhood character or prevent improper use of the land. Many covenants of this nature were imposed in the United States in the 1920s through the 1940s, beforezoning became widespread. However, many modern developments are also restricted by covenants on property titles; this is often justified as a means of preserving the values of the houses in the area. Covenant restrictions can be removed through court action, although this process is lengthy and often very expensive. In some cases[which?] it even involves aplebiscite of nearby property owners. Although control of suchplanning issues is often[when?] governed by local planning schemes or other regulatory frameworks rather than through the use of covenants, there are still[when?] many[quantify] covenants imposed, particularly in states[example needed] that limit the level of control over real property use that may be exercised by local governments. InHouston, Texas, the lack of a local zoning ordinance means that property owners make heavy use of deed restrictions to prevent unwanted development.[22]
Covenants have been used to exclude certain classes from owning real estate based on race, religion or ethnicity. These groups are generally marginalized groups.
In the United States, in the early 20th centuryzoning laws were used to prevent integrating neighborhoods but were struck down inBuchanan v. Warley. Thus, deed restrictions and restrictive covenants became an important instrument for enforcingracial segregation in most towns and cities, becoming widespread in the 1920s and proliferating until they were declared unenforceable in 1948[23] in the Supreme Court caseShelley v. Kraemer. They prohibited a buyer ofreal property from allowing use or occupancy by members of a given race, ethnicity, or religion as specified in thetitle deed. Such covenants were employed by manyreal estate developers to "protect" entiresubdivisions, with the primary intent to keep "white" neighborhoods "white". Ninety percent of thehousing projects built in the years followingWorld War II were racially restricted by such covenants.[24] Cities known for their widespread use of racial covenants includeChicago,Baltimore,Detroit,Milwaukee,[25]Los Angeles,Seattle, andSt. Louis.[26]
Said premises shall not be rented, leased, or conveyed to, or occupied by, any person other than of the white or Caucasian race.
— Racial covenant for a home inBeverly Hills, California.[23]
Often the restrictions applied only to African Americans wishing to buy property or rent a house or apartment, but other populations might also be banned, such asAsians,Jews,Indians, and someLatinos. For example, a restrictive covenant covering a large neighborhood in Seattle declared that "no part of said property hereby conveyed shall ever be used or occupied by any Hebrew or by any person of the Ethiopian, Malay or any Asiatic Race", thus banning Jews and anyone of African, Filipino, or Asian ancestry. The exclusionary language varied widely. Some neighborhoods were reserved for the "White or Caucasian race". Others enumerated banned populations. One subdivision near Seattle specified that "This property shall not be resold, leased, rented or occupied except to or by persons of the Aryan race."[27] The Lake Shore Club District inPennsylvania sought to exclude various minorities, including "Negroes", "Mongolians",Hungarians,Mexicans,Greeks, and various other European ethnicities.[28]
InMontgomery County, Maryland, covenants excluded Black Americans and sometimes included language excluding Jews, Armenians, Iranians, Syrians, Turks, Greeks, Indians, Chinese, Japanese, Mongolians, Asians in general, or "non-Caucasians" in general.[29]
Covenants in Massachusetts localities excluded Black Americans and sometimes Irish, Italian and Polish people as well. One 1881 deed fromLowell, Massachusetts stated that "land shall never be deeded or conveyed to any person born in Ireland". A 1916 covenant inSpringfield, Massachusetts, stated that "said lot shall not be resold to a colored person, a Polander or an Italian."[30]
Some covenants, such as those tied to properties inForest Hills Gardens,New York, also sought to excludeworking class people; however, this type ofsocial segregation was more commonly achieved through the use of high property prices, minimum cost requirements, and application reference checks.[28]: 131–137
Covenants inSeattle, Washington, typically banned Black and Asian people and sometimes Jews.[31]
Covenants inHennepin County andRamsey County, Minnesota excluded African Americans and sometimes Asians and Middle Easterners. Prior to 1919, covenants sometimes excluded Jews. One Minneapolis covenant excluded "any person or persons of Chinese, Japanese, Moorish, Turkish, Negro, Mongolian or African blood or descent."[32] In 1953, theMichigan Legislature banned new covenants and in 1962 the legislature banned housing discrimination on the basis of race, religion or national origin.[33]
Racial covenants emerged during the mid-19th century and started to gain prominence from the 1890s onwards. It was not until the 1920s that they gained widespread national significance, and continued to spread through the 1940s. Racial covenants were an alternative to racially restrictivezoning ordinances (residential segregation based on race), which the 1917US Supreme Court ruling ofBuchanan v. Warley invalidated on constitutional grounds.[34][35]: 26
During the 1920s, theNational Association for the Advancement of Colored People (NAACP) sponsored several unsuccessful legal challenges against racial covenants. In a blow to campaigners againstracial segregation, the legality of racially restrictive covenants was affirmed by the landmarkCorrigan v. Buckley271 U.S.323 (1926) judgment ruling that such clauses constituted "private action" not subject to theDue Process Clause of theFourteenth Amendment.[35]: 31 [36] This cleared the way for racial restrictive covenants to proliferate across the US during the 1920s and 1930s.
Even the invalidation of such a covenant by the US Supreme Court in the 1940 case ofHansberry v. Lee did little to reverse the trend, because the ruling was based on atechnicality and failed to set alegal precedent.[35]: 57 It was not until 1948 that theShelley v. Kraemer judgment overturned theCorrigan v. Buckley decision, stating that exclusionary covenants were unconstitutional under the Fourteenth Amendment and were therefore legally unenforceable.[35]: 94 [37][38] On December 2, 1949US solicitor generalPhilip Perlman announced that the "FHA could no longer insure mortgages with restrictive covenants".[39]
Some commentators have attributed the popularity of exclusionary covenants at this time as a response to theurbanization of black Americans followingWorld War I, and the fear of "black invasion" into white neighborhoods, which residents felt would result in depressed property prices, increased nuisance (crime), and social instability.[28]: 97–98 Many African Americans openly defied these covenants and attempted to "pioneer" restricted areas.[40] But even still the covenants played a role as "gentlemen agreements", it wasn't until 1962, that theEqual Opportunity in Housing executive order was signed byPresident John F. Kennedy, prohibiting using federal funds to support racial discrimination in housing. This caused the FHA to "cease financing subdivision developments whose builders openly refused to sell to black buyers."[41]
In 1968, Congress passed the Fair Housing Act (Title VIII of theCivil Rights Act of 1968) which outlawed housing discrimination based on race, color, religion, sex, or national origin. In 1988, it was expanded to prohibit discrimination based on familial status (e.g. the presence of children) or disability.[42] It wasn't until 1972 that the Mayers v Ridley decision[43] ruled that the covenants themselves violated the Fair Housing Act and that county clerks should be prohibited from accepting deeds with such clauses.[44]
Although exclusionary covenants are not enforceable today, they still exist in many original property deeds as "underlying documents", andtitle insurance policies often contain exclusions preventing coverage of such restrictions. It is not always easy to remove them from the chain of title.[45] Since 2010, the Seattle Civil Rights & Labor History Project has located more than 500 restrictive covenants and deeds covering more than 20,000 properties inSeattle and its suburbs. In response, the Washington State legislature passed a law that since January 1, 2019 allows property owners to "modify" property records, disavowing the offensive restriction.[46] Mapping Inequality, a collaboration of three teams at four universities, has identified restrictive covenants in various parts of the United States.[47] TheMapping Prejudice project at the University of Minnesota has collected restrictive covenants in the Minneapolis area.[48]
Although most commonly associated with the United States, racially or ethnically restrictive covenants have been used in other countries:
Title covenants serve as guarantees to the recipient of property, ensuring that the recipient receives what he or she bargained for.
Since 1989, the main covenants implied inEngland and Wales on "limited" or "full title guarantee" (unless expressly overridden) are:[58]
Others as to charges, incumbrances, and third-party rights vary depending on whether full or limited title guarantee is agreed.[further explanation needed][64]
Outside of England and Wales, theEnglish covenants of title, sometimes included in deeds to real property, are (1) that the grantor is lawfully seized (in fee simple) of the property, (2) that the grantor has the right to convey the property to the grantee, (3) that the property is conveyed without encumbrances (this covenant is frequently modified to allow for certain encumbrances), (4) that the grantor has done no act to encumber the property, (5) that the grantee shall havequiet possession of the property, and (6) that the grantor will execute such further assurances of the land as may be requisite (Nos. 3 and 4, which overlap significantly, are sometimes treated as one item).[65] The English covenants may be described individually, or they may be incorporated by reference, as in a deed granting property "with general warranty and English covenants of title...".
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