Property Law Outline - Equitable Servitudes

1. Definitions
1. An equitable servitude is a covenant to do or not to do something regarding the use of land.
1. Important for Common Interest Communities.
2. Equitable servitudes are enforceable at equity by specific performance or injunction.
3. Important differences between real covenants and equitable servitudes…
1. Implied v. Express
1. Real covenants may not be implied, must be in writing.
2. Equitable servitudes may be implied. (see inquiry notice below).
2. Limitations on enforcement
1. Ex. O sells lots to X and Y with restrictions in the deeds.
1. If a real covenant, only O may enforce the restrictions against X.
2. If an equitable servitude, O and Y may enforce restrictions against X.
3. Remedy
1. Real covenants provide damages.
2. Equitable servitudes provide injunctions or specific performance.
    

2. Creation of Equitable Servitudes
1. Equitable servitudes usually must be created expressly in writing.
2. Negative equitable servitudes, however, may also be implied (see inquiry notice below).

3. Requirements for Enforcement of Equitable Servitudes Against Successors
1. Intent
1. Original parties must have intended to bind successors.
2. Original agreement need not expressly refer to successors; it is enough if a court can discern that intention from the circumstances surrounding the agreement.
1. In practice, courts sometimes conclude intent exists if notice is present.

2. Touch and Concern
1. Requires that the servitude relate to the use of land.
1. Originally, very restrictive, only actual uses/non-uses of land qualified.
2. Now, generally has been expanded.
2. View touch and concern is a murky balancing test weighing the benefit and the burden while maintaining a bias towards efficient uses.
3. For more detail, see Touch in Concern in Covenants.
    

3. Notice
1. The burdened party must have notice of the servitude for it to run.
2. Actual notice
1. Burdened party was told of the servitude in his deed.
3. Record notice
1. Burdened party found the servitude in the historical record of the deed (or should have).
4. Constructive/inquiry notice
1. Burdened party should have known of the restriction because of the conditions of the lots around him.
2. Ex. Sanborn v. McLean (Supp)
1. Developer sold lots, half with restrictions against commercial use and the other half without the restriction. Owner of a lot with no restriction wanted to build a gas station on the lot. Property owners wanted to prevent him from doing so by inferring an equitable servitude against his lot.
2. Held that there existed a reciprocal negative easement (equitable servitude though, really) because of the grantor's common scheme in putting restrictions in most of the deeds. Since no one else in the neighborhood was using their land for commercial use, owner should have foreseen the restriction and inquired about it (inquiry notice!).
3. In a subdivision, once a restriction is placed on one lot, subsequent lot buyers take title at risk of being subject to the same restriction.
1. Many courts do not accept Sanborn and hold that an owner must have actual or record notice to be bound by an equitable servitude.
4. Issue becomes, how many/what percentage of lots must have the restriction before it can be enforced against lots with no restriction?

 

4. NO PRIVITY IS REQUIRED.

4. Termination of Equitable Servitudes
1. Generally same as Covenants.
2. If the original purpose of the servitude can still be realized, it will be enforced even though the unrestricted use of the property would be more profitable to its owner.
1. Ex. Bolotin v. Rindge (p.767)
1. Owner owned lot in LA neighborhood adjacent to busy street. Restriction in deed against putting commercial buildings on lot. If the lot is commercial, worth $200k. If residential, worth almost nothing.
2. Held that the original purpose of the servitude was to preserve the character of the neighborhood the lot was in. The original purpose can still be realized; circumstances have not changed so much that the purpose is obsolete. The adjoining properties are still benefitted by the restriction. Property value alone will not invalidate a restriction.

5. Recording Acts
1. Purpose
1. Prevent surprises.
2. Inform prospective buyers about any encumbrances on the land.
3. Helps prioritize competing claims (time line issues).
2. Ways of determining who gets property in the face of competing claims
1. Race Statutes
1. First to record gets the land, even if other claimant got the deed first.
2. No penalty for bad faith purchase, even if recorder knew of other sale.
3. O sells to X, next day to Y. First to record will get land.
2. Race/Notice Statutes
1. First BFP to record gets the land, even if another claimant got the deed first.
2. BFP could not have known of other sale.
3. O sells to X, next day to Y. Y will only own if bought in good faith and records before X.
3. Notice Statutes
1. First BFP to record gets the land over any BFP who has not recorded.
2. A BFP who records gets the land over other claimants who have not recorded.
3. O sells to X, next day to Y. Y will own as long as was unaware of sale to X. If X records before Y's purchase, Y has constructive notice.