Establishing Vertical Privity - dummies

Establishing Vertical Privity

By Alan R. Romero

Vertical privity, in property law, generally refers to the relationship between an original party, whether covenantor or covenantee, and the successor to that party, who wants to enforce the covenant or against whom someone else wants to enforce it. The required relationship between the successor and the original party differs slightly for the benefit and the burden to run, as follows:

  • Running burdens: In order for the burden to run with the burdened land, the successor to the original burdened party must own the same estate that the original burdened party owned, in at least some of the burdened land.

  • Running benefits: For the benefit to run with the benefited land, the successor must own either the same estate as the original benefited party or a lesser estate that was part of the original owner’s estate, in at least some of the benefited land.

The reason for this rule is that covenants actually run with estates, not with land, despite the usual expression about covenants running with the land. An estate is a period of ownership of land. In the U.S. legal system, people own estates in land, not the land itself.

That estate may be permanent, called the fee simple absolute, or it may be for a time, like a leasehold or a life estate that ends at death. Because real property owners actually own estates in land, it makes sense that covenants would be attached to their estates, not the land.

In fact, the benefit and the burden of a covenant may relate to the same land but to different estates in that land — that’s the situation when a tenant makes covenants to the landlord. The burden of the tenant’s covenants touches and concerns his leasehold estate in the land, while the benefit of the covenants touches and concerns the landlord’s future estate, the reversion.

The burden therefore may run with the leasehold if the tenant transfers the leasehold to someone else, and the benefit may run with the reversion if the landlord transfers her estate to someone else.

A successor to the original party’s estate has vertical privity regardless of whether the successor acquires that estate in the entire benefited or burdened parcel of land or just some of it. For example, suppose an owner of 5 acres of land sells 1 acre and the buyer covenants that she’ll use the purchased land for residential purposes only.

Assuming the parties intended the benefit to run, the covenant certainly touches and concerns the seller’s land and therefore would run with that land. If the seller then divides up her remaining 4 acres, selling it to four different people, all four of those new owners would have vertical privity with the seller because they succeeded to the original party’s estate in some of the benefited land.

The burden runs to a successor only if the successor acquires the same estate as the original party. Using the same example, if the buyer subsequently leases her property to a tenant, her tenant doesn’t own the same estate as the original covenantor (the buyer) and therefore doesn’t have vertical privity. The tenant therefore wouldn’t be bound by the covenant.

But it’s different with the benefit. The benefit runs to a successor even if the successor acquires a lesser estate derived from the original benefited party’s estate. So, for example, the benefited party’s tenant would have the right to enforce the covenants against the burdened party.