How to Analyze a Covenant Dispute - dummies

How to Analyze a Covenant Dispute

By Alan R. Romero

You can reduce the chances of mistakes, confusion, or wasted energy by being methodical in how you analyze a covenant dispute. For example, you don’t need to waste your energy talking about whether a covenant touches and concerns the burdened land if the original covenantor still owns that land. Here are the steps for analyzing a covenant dispute:

  1. Determine what the conflict is.

    Make sure you identify and understand who wants whom to do or not do what.

  2. Consider whether there’s a covenant that would govern or resolve the conflict.

    Is there an express covenant that satisfies the statute of frauds, and would that covenant actually prohibit or require the burdened party to do what the benefited party wants? That may require interpreting the covenant. Consider also whether a common scheme of development may imply a relevant covenant.

  3. If there is a covenant that would govern the conflict, determine whether that covenant applies to the parties you’ve identified.

    Does the one party have the right to enforce the covenant, and is the other party bound by the covenant? If either is an original party to the covenant, she’s bound by her contract and the answer is easy.

    But if either or both are successors to original parties, then you must consider whether the covenant runs with the relevant parcel of land. The covenant will bind a successor in either law or equity if

    • The covenant touches and concerns the land.

    • The original parties intended to bind successors.

    • Either the original parties had horizontal privity and the successor has vertical privity with the original burdened party (law), or the burdened party had notice of the covenant for the benefit of the party seeking to enforce it (equity). Remember that if the benefited party wants damages, she must prove horizontal and vertical privity.

  4. If the covenant would apply to the parties, evaluate whether it’s enforceable.

    Consider whether the covenant has been terminated by private agreement or is unenforceable for any reason, including changed circumstances, waiver, unclean hands, abandonment, unreasonableness, or restraint on alienation.