Implying Both the Buyer’s Covenant and the Reciprocal Covenant - dummies

Implying Both the Buyer’s Covenant and the Reciprocal Covenant

By Alan R. Romero

In property law, the implied covenant theory can imply covenants benefiting and burdening a lot even when the original deed to that lot says nothing about a covenant.

If the common plan was evident at the time a person bought her lot from the common owner, then she implicitly covenants that her land will be subject to the same covenants that the other lots are subject to, even if her deed doesn’t say so. Likewise, the common owner implicitly makes the reciprocal covenant to the buyer.

The common plan may not have been evident from the start, however. The more lots that are sold with uniform, express covenants, the more likely that a court will find a common plan sufficiently manifested.

Although other kinds of evidence, such as marketing materials and oral representations by the common owner, can manifest a common plan, a court almost certainly won’t find an implied covenant unless the common plan has already begun to be implemented in actual sales — unless a significant number of properties have been sold with express covenants.

Even if a common owner represents that there will be a common plan of development, if the first few properties are sold without express covenants, those properties will almost certainly not be burdened by implied covenants, either.

But if the next ten lots are sold with express covenants, the following lot that is sold would almost certainly be burdened by an implied covenant, even if the deed didn’t express the covenant.