Horizontal privity note

Note on horizontal privity

The basic concept of horizontal privity can be express by the aphorism: “If it’s going to run with the land, it must be born with the land,” signifying that a real covenant must, in some sense, be part of the conveyance of the burdened property interest rather than being independent from it. The more restrictive rule requires that the benefited and burdened landowners have a continuing relationship (i.e. a fee simple conveyance from A to B would not satisfy the requirement). So to meet the restrictive rule, a real covenant is unenforceable as such unless the original covenantor and covenantee had a leasehold relationship, or unless their properties were servient and dominant tenements for an easement. The more flexible interpretation permits the horizontal privity requirement to be satisfied if the covenant is part of a conveyance in fee.

Consider five cases:

In case 1, the owner (in fee) of Izzie Haven, B makes a covenant to the owner (in fee) of Bundleofstyx Haven, A, that Izzie and any other pet occupying B will never do anything to make the occupancy of Bundleofstyx Haven undesirable or unsightly or to interfere with any pet residing on Bundleofstyx Haven. A sells Bundleofstyx Haven to C, who sells it to E. B sells Izzie Haven to D, who sells it to F. F’s pet jaguar, “Tizzy,” kills E’s pet coyote, “Barker.” E sues F for breach of the covenant. There is no real covenant to enforce between E and F because A and B lacked horizontal privity.

If, however, in case 2, Izzie Haven was not a separate property parcel but a leasehold on the entire premises of Bundleofstyx Haven, there would be horizontal privity between A and B, even under the English Rule, and the covenant would be enforceable as between E (now the successor to the landlord’s reversion) and F (now the successor to B’s leasehold).

If in case 3, there is no leasehold, but, Bundleofstyx and Izzie Haven are separate but adjacent fee interests, and A had an affirmative easement appurtenant to inspect Izzie Haven for evidence of pet droppings, canine, jaguar or otherwise. Covenant 1 would be enforceable as between E, successor to A’s fee interest, and F, successor to B’s fee interest, under the Massachusetts Rule (the more restrictive American interpretation of horizontal privity) because the easement creates horizontal privity.

Now, in case 4, suppose A subdivides Bundleofstyx Haven, and coveys half in fee to H, and later, conveys the other half in fee to G. G and H then convey all of their interests to I and J respectively. When A coveys to H, A insists that the deed include a covenant promising that H and his heirs or grantees never use the premises to create or play a song known as “The Conquest Stick.” J creates such a song and plays it loudly. I sues J for breach of the covenant. There would be no enforceable real covenant under either the English or the Massachusetts rule. There would, however, be an enforceable real covenant under the more relaxed American rule because the covenant was part of the deed from A to H.

Finally, in case 5, suppose A subdivides Bundleofstyx Haven, but does not include a covenant in either his conveyance to G or his conveyance to H. H subsequently makes a no-Conquest-Stick-song covenant to G. G and H convey to I and J, as before. Now the covenant is not enforceable as a real covenant between I and J under any interpretation of horizontal privity.

Additional quote notes:

“Horizontal privity takes three forms: the strict English position, the intermediate Massachusetts position, and the relaxed American majority position. In its strict English form, the horizontal privity requirement prevents all covenants imposing affirmative burdens from binding or benefiting successors, except for those covenants created in leases. The English requirement arguably serves two basic functions. First, because the existence of a lease is generally discoverable by inspection of the premises, and because the terms may be elicited from either landlord or tenant, the privity requirement helps to insure that successors receive notice of all running burdens. Second, the strict horizontal privity limitation imposed by the English rule serves an economic function by limiting restraints on the alienability of land. If affirmative burdens were allowed to run to successors indefinitely, land could become unproductive. The cost of compliance might make the economic burden of using the land so great that its value would be substantially depressed and alienability restrained. By limiting the imposition of affirmative burdens to covenants and by limiting running covenants to lease transactions, the English courts have protected against the dangers of affirmative burdens. In a leasehold arrangement, both parties to the covenant have an economic interest in the continued productivity of the burdened land. Thus, there is little danger that the covenant will be continued once it becomes unproductive or economically prohibitive to do so. Furthermore, negotiation between a lessor and lessee normally will be relatively easy because the parties are in frequent contact with each other. Transaction costs, therefore, will not inhibit efforts to modify or terminate an obsolete covenant. The strict horizontal privity requirement thus compensates for lack of public land records and lack of a direct way to modify or terminate covenants that have outlived their utility.

“The intermediate, or Massachusetts, position allows running covenants between parties who hold the dominant and servient tenements of an easement, as well as between the parties to leases. Thus, like the strict horizontal privity requirement, the Massachusetts position limits the transaction costs involved in modifying or terminating covenants. It does not, however, necessarily provide the same protection against burdensome or obsolete covenants because the holder of the dominant tenement of an easement may not be affected by the poverty of the servient tenement.

“In most of the United States, the horizontal privity requirement has been relaxed to permit the creation of running covenants in conveyances of fee simple estates. In this vestigial form, the horizontal privity requirement appears to prohibit only those covenants which are created independently from a conveyance of some other interest in the burdened land. The requirement apparently prevents the creation of running covenants between neighbors who do not share interests in an easement and who do not set up a straw conveyance to create the covenant. It is difficult to divine any useful purpose served by this requirement. Accordingly, in some jurisdictions horizontal privity is not required at all.”[1]

“In its original English form, it restricted the use of real covenants to lease transactions. As developed in the United States, the relationships creating horizontal privity expanded until a real covenant could be created in any transaction involving conveyance of some other interest in land.

In this American form, the only possible function of the horizontal privity requirement is to insure that covenants appear in recordable instruments. This function is more simply served by the Statute of Frauds and the recording acts. Since the doctrine has little support in modern case law and none among scholars of servitudes law, its elimination should not prove controversial.”[2]

“The term "horizontal privity" refers to a relationship between the original covenantor and covenantee. In order to create a covenant which had the potential to run with the land, the transfer between the parties had to be in the form of a conveyance (in which case, we say that the parties had horizontal privity). The grantor need not have to convey his entire estate to the grantee in order to have horizontal privity, but some portion of an estate had to be transferred. In other words, adjoining landowners could not agree to bind their land for their mutual benefit (no horizontal privity) and have the covenants bind future successors. In addition, at early English common law, covenants could only run with the land when the original parties were in landlord-tenant relationships. Even as late as 1834, in the case of Keppell v. Bailey, the court concluded that horizontal privity was satisfied only by a landlord-tenant relationship.[3]

[1] Susan F. French, Toward a Modern Law of Servitudes: Reweaving the Ancient Strands, 55 S.Cal.L.Rev. 1261, 1292-1293 (1982) [footnotes omitted].

[2] Susan F. French, Servitudes Reform and the New Restatement of Property: Creation Doctrines and Structural Simplification, 73 Cornell L.Rev. 928, 934 (1988) [footnotes omitted]

[3] John W. Fisher, II, The Evolution of Restrictive Covenants in West Virginia, 100 W.Va. 55, 59 (1997) [footnotes omitted].