by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
randolphp@umkc.edu
SERVITUDES; COVENANTS: "TOUCH & CONCERN:" Affirmative covenants running in favor of City in exchange for certain planning and zoning benefits to preserve the historic nature of burdened property, preserve and replace trees, install roads and underground parking, install fire alarms, preserve old buildings, etc. "touch and concern the land" and will be binding on successor owners of the property.

City of New York v. Dellafield 246 Corp., 662 N.Y.S.2d 286 (App. Div. 1997).

The case involves the Dellafield Mansion project, which was an effort to establish residential development in and around an old mansion donated to Columbia university. The development requirements were extensive, and were included in a covenant running with the land as well as backed up, in some cases, with surety bonds and the power of the city to revoke zoning benefits if the promises were not kept.

The property sold at a foreclosure sale (apparently under a mortgage junior to the covenants) and the corporate personification of the foreclosure sale purchaser ultimately took title and argued that the covenants were unenforceable because they did not "touch and concern the land" and because there was no privity of estate between the transferee and the original promissor.

The court here, in some instances reversing the trial court, finds all of the covenants enforceable as running covenants. It does not discuss the privity issue at all (perhaps because most of the relief sought was equitable in character, and the privity requirement doesn't usually apply as to the "running of covenants in equity") but does go into some length (for a New York decision) about whether the covenants touched and concerned the land.

The court rejects the trial court notion that the fact that certain covenants had "back up" surety promises made them any less covenants running with the land. Further, the fact that the City could revoke the earlier granted zoning benefits also was of no consequence, as this was only one option the City could use, and equity still could specifically enforce the promises through injunction.

The court acknowledges that some old New York authority had shown reluctance to conclude that "affirmative covenants" ran with the land. Many of the covenants in this case, of course, were "affirmative covenants," but the court has no trouble concluding that they touch and concern the land - although it does have some trouble explaining exactly what that test means. It simply says that all the promises relate to something that must be done on the land, and that's that.

It purported to distinguish the old "affirmative covenants" cases on the ground that they really addressed the propriety of imposing an affirmative duty "in perpetuity." This concern was particularly apparent in one case, Eagle Enterprises v. Gross, where the covenant required for payment of charges related to an old water well when the property now was served by public water connections.

Comment 1: The cases that influenced the trial court, and were distinguished by the appeals court here, are old law casebook chestnuts dating from an era when courts were struggling with the question of what sorts of covenants were too "open ended" and therefore too much a threat to alienability to be permitted to run with the land. Some New York authority drew a distinction between affirmative and negative covenants, holding that only the latter were of an acceptable sort for running covenants. Eagle Enterprises v. Gross, 39 N.Y.2d 505 (N.Y. 1977); Nicholson v. 300 Broadway Realty Corp., 7 N.Y.2d 240, 244, 196 N.Y.S.2d 945, 164 N.E.2d 832 (N.Y. 1959); Neponsit Property Owners' Association v. Emigrant Industrial Savings Bank, 278 N.Y. 248, 254-255, 15 N.E.2d 79 (N.Y. 1938). The "affirmative promise" rationale never has been the law elsewhere in America, but there are decisions dating from the same period that are conservative on the issue of what covenants ought to run.

Courts in other jurisdictions are well past this level analysis today, as is the new Restatement of Servitudes. The editor doubts whether the hoary cases discussed by this court really represent modern thinking on these matters even in New York.

The decisions the court distinguishes are all Court of Appeals decisions, and the inferior appellate court apparently feels comfortable ignoring their import by focussing solely upon the relationship of the promise to the land and not upon the affirmative nature of the covenants.

Comment 2: The court referred to the City as the "owner of benefitted property" so that the covenants touched and concerned the land as to benefit. It doesn't really clarify whether it is requiring that the "touch and concern" test be satisfied as to benefit in every case and particularly in cases involving the City. In failing to do so, it does great disservice to the law. Public agencies should not be required to demonstrate particular property that is benefitted by a covenant granted in exchange for zoning benefits. The City is the surrogate for the public interest, and that should be enough.

Comment 3: As indicated in prior postings, the proposed new Restatement of Servitudes does away with the "touch and concern" requirement entirely and would have no difficulty with the enforceability of these covenants.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Woodward at the ABA. (312) 988 5260 or woodwars@staff.abanet.org