Restrictive Covenants – New Hampshire Supreme Court Precedential Opinion
In the December 6, 2006, opinion of Shaff v. Leyland, the New Hampshire Supreme Court (the “Court”) took up an issue of first impression concerning the standing required to enforce restrictive covenants attached to land. 154 N.H. 495, 914 A.2d 1240 (N.H. 2006).
The facts surrounding this dispute first began in 1985, when Edith W. Leyland (“Appellant”) conveyed twenty-three acres of land to Margaret A. Shaff (“Appellee”) by a warranty deed that contained the following restrictive covenant: “The above described premises are conveyed subject to the restriction, which shall run with the land, that the Grantees, their heirs and assigns shall construct on said premises only a colonial-type residence having a market value of at least One Hundred Thousand Dollars ($100,000).” The trial court found that Appellant lacked standing to enforce the restrictive covenant because she did not reserve a right of enforcement in the deed and at the time this action was brought, no longer owned any property in the surrounding area.
In assessing the Appellant’s standing to enforce the restrictive covenant, the Court found that the issue was one of first impression in New Hampshire, and given this fact, would need to look to the law of other jurisdictions. The Court explained that the majority rule provides that if an individual does not own the property that is benefited by the restrictive covenant, then he or she cannot show legal injury, and therefore lacks standing to enforce the covenant. Rogers v. State Road Commission, 227 Md. 560, 177 A.2d 850, 852 (Md. 1962).
The majority rule was formed through an analysis of the two general classifications of covenants: covenants appurtenant and covenants in gross. Restatement (Third) of Property: Servitudes § 1.5 (2000). “Appurtenant” means that the rights or obligations of a servitude are tied to the ownership or occupancy of the land. Id, “In gross” means that the benefit or burden of servitude is not tied to ownership or occupancy. Id. Either covenant can be personal or can run with the land. Id. Running with the land means that the restriction passes automatically to successors in ownership, while a personal covenant means that the restriction is not transferable and does not pass on with successive ownership. Id. Since the common law has not always recognized covenants in gross, it requires that a person own the land that benefits from the restriction in order to have standing to enforce it. 20 Am. Jur. 2d Covenants, Etc. § 244 (2005). In contrast, the Restatement (Third) of Property finds that one does not need to have an ownership interest to have standing to enforce a covenant in gross, but rather only needs to “establish a legitimate interest in enforcing” the restriction. Restatement (Third) of Property: Servitudes § 8.1.
The Court explained that the general rule of construction favors appurtenant servitudes over servitudes in gross. Burcky v. Knowles, 120 N.H. 244, 248, 413 A.2d 585 (1980). Other jurisdictions which recognize the majority rule provide that restrictions contained in deeds are to be regarded as for the personal benefit of the grantor unless a contrary intention appears. The Court determined that it would follow this same standard, holding that restrictive covenants shall be construed as appurtenant to an interest in land, the benefit of which is personal to the covenantee and enforceable only by the covenantee unless a contrary intent is expressed in the language of the covenant.
The restrictive covenant here expressly stated that the burden shall run with the land, however, there was no mention as to what type of covenant was conveyed or the intent of the benefit. The Court found that at the time Appellant conveyed the property, she owned other property in the immediate area, and concluded that the restrictive covenant was created to personally benefit the Appellant as the owner of the land that benefitted from enforcement of the restriction. Additionally, the Court reasoned that if the Appellant wished to hold the covenant in gross, she could have included language to that effect, but chose not to do so, and therefore, the Court found the covenant to be appurtenant and the Appellant lacked standing to enforce the covenant because she no longer owns land that benefits from it.
*The Court stated it recognized that the adoption of the rule set forth in the Restatement (Third) of Property could permit an original covenantor to enforce a covenant in gross regardless of ownership, however the Court found that this case did not present a proper opportunity to decide whether or not to adopt such rule because it was not necessary to the decision.
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