In 1911, Neponsit Realty, as owner of a tract of land, caused to be filed a map of the land.
Tract developed for residential purposes and Neponsit Realty conveyed lots in the tract to purchasers and referred to the filed map.
In 1917, they conveyed the land now owned by D to Deyer and his wife.
Deed contained a covenant providing that the property would be subject to an annual charge not to exceed $4 per lot.
Assigns of the first party may include a Property Owner's Association.
If not paid, becomes a lien on the land.
Covenant shall run with the land until 1940.
P, an assignee of Neponsit Realty, brought an action to foreclose on a lien owed by D.
D purchased the land at a judicial sale.
Procedural History
P's motion was granted at trial court.
Appellate division affirmed.
Issues
Does a covenant to pay an annual charge to a property owner's association touch or concern the land?
Holding/Rule
A covenant to pay an annual charge to a property owner's association does touch or concern the land.
Reasoning
Neponsit Realty clearly intended that the covenant run with the land and be enforceable by the property owner's association.
It has often been said that a covenant to pay a sum of money is a personal affirmative covenant which does not concern or touch the land.
In many jurisdictions, this narrow English rule has been substituted for a more liberal and flexible rule.
However, NY has not abandoned the English Rule.
However, unless we exalt technical form over substance, the distinction must depend upon the effect o the covenant on the legal rights which otherwise would flow from ownership of land and which are connected with the land.
If we stress the intent an substantial effect of the covenant rather than its form, it is clear that the covenant in question may be property said to touch and concern the land of the defendant and so the burden should run with the land.
The sum of money affects public spaces, beaches, parks, improvements. These public spaces must be maintained, and the burden of maintenance should rest on the land benefited by the improvements.
Another difficulty is that none of the definitions of privity of estate seem to cover the relationship between P and D in this case.
D was created solely to act as assignee of the benefit of the covenant.
However, if the distinction between the property owners association and the property owners for whose benefit the association has been formed, then there is no basis for this argument.
Enforcement of these covenants rests on equitable principles, and so even if it technically violates one of the requirements, if equity requires enforcement, then it should be enforced.
The corporate P has been formed as a convenient instrument by which the property owners may advance their common interests.
Only blind adherence to an ancient formula designed to meet entirely different conditions could constrain the court to hold that a corporation formed as a medium for the enjoyment of common rights of property owners owns no property which would benefit by enforcement of the common rights, and thus has no cause of action in equity to enforce the covenant upon which such common rights depend.
In substance, if not in form, the covenant is a restrictive covenant that touches and concerns D's land, and in substance, if not in form, there is privity of estate between the plaintiff and the defendant.
