Restrictive covenants in Texas real estate are contractual promises relating to how a particular piece of property can be used. The restrictive covenant will specify constraints on specific uses of the property. For example, a homeowner’s deed may specify that his land is for single-family residential purposes only.
In this article, we will explain the elements involved in creating restrictive covenants. Although similar, we will also explain how equitable servitudes differ from restrictive covenants in Texas. If you are interested in restrictive covenants for a large area of land that you are developing, or if you have a question about a restrictive covenant, contact Austin real estate attorney Farren Sheehan for an evaluation.
Elements of a Restrictive Covenant in Texas
To create a restrictive covenant that is binding upon subsequent owners and assignees of the land, the following elements for a restrictive covenant must be met:
- It must be in writing.
- There must be an intent to run with the land.
- The covenant must touch and concern the land.
- There must be horizontal privity.
- There must be vertical privity or privity of estate.
- Notice must have been given to subsequent purchasers of the covenant.
Each of these items is addressed more thoroughly below:
(1) Covenant Must Be in Writing
Restrictive covenant promises must be in writing to satisfy the Statute of Frauds. For a covenant that states by its terms that it is to last for more than one year, it must be in writing to be enforceable. Most often in Texas real estate transactions, the restrictive covenant language is contained in the deed of sale for the property.
(2) Intent to run with the land
The intent of the original parties must have been for the covenant to run with the land, binding the successors, subsequent assignees, or purchasers by the same terms. If the language of the conveyance creating the covenant includes application to the “successors, heirs and assigns” of the burdened landowner, this requirement is met.
(3) The covenant must “touch and concern” the land
A restrictive covenant touches and concerns the land if the effect of the covenant is to make the land more useful or valuable to the benefited party. The land benefited by the restrictive covenant is known as the “dominant estate,” and the land burdened by the restrictive covenant is referred to as the “servient estate.” For a negative covenant, the covenant must restrict the holder of the servient estate in his use of that piece of land. For example, one court found that a restrictive covenant prohibiting use of a servient estate from selling alcohol is a covenant that touches and concerns the land.
(4) Horizontal Privity
At the time the promisor entered into the covenant with the promisee, there is horizontal privity if the two shared some interest in the land independent of the covenant (i.e. grantor-grantee, landlord-tenant, or mortgagor-mortgagee relationship). Just being neighbors and creating an agreement for one to not use his property in a certain way does not create horizontal privity to run with the land.
(5) Vertical Privity or Privity of Estate
Vertical privity, or privity of estate between the parties to an agreement, means that a mutual or successive relationship exists to the same rights in property. When the property is conveyed, either by simultaneous or successive interests, the vertical privity requirement is satisfied.
(6) Notice to Subsequent Purchasers
Notice must be given to subsequent purchasers of the restrictive covenant on the land. As a practical matter, recording a deed in the county clerk’s records that includes a statement in the deed specifying that the property is restricted is sufficient to put a subsequent purchaser on notice that there are use restrictions that apply to the property.
Differences Between a Restrictive Covenant and an Equitable Servitude
Similar to restrictive covenants, equitable servitudes are referred to by Texas courts as “implied reciprocal negative easements” or “implied equitable servitudes.” Both restrictive covenants and equitable servitudes are promises that restrict the use of real property and bind the owner of the property and his successors. Equitable servitudes are broader than restrictive covenants because they do not have to be included in the written deed and are enforceable in court as equity.
The two primary requirements that must be met for the equitable servitude doctrine to save an otherwise unenforceable restrictive covenant are:
- A general plan or scheme for development must exist; and
- Subsequent purchasers must acquire their property with notice (either actual notice or constructive notice) of the covenant or servitude.
Note that the relief for violations of restrictive covenants is monetary damages, whereas the relief for equitable servitude is injunctive enforcement through equity, usually by specific performance. In other words, while restrictive covenants are usually resolved by the awarding of monetary damages to the aggrieved party, equitable servitudes are enforced with an injunction preventing the use of the property in the manner that is in accordance with the general plan.
For an example of the use of equitable servitude, let’s say that a developer in Pflugerville or Round Rock divides a tract of land into lots for a residential subdivision. If some of the lots sold included restrictive covenants for certain uses and prohibited uses of the land, while deeds for sales of other lots did not contain the restrictive language, the courts will utilize the doctrine of equitable servitude to enforce the same restrictions on the lots without the written restrictive covenants in order to preserve consistency for the entire subdivision.
Contact Sheehan Law, PLLC Today
For more information on equitable servitudes and how they differ from restrictive covenants, see our article posted on Equitable Servitudes in Texas. If you have further questions about restrictive covenants or equitable servitudes, contact the Austin, TX real estate attorneys at Sheehan Law, PLLC. To get started, call us at (512) 251-4553, or fill out our online contact form with your questions.