Orchard Hill Realties, Inc. v. Maas, 47 A.D.2d 292, 366 N.Y.S.2d 682 (1975)
For an affirmative covenant to run with the land and bind subsequent owners, it must satisfy three requirements: the original parties intended the covenant to run, there is privity of estate between the parties, and the covenant must touch and concern the land, meaning it substantially affects the ownership interest in the property.
Summary
Orchard Hill Realties, Inc. sued Maas to enforce a covenant in a deed requiring Maas to purchase water from Orchard Hill. The original deed contained a provision that the covenant would run with the land. Maas, a subsequent owner, refused to purchase water, having established his own well. The court held the covenant was not enforceable against Maas because, while the original parties intended the covenant to run with the land and privity of estate existed, it did not sufficiently “touch and concern” the land. The court emphasized that such covenants are disfavored due to potential restrictions on alienation.
Facts
In 1951, Orchard Hill Realties, Inc. (Orchard Hill), a developer, sold land to William and Pauline Baum. The deed required the Baums to purchase water for domestic use from Orchard Hill’s well from May 1st to October 1st each year for $35. The deed stated the covenants would run with the land. Maas became a successor in interest to the Baums after a series of conveyances. Maas’s deed did not contain the water purchase covenant, nor did it refer to any restrictions. Maas built his own well and refused to purchase water from Orchard Hill. Orchard Hill sued Maas to collect the annual fee for the water supply.
Procedural History
The trial court found the covenant ran with the land and was binding on Maas. The Appellate Division reversed, holding the covenant was not enforceable against Maas. The New York Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
Whether a covenant requiring a grantee to purchase water seasonally from the grantor is enforceable against subsequent grantees when the covenant is only contained in the original deed and the subsequent grantee has an independent water source.
Holding
No, because while the original parties intended the covenant to run with the land, and there was privity of estate, the covenant did not sufficiently “touch and concern” the land and created a burden in perpetuity.
Court’s Reasoning
The court reaffirmed the three-part test for an affirmative covenant to run with the land from Neponsit Prop. Owners’ Assn. v Emigrant Ind. Sav. Bank, 278 N.Y. 248 (1938): (1) the original grantee and grantor must have intended that the covenant run with the land; (2) there must exist “privity of estate” between the party claiming the benefit of the covenant and the party upon whom the burden of the covenant is to be imposed; and (3) the covenant must be deemed to “touch and concern” the land with which it runs. The court emphasized that even with an express statement of intent for the covenant to run, it must still meet all legal requirements.
The court focused on the “touch and concern” requirement, stating that a covenant must substantially affect the promisor’s legal interest in the property. Citing Neponsit, the court noted, “the distinction between covenants which run with land and covenants which are personal, must depend upon the effect of the covenant on the legal rights which otherwise would flow from the ownership of land and which are connected with the land.”
In this case, the covenant for seasonal water supply did not significantly affect Maas’s ownership rights or those of other property owners. Maas secured his own water source, and the record did not show that other owners would be deprived of water or face prohibitive costs if Maas terminated the service. The court characterized the agreement as a personal, contractual promise rather than a property interest.
The court also expressed reluctance to enforce the covenant because affirmative covenants are disfavored due to concerns about undue restrictions on alienation and perpetual burdens, citing Nicholson v. 300 Broadway Realty Corp., 7 N.Y.2d 240 (1959). Unlike covenants in Nicholson and Neponsit, the water supply covenant had no outside limitation, creating a potential burden in perpetuity, which weighed against its enforcement.