Also known as: privity of contract · privity of estate · privity · contractual privity · estate privity
Written by attorneys · grounded in primary & secondary sources — see below
A dual relationship between parties to a lease under which one party holds both contractual obligations from the lease agreement and estate-based obligations arising from shared possession or ownership of the leased property. The distinction determines whether obligations survive a transfer of the leasehold interest. Privity of contract persists after assignment unless released while privity of estate ends with the transfer of possession.
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Pablo Perez leased commercial space to Parker Phillips under a written lease containing a repair covenant. Pablo assigned his interest to Prosperity Investments without obtaining a release from Parker. When the roof failed, Parker sued Pablo for breach. Pablo remained liable because his obligation rested on privity of contract that the assignment did not extinguish.
Pearl Porter bought a newly built home from its first owner. Two years later the foundation cracked. Pearl sued the original builder-vendor for breach of the implied warranty of habitability. The court dismissed the claim because Pearl lacked privity with the builder and the jurisdiction limited warranty enforcement to the original purchaser.
Preston Pratt used a strip of land adversely for seven years then conveyed his parcel to Pierce Patterson. Pierce continued the same use for eight more years. When the record owner sued to quiet title, Pierce added the two periods because privity existed between the successive adverse users through the conveyance.
Phoenix Technologies granted a right-of-way across its land to a neighboring utility. The deed contained no mention of any lease or estate relationship between the parties. The servitude nevertheless bound subsequent owners because no privity of estate or contract is required to create a servitude under modern doctrine.
Pulse Media assigned its lease to Pacific Bank. The lease required the tenant to maintain common areas. Pacific Bank took possession and the landlord sued when the areas fell into disrepair. Pacific Bank became obligated because the assignment placed it in privity of estate with the landlord and the covenant touched and concerned the land.
Perry Pratt bought a car from a dealer. A steering defect caused an accident injuring a pedestrian bystander. The pedestrian sued the manufacturer in negligence. The manufacturer could not escape liability by citing lack of contractual privity because the duty of care extends to all foreseeable victims regardless of direct contract.
Privity of contract arises from the original lease agreement and survives assignment unless the landlord releases the assignor. Privity of estate arises from the transfer of possession and ends when the assignor relinquishes the estate. The distinction controls whether the original tenant remains liable for covenants that touch and concern the land.
Supporting sources
…warranty provisions and the disclaimer of liability contained in the purchase order do not bind them because (1) there was no privity of contract between them and the defendants, (2) the warranty provisions are not binding upon them because they were not read by or explained to Mr. Henningsen before he signed the purchase order, (3)…
…whether a distinction exists between a warranty based on a contract between the parties and one imposed on a manufacturer not in
…In most areas product liability law has moved far beyond “mere” implied warranties running between two parties in privity
…Ballantine explains: Where the same claim of title has been consistently asserted for the statutory period by persons in privity with each other, there is the same reason to quiet and establish the title as where one person has held. The same flag has been kept flying for the whole period. It is the same ouster and…
…those that do not. But surely it cannot be said that this distinction, which is so closely related to traditional concepts of privity
Jurisdictions split on the issue. Some require privity and limit enforcement to the original buyer. Others extend the warranty to subsequent purchasers when the defect renders the home unfit for habitation. The answer turns on whether the court treats the warranty as running with the property or as strictly contractual.
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Tacking is permitted when privity exists between the successive users, typically through a conveyance of the disputed parcel. The periods combine to satisfy the statutory requirement even though neither user alone held the land for the full period.
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Modern doctrine holds that no privity of estate or contract is necessary to create a servitude. The Restatement (Third) of Property rejects the older English requirement of a special relationship between the original parties.
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