Also known as:requirements of privity · privity requirement · privity requirements · privity of contract
Written by attorneys — see sources below.
A prerequisite for the enforcement of covenants and lease obligations against successors in interest. It consists of a direct legal relationship between the original parties that allows burdens or benefits to run with the land or leasehold. The requirement distinguishes between privity of contract, which survives transfers, and privity of estate, which terminates upon conveyance of the interest.
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How its tested
Common Examples
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Landlord Retains Contract Privity After Assignment
Ivan leased a loft to Brook Cyber under a lease containing an express promise to provide tech support. Brook Cyber assigned the lease to South Dev without any release from Ivan. Ivan continued to accept rent from South Dev but sued Brook Cyber when support stopped. The court held Brook Cyber liable because its obligation rested on privity of contract that survived the assignment.
Transferee Assumes Liability by New Promise
Roland Rhodes leased property to Radiance Media under a lease with an express maintenance covenant. Radiance Media assigned to Raven Logistics and obtained a promise from Raven to perform the covenant. Raven later assigned to Rising Sun Electronics. Roland sued Raven after a breach. The court imposed liability on Raven because its assumption created privity of contract that survived the second transfer.
Roger Ramirez leased land to Roland Rhodes under a covenant to maintain fencing. Roland assigned the leasehold to a buyer who later conveyed to a subsequent tenant. When fencing fell into disrepair the landlord sued the original lessee. The court enforced the covenant because privity of contract survived the successive transfers.
Howard v. Kunto2 Wash. App. 348, 469 P.2d 990
Land surveying errors led to a mismatch between deed descriptions and actual occupations on the shore of Hood Canal in Mason County. As long ago as 1932, McCall resided in the house now occupied by the Kuntos under a deed describing a 50-foot-wide parcel that was adjacent to the lot where the house stood. Several property owners to the west of defendants were similarly situated.
Since 1946, several conveyances occurred using the same legal description accompanied by transfer of possession to succeeding occupants. The Kuntos' immediate predecessors, the Millers, had a survey performed to build a dock which indicated conformity between deed and occupation, leading to placement of boundary stakes and construction of improvements.
The Kuntos took possession of the disputed property under a deed from the Millers in 1959. In 1960, the Howards, who held land east of the Kuntos, undertook a survey to convey an undivided one-half interest to the Yearlys. The survey revealed that the Howards were record owners of land occupied by the Moyers and the Moyers held record title to land occupied by the Kuntos.
In April 1960, Howard obtained a conveyance from Moyer of the land upon which the Kunto house stood in exchange for conveying the land upon which the Moyer house stood. Until that conveyance, neither Moyer nor predecessors asserted any right to the property possessed by Kunto and predecessors. Plaintiffs instituted this action to quiet title on August 19, 1960, when defendants had been in occupancy of the disputed property less than a year.
The trial court denied the Kuntos' claim of adverse possession, finding a lack of continuity of possession or estate to permit tacking and that defendants' possession was not continuous because it involved only summer occupancy. Defendants appealed from the decree quieting title in the plaintiffs.
Roberto Reyes leased commercial space containing a repair covenant. He assigned to a corporation that later assigned again without release. After breach the landlord sued the first assignee. The court imposed liability because the original contractual privity continued despite the second transfer.
In May 1955, Claus H. Henningsen purchased a new 1955 Plymouth Plaza Club Sedan from Bloomfield Motors, Inc., an authorized De Soto and Plymouth dealer for Chrysler Corporation.
Mr. Henningsen intended the car as a Mother's Day gift for his wife, Helen Henningsen, and communicated that intention to the dealer. He alone signed a one-page printed purchase-order form. The reverse side contained, in fine six-point script type, a warranty clause limiting the manufacturer's obligation to replacement of defective parts within ninety days or four thousand miles and disclaiming all other warranties, express or implied. The front of the form contained two even smaller paragraphs directing attention to the back-side conditions. The form was a standardized document prepared by the manufacturer and used by all its dealers. No one called the fine-print provisions to Mr. Henningsen's attention, and he did not read them.
The car was delivered on May 9, 1955, after the dealer performed the items listed in Chrysler's New Car Preparation Service Guide. On May 19, 1955, while Mrs. Henningsen was driving north on Route 36 in Highlands, New Jersey, at twenty to twenty-two miles per hour on a smooth, paved highway, she heard a loud noise from the front of the car. The steering wheel spun in her hands and the vehicle veered sharply into a highway sign and brick wall. The car had been driven only 468 miles, had required no servicing, and had exhibited no unusual behavior before the accident.
An insurance appraiser with eleven years of experience examined the wrecked vehicle and concluded that something in the steering mechanism from the wheel down to the front wheels had broken or dropped off. Plaintiffs also presented expert testimony that the steering failure resulted from a latent manufacturing defect that could not have been discovered by reasonable inspection. The negligence counts against both defendants were dismissed at trial. The case was submitted to the jury solely on the implied-warranty claims.
The jury returned verdicts for both plaintiffs against Chrysler Corporation and Bloomfield Motors, Inc. Defendants appealed and plaintiffs cross-appealed from the dismissal of the negligence claim. The Supreme Court of New Jersey certified the matter directly before consideration by the Appellate Division.
Raphael Rivera leased property with an express use restriction. He assigned the leasehold and the assignee promised performance. After further transfer the landlord sued the first assignee for violation. The court held the assignee liable on surviving privity of contract created by the assumption.
Plaintiffs acquired ownership of the real property located in San Francisco on or about July 10, 1961, from defendants Nicholas Kotoff and Nell Kotoff. Defendant George Savage, a real estate broker, represented the sellers in the transaction. The sale was memorialized in a uniform agreement of sale and deposit receipt, attached to the complaint as Exhibit 1. This document acknowledged receipt of $1,000 toward a $21,000 purchase price for the property in its present state and condition. It contained a provision stating that no representations, guaranties or warranties of any kind or character have been made by any party hereto, or their representatives which are not herein expressed. Savage was to receive a commission of $1,000 from the sellers for his services.
The complaint filed on February 13, 1962, alleged that the defendants knew at the time of the sale that the building was in a state of disrepair, that the units contained therein were illegal, and that the building had been placed for condemnation by the proper officials of San Francisco. The plaintiffs did not know these facts. They did not discover them until November 1961. The defendants willfully and fraudulently failed to reveal the information. The plaintiffs purchased the property justifiably relying on the nondisclosure in the belief that the property was in legal tenantable and properly repaired condition as required by law. The complaint sought $5,000 in general damages and $10,000 in punitive damages based on the claim that the actual market value of the property was $5,000 less than it would have been in the condition as represented.
Defendant Savage filed a demurrer. The demurrer asserted that the complaint failed to state facts sufficient to constitute a cause of action. It also asserted that the complaint was ambiguous, unintelligible and uncertain. The demurrer specifically attacked the legal sufficiency of the facts pleaded on the ground that the exhibit showed the plaintiffs had offered to purchase the property in its present state and condition with no unexpressed representations. The trial court sustained the demurrer without leave to amend and entered judgment in favor of Savage.
Plaintiffs appealed from the judgment entered after the sustaining of the demurrer without leave to amend.
Ronald Reed purchased land subject to a recorded maintenance covenant benefiting neighboring parcels. He conveyed to a buyer who ignored the covenant. The original promisee sued the subsequent owner. The court enforced the burden because vertical privity connected the successor to the original covenantor.
Nahrstedt v. Lakeside Village Condominium Association, Inc.878 P.2d 1275, 1287 (Cal. 1994)
Lakeside Village is a 530-unit condominium development in Culver City consisting of 12 separate three-story buildings whose residents share common lobbies, hallways, laundry, and trash facilities. In April 1978 the developer recorded a declaration of covenants, conditions, and restrictions that included the provision that no animals, defined to mean dogs and cats, livestock, reptiles, or poultry, shall be kept in any unit. Plaintiff Natore Nahrstedt purchased a unit in January 1988 and moved in with her three cats, which she kept entirely inside the unit.
When the Lakeside Village Condominium Association learned of the cats it demanded their removal and levied successive monthly fines against Nahrstedt. Nahrstedt then filed suit against the Association, its officers, and two employees seeking declaratory relief that the pet restriction was unreasonable as applied to her indoor cats, invalidation of the assessments, damages for invasion of privacy and emotional distress, and injunctive relief. The complaint alleged that the cats were noiseless, created no nuisance, and had not damaged any portion of her unit or the common areas, and it incorporated by reference the grant deed, the declaration, and the condominium plan.
The Association demurred to the complaint on the ground that the restriction was reasonable as a matter of law. The trial court sustained the demurrer as to every cause of action and dismissed the complaint. A divided Court of Appeal reversed the judgment of dismissal, concluding that Nahrstedt had stated a claim for declaratory relief because the reasonableness of enforcing the restriction against her particular cats presented a factual question. The dissenting justice in the Court of Appeal maintained that the recorded restriction should be treated as presumptively valid under the law of equitable servitudes. On the Association's petition the Supreme Court granted review.
Does privity of contract survive an assignment of a lease?
Yes. An original tenant's express promise in a lease creates a contractual obligation that remains enforceable by the landlord after assignment unless the landlord grants an express release. The assignment terminates privity of estate but leaves the contractual privity intact.
Supporting sources
What is the difference between horizontal and vertical privity?
Horizontal privity requires a special relationship between the original covenanting parties at the time the covenant is created. Vertical privity requires a chain of title connecting a successor to the original party whose estate is burdened or benefited. Modern law has largely abandoned the horizontal privity requirement.
Supporting sources
Is privity required between a manufacturer and an injured consumer in products liability?
No. Strict products liability permits recovery by the ultimate consumer without any direct contractual relationship to the manufacturer or other sellers in the distribution chain. The historical privity requirement has been eliminated to protect consumers from defective products.
Supporting sources
Does the benefit of a land-use promise run without additional privity?
Yes. The benefit of a promise respecting land use runs to the promisee's successors without any privity between the promisor and promisee beyond the promise itself. A successor to the promisee may enforce the restriction against a successor to the promisor.
Supporting sources
32 N.J. 358, 161 A.2d 69 (1960)
…manufactured they will be dangerous to life or limb, then society’s interests can only be protected by eliminating the requirement of privity between the maker and his dealers and the reasonably expected ultimate consumer. In that way the burden of losses consequent upon use of defective articles is borne by those who are in a…
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