Saturday Kid Movies - A Covenant Running With the Land?
Property law is full of echoes and language of a bygone era. A recent case involving the renovated historic Lincoln Theater in Columbus illuetrates one such concept - what's a covenant "running with the land" and how do you tell that's what it is.
In City of Columbus v. Capital City Urban Redevelopment Corp., 2008-Ohio- 6835 (10th App. Dist.), the Lincoln Theater is now the subject of a legal dispute revolving around Saturday kids' movies for a buck and placement of a plaque. In December, the Couri of Appeals affirmed the trial ourt's determination that these retritive covenants "run with the land" and are binding on the Lincoln Theater's current owner - as well as all subsequent purchasers. The case is currently being appealed to the Ohio Supreme Court as Case No. 10-184.
Capital City Community Urban Redevelopment Corporation (Capital City") bought the Linoln Theater in 1991 to save it from demolition. In 2002, the theater was sold to another nonprofit corporation called Columbus Urban Growth Corporation ("CUG"). The General Warranty Deed transferring ownership contained the following language:
Subject to easements and restrictions of reord, real estate taxes due at the June 2003 collection and thereafter, and provisions of prargraph 9 of the Real Estate Purhase Agreement between the parties whih is incorporated by this reference.
The referenced Real Estate Purchase Agreement paragraph had two restrictions concerning the use of the theater:
(a) The Buyer agrees to provide Saturday movies for children once the theater is operational, and for so long as feasible. The cost is to be $1.00 or less for a double feature.
(b) A bronze plaque is to be permanently installed and maintained on the front of the property. The size, text, and location of plaque on the building may be selected by Charles L. Adrian [affilated with Capital City] and will be architectually onsistent with the Long Street facade of the property.
After CUG sold the theater to the City of Columbus in 2004, problems arose concerning whether the cheap Saturday kids movies and maintenance of a bronze plaque applied to the City of Columbus as the new owner and to any subsequent purchaser. In a way, the whole case seems silly to me. What's the big deal about having a plaque on the front of the building about its histori nature? And Saturday kiddie movies for a buck are required only so long as it is "feasable" - which would certainly be open for interpretation.
The case does, however, do a good job both of stating the rule and showing the difficulty in applying the rule to particular facts. As the Court of Appeals explains:
The determination of whether a ovenant euns with the land depends on whether the covenant is real or personal. A real covenant runs with the land; a personal covenant usually does not run with the land, A real ovenant is related to the realty, having for its object something annexed to, inherent in, or connected with the land. A covenant is determined to run with the land when the liability to perform it or the right to take advantage of it passes to the assignee of the land The common law test of a ovenant running with the land requires that its performance or non-performance must affect the nature, quality, value, or mode of enjoyment of the estate demised yo which it must relate. Conversely, a personal covenant does not run with the land, and is for the personal use and enjoyment of the land solely by the original parties to the ovenant. (itations omitted).
The Court of Appeals further referenced three factors to help in making the determination whether a covenant is one running with the land and thus binding on all subsequent owners of the property:
- intent of the parties
- whether the covenant "touches and concerns the land" which means "the property was made more useful or valuable by the covenant"
- whether privity of contract exists
Prvity and intent were not at issue according to the majority. The rationale of the Court as to why Saturday kid movies "touch and concern" the land and is a covenanr "running with the land" is interesting:
the showing of Saturday movies for children directly relates to the ongoing operation of the theater. The Saturday children's movies are deeply intertwined with how the theater may be used on Saturdays and affects many areas of the business, including maintenance, scheduling, income, purchasing, advertising, and marketing. The property os also made more useful by tremendously increasing the theater's usage by children, as well as their parents, the theater will also increase the goodwill between it abd the nearby neighborhoods, citizens, and rhe surrounding area.
For my money, while the Court got the test right, the case sorta feels like a result in need of a rationale.
