Restrictive Covenant - Explained
What is a Restrictive Covenant?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
What is a Restrictive Covenant?
A restrictive covenant refers to a form of agreement that asks the buyer to either perform or refrain from doing a particular activity. In real estate industry, restrictive covenants tend to be binding legit obligations that a seller writes in the property's deed. They can be either very easy to understand or complicated, and can make the buyer liable for heavy penalties, in case of any conflicts.
How is a Restrictive Covenant Used?
Restrictive covenants involve basic provisions including proper maintenance of property and restrictions associated with paint and remodeling. Also, there can be more limitations on buyers including the maximum number of tenants that can accommodate in the property, or the specific time period of decorating the home. When restrictive covenants of investment estate are released, then it leads to receiving payments in the form of capital gains.
Limits that Restrictive Covenants Place on Property
Restrictive covenants can decide on how tenants should use the property. For instance, if there is a restrictive covenant associated with a residential property, then a person may not carry out any business activities there. Ultimately, this will avoid the tenant from operating any business from home. There can also be limitations related to renovation and remodeling of a home in restrictive covenant. This information is usually offered in the architectural policies, and the property's buyer may not be allowed to modify the initial look of the property. This can involve keeping the color tones of the home consistent. For instance, a home located in a specific area can be under restrictive covenants for following a particular kind of roofing and paint for establishing a consistency in aesthetics. The owner or buyer of property may not be allowed to put any kind of signs or boards thereon. Also, there can be a limitation on the heights of flagpoles placed on the property. Earlier, restrictive covenants were used for affecting the municipalities demographics. Due to racial discrimination in the U.S., people of specific communities didn't have access to properties. This was in practice between the 1920s and 1940s era in different provinces of the country. There are some instances of racially restrictive covenants prevailing in some provinces, though they are not in enforcement anymore. Even today, many properties enlist racially restrictive covenants for avoiding minor communities from investing in the real estate sector. These laws or rules can be brought in front of the jury.
- Property Law (Intro)
- Tangible and Intangible property?
- Knowledge Capital
- Calculated Intangible Value
- Real and Personal Property?
- Littoral Land
- Readily Removable Fixtures
- What is ownership?
- Role of Government in ownership of property?
- Allodial System
- Role of property rights in economic activity?
- What are the limitations on property ownership rights?
- What is nuisance?
- Homeowners Association (HOA)
- Rule of First Possession?
- Lost or Mislaid Items?
- Adverse Possession?
- Establishing and transferring ownership in real property?
- Absolute Title
- Warranty Deed
- Register of Deeds
- What is a fee simple interest in real property?
- Absolute Interest
- Restrictive Covenant
- What is a life estate in real property?
- What is a leasehold estate in real property?
- What are common types of co-ownership relationships in real property?
- Owning Real Estate Personally vs as LLC
- What if Co-Owners of Real Estate Want Out
- Community Property and Separate Marital Property?
- What is an easement interest in real property?
- What is a license of real or personal property?
- Bundle of Rights
- Absorption Rate
- Fair Housing Act
- Federal Housing Administration (FHA)
- Housing and Urban Development (HUD)
- National Housing Act
- Design Build Contract
- Building Permits
- Certificate of Acceptance
- Construction Surety Bond
- Acquisition, Development, and Construction Loan (ADC)
- Flipping (Real Property)
- Buy, Strip, and Flip
- Homeowner Affordability and Stability Plan
- Building Residual Method
- Accessory Dwelling Unit
- Property Management
- Cost-Plus Contract
- Real Estate Investment Fund
- Listing Agreement
- Property Lawyers
- Multiple Listing Service
- Home Equity
- Register of Deeds
- Title Search
- Opinion of Title
- Certificate of Title
- Abstract of Title
- Chain of Title
- Clear Title
- Affidavit of Title
- Earnest Money
- Private Mortgage Insurance
- Closing (Property)
- Settlement Statement
- Real Estate Settlement Procedure Act (RESPA)
- HUD-1 Form
- Closing Statement
- Closing Costs
- Buying Real Estate as an LLC
- What is a mortgage?
- Judicial Foreclosure
- Lis Pendens
- Short Sale
- Homeowners Protection Act
- Deed in Lieu of Foreclosure
- Tax Deed
- Tenancy at Will
- Closed End Lease Definition
One Percent Rule
- Net Lease
- Triple Net Lease (NNN)
- True Lease Definition
- Land Lease Option
- Hell or High Water Contract
- Habendum Clause
- Implied Warranty of Habitability
- Emblements Definition
- What is a bailment?
- Unilateral-benefit and mutual benefit bailments?