What is a restrictive covenant?

A restrictive covenant is a legal agreement that imposes limitations on the use or development of a property. These are usually put in place by the original property owner and are designed to protect the value and character of the property or surrounding area.

How do restrictive covenants work?

When a property is sold, the restrictive covenant is typically included in the deed and becomes a legally binding agreement that the new owner must abide by. This can include restrictions on things like building height, exterior renovations, or land use.

Impact on real estate transactions

Restrictive covenants can have a significant impact on real estate transactions. Prospective buyers need to carefully review the terms of the covenant to understand any limitations it may impose on the property. Failure to comply with a restrictive covenant can result in legal action and potential financial penalties.

In conclusion, a restrictive covenant is an important legal agreement that can affect the use and development of a property. It is crucial for both buyers and sellers to understand the implications of these covenants in order to make informed decisions during real estate transactions.