A real covenant refers to a contract between two or more landowners that limits their use of property. This type of covenant “runs with the land,” which means that people who take interest in the land in the future are also subject to the contract.
One owner will be burdened by the covenant and the other will receive some type of benefit. To make this concept easier to understand, consider the following examples of real covenants:
- An agreement to build a fence (affirmative covenant); and
- An agreement not to fish on one of the landowner’s property (restrictive covenant).
In order for a real covenant to be enforceable, the following elements must be met:
- The agreement must be in writing;
- The original parties must intend for the benefit and burden that results from the covenant to apply to all subsequent owners;
- The covenant must relate to the direct use or enjoyment of the land;
- A relationship between the original parties to the covenant must exist (this is referred to as horizontal privity);
- A relationship between the original parties and the subsequent owners of the land must exist (this is referred to as vertical privity);
- When ownership is transferred, the new owners must acquire the exact piece of land; and
- Subsequent owners must have notice that the real covenant exists.
These requirements may vary from state to state. Check your local laws or consult with a real estate attorney to determine what is required for a real covenant to run with the land in your state.
As noted above, if the elements are not present the covenant will not be enforceable. However, there are also some ways that a real covenant can be terminated:
- Abandonment: A real covenant is abandoned when the party that benefits from it chooses to stop receiving the benefit.
- Changed Conditions: If circumstances have changed so drastically that no benefit can be drawn from the real covenant, it will be viewed as being terminated.
- Agreement: At any time, the parties bound by the covenant can agree to end the covenant.
It is important to determine whether any land you are purchasing has a real covenant attached to it because this will affect your rights as a property owner. A local real estate attorney can help you determine the extent of your rights to your property and can help you defend any attack for breaching a real covenant. In addition, an attorney can help you enter into a real covenant with another property owner if you wish to do so.