What is a Covenant On a Property? A Guide to Real Estate Covenants

May 23, 2022
What is a property covenant

When you are looking at a piece of property, either to buy or rent, one of the things you will want to look out for is covenants. Wondering about what is a covenant on a property? Covenants are promises that the property owner makes to the people living around it.

These promises can affect what you are allowed to do on your property, what colours you can paint your house, how many animals you can keep, and more. In this guide, we will explain what covenants are and how they work so that you can understand them in real estate transactions.

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What is a covenant on a property?

A covenant is a set of rules that govern what can and cannot be done on the property. They’re frequently made in a deed between two parties, with one agreeing to limit the use of its land in a certain way for the advantage of the other. 

Any covenants affecting the property will be stated in the title for registered properties. A covenant is crucial because it can influence land value or its intended use. Let us look at the real-world examples after understanding what is covenant property

Property covenant examples:

– You might have a covenant that limits what you can build on the land. For example, you might not be able to make anything other than a single-family home.

– You might have a covenant that requires you to keep your lawn mowed and free of weeds.

– You might have a covenant that says you cannot paint your house any colour other than white.

– You might have a covenant that limits the number of animals you can have on the property.

How do covenants affect the value of a property?

Covenants can affect the value of a property in two ways: positive and negative. Positive covenants tend to increase the property’s value because they require the owner to do things that improve the property, such as maintaining it in good condition or making improvements to it. 

On the other hand, negative covenants can decrease the value of a property because they restrict what the owner can do with it. For example, if there is a covenant that says you cannot paint your house any colour other than white, that might decrease the property’s value for someone who wants to paint their house blue.

What is a positive covenant?

A positive covenant necessitates some action, such as constructing a fence along a boundary. Positive covenants are usually contracted between the parties to the deed imposing the covenant, and they do not bind future landowners. 

It should be noted that subsequent landowners who profit from a positive covenant can enforce the covenant against the original landowner who bears the burden of the covenant.

What is a negative or restrictive covenant property?

A restrictive covenant restricts or prohibits the use of land for the benefit of another land in a certain way. Covenants of restriction are considered to run with the ground. 

The covenant’s benefit and burden are tied to the property itself, not to the landowner. The restricted covenant will remain enforceable even if one of the original parties sells their property.

How to find covenants on a property?

The next part about learning what is a covenant on a property is knowing how to find out if there is a covenant on property. The most suited way to start is by looking for registered properties. 

The title will list any covenants that are attached to the property. You can also ask your real estate agent or the person selling the property if they know of any covenants that apply to the property.

Are there any risks associated with covenants?

There are a few risks associated with covenants, such as:

– You might not be able to do what you want with your property if restrictive covenants are in place.

– The value of your property could decline if there are negative covenants attached to it.

– You could be sued if you violate a covenant.

How to remove a covenant on a property in NSW?

If you want to remove a covenant on a property in New South Wales, you’ll need to apply to the Land and Environment Court once you learn what is a covenant on a property. 

You’ll need to prove that the covenant is no longer relevant or that it’s causing financial hardship. You might also be able to modify the covenant if it’s possible to do so without affecting the original purpose of the covenant.

Are there any other things you should know about covenants?

Here are a few other things to keep in mind when it comes to “what is a covenant on a property”:

– Covenants can be created by either the government or a private party.

– Covenants usually run with the land, which means they’re attached to the property and not the owner.

– Covenants can affect the value of a property, either positively or negatively.

Covenants can expire, so it’s always a good idea to check and see if there are any covenants on a property before buying it. You can achieve this by looking at the title or asking the seller. If you’re not sure, you can always consult with a lawyer.

Covenants are just one of many things to consider when buying property. It would help if you also thought about things like location, price, and what you want to do with the property before deciding.

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