Covenant In Real Estate
A covenant real estate definition covers covenants in the context of residential real estate, condominiums, neighborhoods, or housing co-ops that are ruled by an agreement of the owner to adhere to certain rules. These rules are commonly stipulated in the CC&R's written by the Homeowners Associations (HOA) or in the purchasing contract.
CC&R stands for Covenants, Conditions & Restrictions that are applied in order to maintain the appearance and regulate the use of properties that pertain to HOAs or other groups of owners like gated communities.
How are real estate covenants applied?
A real estate covenant is legally binding and enforceable by HOAs. There are cases when covenants are not stipulated in the contract or the CC&R but are made between neighbors. Even in that case, they are still binding and can be litigated in court if not respected.
Most commonly, covenants are used by planned developments such as master-planned communities, gated communities, condominiums, or co-ops, where uniformity and a certain level of conformity to order are desired. Many homeowners that live in such planned developments are open, willing, and welcoming to these covenants as they uphold certain standards in the community. That being said, there are positive and negative covenants. But we'll see exactly how they are different.
Positive covenants
Covenants that are considered positive generally require some form of action from the homeowner. They are considered positive because they add value to the property and only concern the current owner. These real estate covenants are not passed along with the deed of the house or transferred to other owners.
Example of a positive covenant:
An HOA can impose a covenant on a homeowner to build a fence on the property. This fence is built at a certain point so there is no need for it to be built by a potential future owner. A fence will also increase the value of the property.
Restrictive covenants
These types of real estate covenants are imposed in order to restrict the way in which a property can be used. They limit some preferences and options a homeowner would otherwise have and they are tied to the land. This means that they are passed along to new owners and, when not respected, they are sanctioned.
Example of a restrictive covenant:
An HOA can demand a homeowner to not own a dog on the premises and can also restrict a homeowner from running a business in their home. Alterations to the home can also be prohibited.
It is important for homeowners to know that covenants can be presented in a way that might confuse them. For instance, a restrictive covenant can be presented as a positive covenant and the opposite.
Any type of real estate covenant can affect the value of a home in a positive or negative way, as well as affect the people living there. This is why real estate agents are important, and a lawyer should be consulted if CC&R's are mentioned or covenants in general.
Popular Real Estate Terms
The term annuity due is a contract that demands payment at the beginning of each period. The most common example of an annuity due in real estate is rent when we consider that most ...
Failure or refusal to perform a specified action. The failure to fulfill contractually agreed upon terms or actions. Nonperformance creates a liability which can enable a judicial damage ...
Founded in 1969 and located in West Palm Beach, FL, NACORE has 3,273 members. Its members consist of anyone managing, administering and/or operating regional real estate departments for ...
The prepared form used to specify the terms of the listing contract. Usually a listing form consists of blanks the real estate agent fills in to provide the necessary information needed to ...
Approach to appraise rental property based on anticipated future earnings to be derived from it plus the estimated selling price at the end of he period held. ...
A decrease in spending dollars because of a decrease in the money supply. Less funds available to prospective home buyers by lenders. Attractive mortgages are difficult to get. ...
Layer of material put on the outside wall or foundation to prevent the intrusion of water or humidity into the structure. A moisture barrier is constructed out of plastic, aluminum foil, or ...
Tax assessed on a transfer of property made without adequate legal consideration. This tax is based on the appraised value of the property at the time of transfer.Also, gifts of property ...
Real estate market where supply significantly exceeds demand enabling potential buyers to obtain lower prices and good deals. ...
Have a question or comment?
We're here to help.