Protective Covenants

Definition of "Protective covenants"

1. An agreement restricting specified financial transactions. For example, a covenant may be agreed to in a loan agreement that a person may not borrow additional monies from another lending institution against a certain collateralized property.
2. Statement in a deed that specified actions, or improvements, can or cannot take place on a given property. The covenants may stipulate the use of the property, restrict the number of occupants, and prohibit certain actions (e.g., early morning parties, animals).

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