A real estate covenant is a legally binding agreement registered on a property’s title, outlining rules for its use or development.
There are two main types of covenants. Positive covenants, which require landowners to perform an action (like landscaping), and restrictive covenants, which prevent certain uses (such as building only single-story homes or using specific materials). These covenants are enforced by the party that benefits from them, often to maintain a desired look, feel, or quality within a development or neighbourhood.
This is easily demonstrated here in the Highlands with two prominent developments: Retford Park Estate and Renwick.
Restrictive covenants: These are the most common and restrict what you can do with your property. Such as specifying the style, colour, or height of fences; limiting the number of dwellings on a block; dictating building materials, height, or setback lines; restricting commercial use or even the types of animals allowed. This ensures uniformity, preserve a certain aesthetic, or protect property values within a housing estate or neighbourhood.
Positive covenants : These are less common but require the landowner to take a specific action. These could include (and not restricted to) requirement to maintain the gardens on the property, perform specific landscaping, or contribute to the upkeep of shared infrastructure.
Key characteristics:
Covenants are formally registered on the property’s Certificate of Title. They are legally enforceable agreements that bind future owners of the land. Unlike government zoning laws, covenants are enforced by the landowners who benefit from them, such as the original developer or other property owners.
Covenants can continue indefinitely, but in some cases, legislation may allow for their removal after a certain period, especially if they have become outdated.
Why do they exist?
Maintain standards:
To ensure all properties in a development are of a similar quality and architectural style.
Create a desired community:
To achieve a specific “look and feel” for a neighborhood, creating a consistent aesthetic.
Protect property values:
By limiting misuse and ensuring high-quality development, covenants can help protect the value of individual properties.
In legal terms, a covenant is an agreement that is registered on the title of a parcel of land. The covenant may restrict the way the land can be used or specify that the landowner must conduct a certain activity. A covenant may be created during the sale of the land as it is transferred to the new owner, or by the registration on the land title under s88B of the Conveyancing Act 1919. A covenant can be created by a developer, or between neighbours, or be required to be created by the conditions of a development consent from Council. The written terms of the covenant identify who benefits from the covenant and which landowner is burdened.
Advice: before you sign or commit to anything, review and covenants on the land, its use or its aesthetics. Good luck!