Covenant

A covenant signifies a formal agreement or commitment between two or more parties to either undertake or refrain from certain actions. The covenantor pledges to the covenantee to either perform specific actions or abstain from them. Covenants are legally binding on the covenantor, akin to contract conditions, yet they may impose obligations enforceable by parties not initially parties to the agreement.

For instance, a restrictive covenant restricts the rights or behaviours of one or more parties involved. Such restrictions, often imposed by a land seller, aim to safeguard the retained land from potential harm by the buyer.

Examples of restrictive covenants may include:

• Prohibiting the construction of buildings or structures on the land.
• Restricting commercial activities on the premises.
• Disallowing residential development on the property.

Importantly, restrictive covenants are inherent to land ownership or usage and extend beyond the original parties involved in the agreement.

Leasehold covenants pertain to commitments made in contracts governing property leasing. These covenants, sometimes termed “positive covenants,” compel parties to undertake specific actions, differing from restrictive covenants, which restrain certain behaviours.

An alienation covenant pertains to property transfers from one party to another.

It is a clause within a lease that dictates whether a tenant can “alienate” the land, meaning:

• Transferring the lease to another party.
• Subletting or leasing out the property.
• Allowing shared occupancy of the premises.