Restrictive covenant

This article is about contractual covenants that restrict use of real property. For contractual restrictions on employment, see Non-compete clause.

A restrictive covenant is a type of real covenant, a legal obligation imposed in a deed by the seller upon the buyer of real estate to do or not to do something. Such restrictions frequently "run with the land" and are enforceable on subsequent buyers of the property. In jurisdictions that use the Torrens system of land registration, restrictive covenants are generally registered against title.

Scope of covenants

Restrictive covenants may arise from many sources, and may be registered against titles or included in leases. Some covenants exist for safety purposes, such as a covenant forbidding the construction of tall buildings in the vicinity of an airport or one restricting the height of fences on corner lots (so as not to interfere with drivers' sight lines). Covenants may restrict everything from the height and size of buildings to the materials used in construction to superficial matters such as paint colour and holiday decorations.

Commercial covenants

Restrictive covenants are commonly registered against commercial properties. General covenants such as those restricting the heights of structures or forbidding certain "dirty" businesses (such as feedlots or chemical production facilities) are common in industrial areas located near residential communities. Developers may seek to restrict the type of business allowed to operate in a certain area so that a purchaser of land in a research park, for example, could not turn the building into a bingo parlour or a tool and die factory. A commercial lease may include a restrictive covenant forbidding the sale of certain items, such as pornography or liquor. A powerful mall tenant (such as a major supermarket chain or other anchor store) may require its landlord to include in its leases to other tenants a restrictive covenant forbidding the sale of certain items (such as fresh meat and produce). The latter situation is more common outside the United States, and is especially seen in Canada.

Residential covenants

Residential covenants are relatively common in the United States. Some residential covenants may be considered generally benign, such as those preventing owners or tenants from removing healthy trees, fundamentally altering historically important structures, or directly harming property values. Others, however, are more detailed. Some restrictive covenants may govern what color a home's exterior is painted, what and how many exterior decorations are allowed, where cars are allowed to be parked, or even who lives in the house (outside of the owner's nuclear family).

Some have accused homeowners associations of selective enforcement of these rules, making a case only when it is something (or someone) another person dislikes. Breaking a rule, even unintentionally, can bring fines or even a lien on the home. In extreme cases, a homeowners' association may file a lawsuit against an owner who violates the covenants or even foreclose the property.

A restrictive covenant differs in the United States from a zoning regulation in that its creation and enforcement is a matter of contract between the landowners whose properties are affected by it, rather than an exercise of the governmental police power. In Canada, governmental authorities may apply both restrictive covenants and zoning regulations to properties. For instance, the city of Calgary's requirement that buildings in the general vicinity of Calgary International Airport be under a certain height is registered against virtually every title in the northeast quadrant of the city as a restrictive covenant, not as a zoning by-law.

Antenna restrictions

Many communities attempt to regulate amateur radio or outdoor television antennas. However, governments may regulate or void restrictive covenants. Some private contracts restricting over the air reception devices (OTARD) were preempted by the FCC in 1996. In PRB-1 the FCC preempted state and local regulation affecting Amateur Radio Antennas but did not see the need (in 1985) to preempt private contracts. Some states have subsequently enshrined this Federal regulation in their own statutes. In 1996 the ARRL American Radio Relay League attempted unsuccessfully to expand PRB-1 and have the FCC preempt restrictive covenants on amateur radio structures. The FCC found insufficient evidence in support of the request at the time and refused to reconsider. After several abortive attempts to secure Federal preemption of covenants regarding Amateur Radio antenna structures, the Middle Class Tax Relief and Job Creation Act of 2012 mandated research to recommend to Congress any need for legislation.

Housing segregation

A Florida subdivision plat from 1926 with a racially-discriminatory deed restriction

In many cases before the 1960s, these covenants were used for segregationist purposes. A covenant might promise that only members of a certain race would occupy the property. However, many African Americans openly defied these covenants and attempted to "pioneer" restricted areas. In the case of Shelley v. Kraemer, the United States Supreme Court ruled that it would be unconstitutional for the courts to enforce racially restrictive covenants, and such covenants no longer have any force.

The Fair Housing Act of 1968 made housing discrimination on the basis of race or color, including racially restrictive covenants, illegal. The Fair Housing Act also created the Office of Fair Housing and Equal Opportunity which is charged with administering and enforcing the act.

See also

• Covenant (law)
• Shelley v. Kraemer
• Timeline of racial tension in Omaha, Nebraska
• Office of Fair Housing and Equal Opportunity

References

• J Howell, ‘The Annexation of the Benefit of Covenants to Land’ [2004] Conveyancer 507
• J Martin, ‘Remedies for Breach of Restrictive Covenants’ [1996] Conveyancer 329
• HRW Wade, ‘Covenants – “A Broad and a Reasonable View”’ [1972] Cambridge L J 157.