A covenant is a formal agreement or promise, usually included in a contract or deed, to do or not do a particular act. Covenants are particularly relevant in the fields of contract law and property law.
- An example of a contractual covenant is a non-compete agreement.
- Examples of common covenants in property law include agreements not to build a fence or agreements to maintain a shared driveway.
Covenants in contract law are governed by standard contract rules and exclusively apply to the parties of the contract. Covenants related to property, however, are subject to their own unique set of common law / statutory rules. Property covenants can sometimes be applied against later owners of the relevant property.
Under the common law, covenants in property are separated between real covenants and equitable servitudes.
Real covenants are covenants that run with the land. A covenant that runs with the land is a covenant that is enforceable against and/or by future owners of that land. For example, if X creates a real covenant that states “X and his assigns will not build a fence taller than 4 feet” and proceeds to sell his property to Y, Y cannot create a fence taller than 4 feet.
A real covenant is only enforceable if it was created intentionally, it relates to the property in question, and two kinds of privity are established. Additionally, a real covenant must be in writing. The party capable of enforcing the covenant depends on whether the burden or the benefit runs with the land. In other words, only the party who the covenant is designed to help can enforce it. In the aforementioned example, the burden runs with the land because the agreement not to build a large fence presumably benefits X’s neighbor. Therefore, only the neighbor can sue for breach of the real covenant. The remedy for a breach of a real covenant is monetary damages.
Equitable servitudes have similar requirements as real covenants; however, they do not require privity. Instead of privity, an equitable servitude requires notice to be enforceable against future property owners. This notice can either be actual notice or constructive notice. Equitable servitudes also differ from real covenants in that they are enforceable through equity measures. As a result, if monetary damages are inadequate, a party suing for breach of an equitable servitude may be granted specific performance.
[Last updated in July of 2022 by the Wex Definitions Team]