When it comes to legal paperwork like contracts, forms, and covenants, terms can seem overwhelming to an entrepreneur or business owner. One such term is “real covenant,” and knowing what it means is essential for understanding and protecting business interests.
What Is a Real Covenant?
In legal terms, a real covenant is a promise or agreement in which one party (the covenantor) makes a binding undertaking to do or refrain from doing something that affects a real or tangible property. This agreement is documented in a deed and legally binds the covenantor to pay a specified penalty, make reparation or in some other way make right any breach of the agreement. This type of agreement is commonly used in real estate transactions, such as when a homeowner agrees to not build a fence higher than six feet or to not use the property for any commercial purpose.
What Are the Benefits of Real Covenant?
Real covenants offer many benefits to businesses and individuals, especially when it relates to land ownership. By having a real covenant attached to a property, it can deter unwanted activity, help to maintain property values and act as a form of dispute resolution. As well, it legally ties the buyer to a certain set of expectations or obligations which may influence decisions about the land, such as financing or construction.
What Should I Consider?
When entering into a real covenant, it is important to read the terms carefully and understand your obligations and limits. Ignorance of the terms of a real covenant is not legally permissible and could lead to serious repercussions. Prospective buyers should also seek the advice of legal counsel to make sure the covenant protects their interests and rights.
In Conclusion
Real covenant is an essential part of many real estate purchases and can offer both legal protection and financial stability. Understanding the terms of a covenant and the implications of signing one can help ensure a successful and mutually beneficial transaction. Taking the time to seek legal counsel and carefully consider one’s options can help a business owner make the best decisions for their individual situation.