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Restrictive covenants in business

On Behalf of | Apr 21, 2023 | Restrictive Covenants

Properties are usually subject to zoning ordinances, which are restrictions and limitations that aim to promote the safety and general welfare of the public. These ordinances also restrict how property owners can use their property.

What is a restrictive covenant?

Restrictive covenants are a clause in a property lease or deed that restricts the owner’s use of that property. It can limit its use to a particular type of use and it can place limits on what changes can be made to the property.

Who creates restrictive covenants?

Usually, developers create these based on zoning laws and restrictions, as well as the developers’ plan for the property development, such as the requirements for how the property or properties in development must be constructed, how they should look like and what property owners or lessees can and cannot use the properties for.

How are restrictive covenants applicable in business?

Restrictive covenants can be applicable in business if you are purchasing a property for business use. A piece of land, for example, may have restrictions stating that the owner can use it only for specific purposes. In the same way, a restrictive covenant can limit the use of a piece of property to a particular use, whether commercial or residential.

Failing to abide by these covenants can cause the new property owner problems in the future and unravel costly legal proceedings. Understanding restrictive covenants, specifically about the property you are purchasing, is critical prior to purchasing the property.

Can I change or amend a restrictive covenant?

Yes. However, to change or amend the covenant, the property owner must go through a governing board or review board to obtain permission. If the board denies the property owner’s request, the property owner must abide by the covenants.

Developers have restrictive covenants in place for specific reasons and for a specific purpose. It is essential to understand them and abide by these rules and regulations if you own a property subject to one.