Restrictive Covenant Definition

A restrictive covenant is an agreement between two parties that restricts the use of a piece of real property. The party who owns the property agrees not to use it for certain purposes, or to sell it to certain types of buyers. The other party, usually a neighbor or developer, agrees not to build on the property or to use it in a way that would devalue the surrounding properties.

Restrictive covenants are typically found in residential neighborhoods. They may be written into the deed when the property is sold, or they may be created by a homeowners’ association. Either way, they are legally binding on all future owners of the property.

Violating a restrictive covenant can result in a lawsuit. The court may order the violator to stop using the property in violation of the covenant, or it may order them to pay damages to the other party.