When purchasing property, it’s important to understand any restrictions or obligations that come with it. One such restriction is a restrictive covenant agreement.
A restrictive covenant agreement is a legal document that restricts the use of a property in a certain way. This agreement is typically put in place to protect the interests of the seller or other parties involved in the sale. The restrictions can include things like building size, height restrictions, type of business that can be conducted on the property, or even exterior design features.
These agreements are typically found in planned communities, commonly known as HOAs (Homeowners Associations). HOAs are usually set up to protect the value of homes in a particular area and to ensure the community maintains a certain look and feel.
However, it’s important to note that these agreements can also be used in commercial real estate transactions. For example, if a large corporation wants to purchase land for a warehouse, the seller may impose a restrictive covenant agreement to limit the corporation’s use of the property to minimize disruptions to the surrounding community.
Violating a restrictive covenant agreement can have severe consequences. It can result in legal action, injunctions, or even fines. It’s important to carefully review any restrictive covenant agreements before entering into a real estate transaction to ensure the restrictions align with your intended use of the property.
In conclusion, restrictive covenant agreements are an important aspect of property ownership. They are used to protect the interests of the parties involved in a real estate transaction and to ensure the community or surrounding areas remain desirable. Be sure to carefully review any agreements before making a decision on a property purchase.