For the novice buyer, real estate terminology is often a vast and confusing landscape. There are many terms and concepts which must be understood to ensure that there are no surprises. One such term that often arises in the course of completing a real estate transaction is the restrictive covenant. This column will explain the meaning and importance of this age old term.

Homeowner’s may not be aware of the fact that they cannot simply do whatever they want with their properties. Municipalities have the right to pass zoning by-laws which dictate how a property can be used, the maximum size and height of the building and where the building can be constructed on the lot. Matters are further complicated by developers who will register a series of restrictive covenants against title to all lots in the subdivision.

Restrictive Covenants prevent you from using your land in a particular manner. They exist to preserve the character of the land being developed and ensure that the land is developed with uniformity. Restrictive Covenants are negative in nature meaning that they may prohibit you from doing something with your land. Restrictive Covenants that are positive in nature i.e. that require you to do something with your land have been found as unenforceable in courts of law. Examples of typical Restrictive Covenants are-- no clotheslines, no trailer or boats on the driveway and no raising animals on the property. Some restrictive Covenants are construction-oriented imposing architectural and design controls.

Restrictive Covenants typically run for a fixed period of time, with 10 years being the norm. Once an entire subdivision is sold, developers rarely will ensure compliance with them. If you are considering the purchase of a new home, the Agreement of Purchase and sale will invariably contain clauses that oblige you to accept any Restrictive Covenants that are or will be registered against the title to the lands. The same situation applies to resale homes, although the wording in the contract may not be as onerous.

If you sign an Agreement of Purchase and Sale without first considering if the Restrictive Covenants exist and what they say, you are taking a chance. For instance, if your dream home involves installing a swimming pool, you would be wise to check with your lawyer before you sign on the dotted line. Your lawyer will be able to search the title and review the contract to determine if a Restrictive Covenant exists so as to prevent you from using the property as planned. Failure to heed this warning may leave you contractually bound to close the deal without a leg to stand on.

Restrictive Covenants are more important to review if you are buying a new home as the title or contract will invariably contain them. For resale homes, they may not be as important because they may have expired or because they may not be enforced once the subdivision has been completed.

Restrictive Covenants can cause you grief if you fail to consider them prior to committing yourself. An experienced real estate lawyer can guide you through this legal maze.