Posted by: Daryl & Wendy Ashby | March 14, 2010

Property Titles and Covenants

A Restrictive Covenant as placed on a title of an individual property and generally restricts the usage of a portion or all of that property for the benefit of another parcel of land or more specifically the owner of another parcel of land.

If drafted correctly it will not only bind the people who originally agreed to the terms, but also subsequent purchasers of the property in question and the future owners of the property that are intended to benefit from the Covenant.

For a Covenant to work correctly, it must have very specific requirements and one of those is that the covenant must be viewed as “negative” by nature. If it is positive by nature, it is not considered capable of running with the land and therefore can be challenged successfully in court as ‘non-binding’.

An example of a Covenant is a building scheme which is usually drafted by the original developer and intended to govern how the land is built upon, what finishing materials are used for each home and even whether a clothes rack or line can be strung in your back yard. These can run with the land for perpetuity for the benefit of all the other property owners in your subdivision, but often have an expiry date affixed to them.

A Right-of-Way grants a person the right to pass over a given property. This is commonly seen in coastal areas where “beach rights of passage” are seen as desirable by the local government.

An Easement is more commonly found involving utility companies, where they have the right to place utility wires/poles/pipes across or beneath a given parcel of land. The only right to enter onto the land is for maintenance of the transmission facilities.

Other Easements can be to protect a view, or open drainage course. In these cases the person doesn’t have the right to enter onto the land which is encumbered, but nor does the owner of the land have the right to block the view, or complain about water running over his land from an adjacent landowner.

Very often a Right-of-Way will be captioned as an Easement, and since the precise nature of the rights and obligations are spelled out within the document, it matters little as to what it is really called.

When you are looking to purchase a piece of real estate, in each case, make certain you are given a copy of each individual document affixed to the title and read them carefully. If you have difficulty understanding the terms, seek legal advice. Don’t be satisfied with a copy of the title and assume everything is just fine just because your agent never said otherwise.

On one occasion I assisted a buyer in purchasing a property but when I checked the title there was a Covenant on it which was registered in 1921. It restricted the sale of the property to caucasians. This Covenant had run with the property and each purchaser since 1921 without being challenged. It could easily have been challenged by anyone wishing to make a point, once the property had changed hands and it would have likely proven itself a needless embarrassment to my client.

To remove this hinderance from the title would prove to be a costly affair which I insisted should not be dealt with by the buyer but rather by the seller, prior to the transfer of title.

On this point alone, I earned my commission.

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