What Is A Covenant That Runs With The Land?
You don’t have to be an attorney to know that to be bound by a contract (real estate or otherwise), you need to have signed that contract. Something that two people sign or agree to, can’t bind you, if you weren’t a part of that agreement.
But there’s an exception to that when it comes to real estate, called covenants that run with the land. And if you are purchasing real estate, these are covenants that you need to be aware of.
A Typical Example
Let’s assume buyer 1 agrees with the homeowner’s association that the Buyer will pay association dues as part of the real estate closing contracts. Two years later, you buy that property from Buyer 1. Do you also have to pay the homeowner’s association dues? You didn’t sign that agreement. Why couldn’t you and Buyer 1 just agree to sell the property, without you having to pay homeowner’s association dues?
Of course, you know this doesn’t happen—in our example above, you will have to pay homeowner’s association dues. But why? It’s because the obligation to pay dues is what is known as a covenant that runs with the land.
Conditions for Covenants to Follow Land
In common terms, this means an agreement that “follows” wherever the land goes; it attaches to the property, and when you buy the property, you are also buying whatever covenants attach to it—that is, you are agreeing to the conditions that were placed on the land (in our example above, the condition to pay the homeowners’ association dues).
Usually a covenant that runs with land, will usually affect the way the land is used or enjoyed, and it must concern or affect the land itself. The covenant must enhance the enjoyment of the land for one party, and burden the other, to some extent.
So, if there was an agreement that property would never be used for commercial purposes, that would affect the land and its use, benefit one party, and burden another. Likewise for easements, which benefit the party using the easement, and burden the party that owns the property.
There also may be some intent that the covenant run with the land, usually expressed in the language in the covenant itself that says it runs with the land. Covenants that run with the land are also often recorded in the public records, so that you know what agreements will come with the property when you buy it.
Covenants that run with the land should be differentiated from personal covenants. Personal covenants are like any other contract-they only burden the parties that signed or agreed to them, not subsequent owners of the property. These usually are independent from the land itself, and can be enforced without affecting the use or enjoyment of the property.
Call a West Palm Beach real estate lawyer at The Law Offices of Larry E. Bray today to get answers to your real estate closing questions.