Also known as: legal covenant · covenants
Written by attorneys — see sources below.
A contractual promise enforceable at law that one party will undertake or forgo specified conduct on land for the benefit of another party. The promise may run with the land when the benefit or burden passes automatically to successive owners.
Landon Long contracts to sell land to Lillian Locke. A title search reveals an unreleased covenant recorded against the property restricting commercial use. Lillian refuses to close because the covenant creates reasonable doubt about marketability. Landon cannot cure the defect within the contract period, so Lillian rescinds and recovers her deposit.
Luke Latham sells property to Lola Langley under a contract containing a covenant to maintain a shared driveway. After closing and deed delivery, the driveway falls into disrepair. Lola sues Luke for breach. Because the covenant concerns physical condition rather than title, the merger doctrine does not extinguish it, and Luke remains liable.
Leo Lynch mortgages property to Landmark Realty. The mortgage contains covenants requiring maintenance and insurance. Leo removes load-bearing walls and stops paying taxes, creating priority liens. Landmark sues for waste. Leo's failure to comply with the mortgage covenants constitutes actionable waste that impairs the lender's security.
Lattice Systems leases space to Lakeshore Industries under a covenant limiting use to retail sales. Lakeshore assigns the lease to a new tenant that opens a competing warehouse operation. Lattice sues the assignee. The covenant in the lease binds the assignee because it touches and concerns the leased premises and runs with the land.
Lumen Capital holds a mortgage containing covenants on property owned by Lance Lee. Lance transfers the property to a buyer who assumes the mortgage. Lance remains personally liable for the covenants to the extent of his prior liability because the transfer does not release him from the original obligation.
Lola Langley mortgages property to Lakeshore Industries with covenants requiring insurance and repairs. Lola transfers the property to a new owner who assumes the debt. Lakeshore may still enforce the covenants against Lola personally because the transfer does not extinguish her preexisting liability under the mortgage.
An outstanding covenant that creates reasonable doubt for a prudent purchaser renders title unmarketable. The buyer may rescind if the seller cannot cure the defect by closing. Contracts often provide a cure period and specify whether marketable or insurable title is required.
Covenants relating to title merge into the deed and are extinguished. Covenants concerning physical condition or other non-title matters survive absent clear intent to the contrary. The surviving covenants remain independently enforceable after closing.
Material failure to comply with mortgage covenants on maintenance, insurance, or payment of taxes constitutes waste when it reduces property value or impairs the mortgagee's security. The mortgagee may foreclose, seek an injunction, or recover damages to the extent of impairment.
The transferor remains personally liable for preexisting covenants and the secured obligation unless released by the mortgagee. Assumption by the transferee does not automatically discharge the original obligor. The mortgagee may proceed against either party depending on the facts.
…v. Hodge , 334 U. S. 24. That case arose when property owners in the District of Columbia sought to enforce racially restrictive covenants against the Negro purchasers of several homes on their block. A federal district court enforced the restrictive agreements by declaring void the deeds of the Negro purchasers. It enjoined…