Technically (and within the context of residential neighborhoods), a covenant is a rule governing the use of real property. However, in common usage, it may also refer to a promise or agreement (as formalized in a deed) concerning the use of the land, as where a purchaser of land "covenants" to abide by certain restrictions associated with the use of the land. Essentially, such covenants are promises made by a prospective purchaser as a condition of purchasing the land in question.
Legal Effect of Covenants
When properly recorded on a deed conveying land, a covenant ("restrictive deed covenant") has the legal effect of a binding contract term, and may be so enforced. When covenants are instead signed privately among neighbors, as in a mutual compact or agreement, they are still binding upon the signatories and may be litigated if breached.
When Covenants are Used
Most planned developments (subdivisions of homes built by a particular builder), including closed or gated residential areas, as well as condominium associations and housing cooperatives, make use of covenants for the benefit of all residential owners and their neighbors. Neighborhoods with properly drafted and enforced covenants or architectural standards have been shown to retain property value better than those with poorly enforced covenants or no standards at all. Neighborhoods that follow their covenants and standards tend to be safer, look better, maintain better relationships with local governments, and better retain or increase the investments that homeowners have made in their properties.
Covenants Vs. Zoning Laws
Covenants differ from zoning ordinances in that they are between private parties rather than between a governmental entity and a private party. Thus, a neighborhood association or single homeowner may enforce a covenant as against another homeowner, rather than a city or county enforcing a zoning ordinance as against a private citizen. Another difference is that zoning ordinances are regulations recorded as local laws "on the books," whereas covenants are recorded in private deeds, either as deed restrictions or as neighborhood compacts between private parties. Because covenants are voluntary, they may be more restrictive that zoning ordinances.
What are "CC&Rs"?
Covenants are often lumped together under the collective term of "covenants, conditions, and restrictions" or CC&Rs, a term commonly found in real estate documents. Since most covenants involve some kind of condition or restriction placed upon the buyer, the collective term "CC&Rs" has been more widely used in recent years to indicate the existence or future existence of limitations associated with the use of the purchased land.
Advice for Home Buyers
Many home buyers are so charmed by the appearance of a house for sale that they fail to take the time to read the CC&Rs that come with the property. They are so pleased with a nice kitchen or a fenced-in back yard that they sign a purchase agreement without realizing that existing CC&Rs may prevent them from keeping their boat or truck on the property, or erecting a basketball hoop in the driveway. Often, title companies will not have copies of the CC&Rs affecting the property until the day of closing, and they are often overlooked at that point. However, CC&Rs are binding upon the purchaser, and the purchaser will become subject to them, whether or not they have been reviewed, read, or understood. The general rule of "constructive notice" applies in these cases. No real estate contract should be signed until a purchaser has reviewed all the CC&Rs (and zoning laws) affecting the property.