Covenants, Restrictions and Agreements
As Counsel for Thoroughbred Title Services I will concede that title reports are not exciting to read and if someone is not familiar with title, they can be quite confusing. One of the more confusing schedules or sections of a title report is the list of Covenants, Restrictions and Agreements. These are documents that affect the real property in some way and if they are properly drafted they can remain in effect in perpetuity, binding each new purchaser even though that purchaser was not the record owner when the agreement was executed. They can be confusing because they are legal documents that are not often written in plain English and many of them were executed a very long time ago.
The most common Covenant or restriction is an easement. An easement is an interest in the real property which usually allows some one to do something — i.e. an ingress/egress easement that allows someone to cross over your land to get to the nearest public road. A shared driveway is a type of easement. Another common easement in a title report is a utility easement — an agreement whereby the owner allows the utility company access to his or her property to run wires or pipes, etc. to provide the utility service. It may also allow the utility company to come onto the owner’s property for maintenance purposes.
Restrictive covenants are agreements that restrict what the owner can do with his or her property. These can control anything from what type of house may be built on the land to how far from the front, side or back property lines a structure may be built (commonly called setbacks – i.e. house must be set back 25 feet from street or 35 feet from adjoining property). Obviously these are important agreements and depending on what the purchaser wants to do with the property, they can be game changers.
Covenant and Restriction search
If you have a prospective purchaser that is planning to do major work on the property once they own it — a tear down and re-build or a significant expansion of the house – adding additional structures, etc., it is a very good idea for their attorney to order a Covenant and Restriction search (C & R search for short) to determine what agreements are recorded affecting the property. While it is a good idea for real estate agents to become familiar with these types of agreements, I would caution any client to review the documents with an experienced real estate lawyer.