HopefullyInLawSchool
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Simple English definitions for legal terms
collateral covenant
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A quick definition of collateral covenant:
A collateral covenant is a type of promise made in a contract or deed that is related to the thing being given or sold, but not directly about it. For example, in a deed for a house, a collateral covenant might be a promise to maintain the lawn or not to build a fence over a certain height. This type of covenant does not affect the ownership of the property, but rather how it is used or maintained.A more thorough explanation:
A collateral covenant is a type of covenant that is entered into in connection with the grant of something, but does not relate immediately to the thing granted. It is usually found in a deed or other sealed instrument and does not pertain to the conveyed property. This type of covenant is different from an inherent covenant, which relates directly to the land.
For example, a collateral covenant may be a promise made by a borrower to a lender to maintain a certain credit score or to provide additional collateral if the borrower's financial situation deteriorates. These promises do not relate directly to the property being financed, but are instead additional obligations that the borrower agrees to in order to secure the loan.