Legal Definitions - continuing covenant

A continuing covenant refers to a promise or agreement within a legal document, such as a contract or property deed, that requires ongoing adherence or repeated performance over a specified period, rather than a single, one-time fulfillment. Unlike a covenant that is satisfied by a single action, a continuing covenant imposes an obligation that persists and must be met consistently throughout the duration of the agreement or ownership.

• Example 1: Homeowners' Association (HOA) Maintenance Rules

  Imagine a homeowner purchases a house in a community governed by a Homeowners' Association (HOA). The HOA's governing documents include a covenant stating that all homeowners must maintain their front lawns in a neat and trimmed condition, free of weeds, at all times.

  This is a continuing covenant because the homeowner cannot simply mow the lawn once and consider the obligation fulfilled. They must continuously ensure their lawn meets the specified standards, week after week, month after month, for as long as they own the property within the HOA. Failure to do so repeatedly would constitute a breach of this ongoing promise.

• Example 2: Business Loan Agreement Financial Ratios

  Consider a small business that takes out a loan from a bank. The loan agreement includes a covenant requiring the business to maintain a specific debt-to-equity ratio (a measure of financial health) of no more than 1.5:1 throughout the entire term of the loan.

  This is a continuing covenant because the business must consistently monitor and manage its finances to ensure this ratio is met, not just at the time the loan is signed, but every quarter or year until the loan is fully repaid. If the ratio exceeds 1.5:1 at any point during the loan term, the business would be in breach of this ongoing promise.

• Example 3: Commercial Lease Property Upkeep

  A restaurant signs a ten-year lease for a commercial space. The lease agreement contains a covenant requiring the tenant to keep the premises, including all fixtures and equipment provided by the landlord, in good repair and working order throughout the lease term.

  This constitutes a continuing covenant because the tenant's obligation to maintain the property is not satisfied by an initial repair. Instead, it demands ongoing vigilance and necessary repairs as wear and tear occur over the entire ten-year period. The tenant must continuously ensure the property remains in good condition, rather than just fixing it once.