Legal Definitions - covenantee

A covenantee is the individual or entity who receives the benefit of a formal promise or agreement, known as a covenant. Essentially, they are the party to whom a specific promise has been made and who is entitled to its fulfillment.

Here are some examples to illustrate this concept:

• Real Estate Development: Imagine a housing developer sells a plot of land to a homeowner. In the deed, the developer includes a covenant stating that the homeowner must maintain their front yard to a certain aesthetic standard, and in return, the developer promises to ensure that all future homes built in the subdivision will also adhere to similar high standards, protecting property values. In this scenario, the homeowner is the covenantee regarding the developer's promise to maintain standards across the subdivision. They are the party who benefits from the developer's commitment to uphold the neighborhood's quality.

• Commercial Lease Agreement: A small business owner signs a lease for a retail space in a shopping center. The lease agreement includes a covenant where the landlord promises not to lease any other unit in the same shopping center to a direct competitor of the small business (e.g., another coffee shop). In this situation, the small business owner is the covenantee. They are the party who receives the benefit of the landlord's promise to protect them from direct competition within the same commercial property.

• Business Acquisition: When a larger company acquires a smaller startup, the acquisition agreement might include a covenant where the founders of the startup promise not to start a competing business for a period of five years. In return, the acquiring company might promise to provide the founders with a specific bonus payment if certain performance milestones are met within the first year. In this specific context, regarding the bonus payment, the startup founders are the covenantees. They are the parties to whom the acquiring company has made a promise of a future payment, contingent on performance, and are entitled to receive it if the conditions are met.