Legal Definitions - negative covenant

A negative covenant is a contractual promise in which one party agrees not to perform a specific action. Instead of requiring someone to do something (which would be an "affirmative covenant"), it imposes a restriction or prohibits certain conduct. These types of promises are common in various legal agreements, such as property deeds, business contracts, and employment agreements, to protect the interests of one or both parties by preventing undesirable actions.

• Real Estate Example: Imagine a homeowner living in a community governed by a Homeowners Association (HOA). As part of their agreement with the HOA, the homeowner signs a document containing a negative covenant stating they will not build any structure on their property that exceeds a certain height or use exterior paint colors not approved by the association. This covenant restricts the homeowner's ability to make certain modifications to their property, ensuring uniformity and adherence to community standards.

  Explanation: This illustrates a negative covenant because the homeowner is promising *not* to undertake specific actions (building tall structures, using unapproved paint colors) that would violate the community's rules.

• Business Contract Example: A small, independent bookstore signs a lease agreement to open a shop in a large shopping mall. The mall's management, to protect its existing tenants, includes a negative covenant in the lease stating that the new bookstore will not sell coffee or baked goods, as there is already a prominent coffee shop and bakery in the mall. This prevents direct competition between the new tenant and established businesses within the same property.

  Explanation: Here, the bookstore is making a promise *not* to sell certain items. This restriction prevents them from engaging in activities that would compete with other tenants, demonstrating a negative covenant in a commercial context.

• Employment Agreement Example: A software engineer with access to highly confidential company algorithms and client lists signs an employment contract that includes a non-compete clause. This clause acts as a negative covenant, stipulating that if the engineer leaves the company, they will not work for a direct competitor within a 100-mile radius for a period of two years. This protects the company's proprietary information and market position.

  Explanation: This is a negative covenant because the engineer is promising *not* to engage in specific employment activities (working for a competitor) after their current job ends, thereby protecting the former employer's business interests.