Legal Definitions - present covenant

A present covenant is a specific type of promise or guarantee included in a legal document, most commonly in a deed transferring real estate. It makes a statement about the current condition or status of the property, or the grantor's (seller's) rights, at the exact moment the transfer occurs.

Unlike a future covenant, which promises to protect the recipient against problems that might arise later, a present covenant is breached immediately if the promised condition does not exist at the time the covenant is made. This means the statute of limitations for suing on a present covenant typically begins running from the date of the transfer, not from when a problem is discovered later.

Here are some examples illustrating present covenants:

• Covenant of Seisin (Rightful Ownership)

  Scenario: David sells his rural acreage to Maria. In the deed, David includes a present covenant stating that he is the rightful owner of the entire property and has the legal right to sell it.

  Illustration: If, at the time of the sale, it turns out David only legally owned 75% of the acreage, with the remaining 25% belonging to a distant relative through an old inheritance, then the covenant of seisin was immediately breached. Maria doesn't have to wait for the relative to claim their share; the breach occurred the moment David transferred the deed because the promised condition (full ownership) did not exist at that exact time.

• Covenant Against Encumbrances (No Hidden Liens or Burdens)

  Scenario: A commercial property owner, "City Developments Inc.," sells a warehouse to a logistics company, "Global Freight Co." The deed includes a present covenant that the property is free from all undisclosed encumbrances (such as liens, mortgages, or easements) at the time of sale.

  Illustration: After purchasing the warehouse, Global Freight Co. discovers that a local municipality had a pre-existing, unrecorded sewer line easement running directly under the building, which was not disclosed during the sale. Since this easement existed at the moment the deed was transferred, the covenant against encumbrances was immediately breached. Global Freight Co. can pursue a claim against City Developments Inc. for this breach, even if the sewer line doesn't cause an immediate operational issue.

• Covenant of Right to Convey (Power to Transfer)

  Scenario: Eleanor, acting as a trustee for a family trust, sells a rental apartment building to a real estate investor, Robert. The deed contains a present covenant that Eleanor, in her capacity as trustee, has the legal authority to transfer clear title to the property.

  Illustration: It is later discovered that the trust document actually required the consent of all beneficiaries for the sale of major assets, and Eleanor had failed to obtain that consent. Because Eleanor lacked the full legal authority to convey the property at the time of the sale, the covenant of right to convey was immediately broken. Robert does not need to wait for a beneficiary to challenge the sale; the breach occurred the instant the invalid transfer was made, giving him grounds for a claim.