Covenant and Covenant Strength – What is a legal covenant and what is the significance of the terms in relation to rental property and lettings ?
The term covenant can have several meanings and has biblical origins but it is of particulalry significance when used in a legal sense in relation to real property and lettings.
Basically, a covenant means a promise, particulalry in relation to a written contract, deed, lease or agreement for property.
The term is used in certain specific types of promises such as a “covenant of warranty” or a promise to guarantee the title (ownership) to a property, a promise agreeing to the use of an easement for access to or over a property and land, or a covenant not to use a premise other that for the use specified in the user clause of the lease.
Restrictive covenants might appear in property deeds, contracts and lease agreements thereby preventing or restricting certain actions a new owner or tenant can make.
Covenant strenght is a term commonly used in the property world to denote the strength or quality of a commercial tenant. A “blue chip company” such as a FTSE 100 company for example would be seen as a very strong tenant likely to keep all its covenents, to always pay rent on time and not break any of its contractual obligations.
Joe Bloggs, on the other hand, the local plumber, may be just as reliable a tenant, paying his rent on time and keeping to the agreement, though much more of an unknown qualtity when it comes to assessing this beforehand.
See: LandlordZONE – Covenant and Glossary
Note: never rely totally on these standard answers. Before taking action or not, always seek professional advice with the full facts of the case and all documents to hand. LandlordZONE.co.uk