A covenant is a legally binding agreement between two or more parties. In the context of property, covenants are often used to restrict the use of land or buildings. For example, a covenant might restrict the height of buildings in a particular area, or it might prohibit the use of land for commercial purposes. Covenants can be either positive or negative. Positive covenants require the owner of a property to do something, such as maintain the common areas of a strata scheme. Negative covenants, on the other hand, prohibit the owner of a property from doing something, such as running a business from home.
Covenants are usually created when a property is subdivided. The developer of the subdivision will often enter into a covenant with the owners of the individual lots, which will restrict the use of the land. Covenants can also be created by the owners of a property, either voluntarily or as part of a court order.
Covenants are enforced by the courts. If a property owner breaches a covenant, the other party to the covenant can take legal action to enforce the covenant. The court may order the property owner to comply with the covenant, or it may award damages to the other party.