What covenant means
A covenant is a promise contained in a deed.
The deed is what gives it its character. An ordinary contractual promise needs consideration to be binding. A covenant in a deed binds because of the formality with which it was made, whether or not the promisee gave anything.
Covenants divide into two kinds, and the distinction matters most in property.
A positive covenant requires action, usually involving expenditure: to repair, to maintain a road, to pay a contribution, to build within a period.
A restrictive covenant requires inaction: not to build above two floors, not to use the premises for a trade, not to subdivide.
In a lease, both sides give covenants. The landlord covenants for quiet enjoyment and, depending on the terms, for structural repair and insurance. The tenant covenants to pay rent, to repair, not to alter, not to sublet without consent, and to use the premises only for the permitted purpose.
How it is used
You meet covenants in three documents.
A lease, where they are the operative obligations of both parties and breach gives rise to damages and, where the lease reserves the right, forfeiture.
A conveyance or deed of assignment, where the seller may give covenants for title, confirming their right to convey, that the buyer will have quiet enjoyment, that the property is free from encumbrances other than those disclosed, and that the seller will do what is reasonably needed to perfect the buyer's title. That last one is the covenant for further assurance, and it is the clause a Nigerian buyer relies on when the seller needs to sign something during the consent and registration process.
And in estate developments, where restrictive covenants imposed on sale keep the scheme coherent.
Enforcement depends on who has the benefit. Between the original parties it is contractual. Against a successor, a restrictive covenant can run with the land where it was properly created, while a positive one generally cannot, which is why estates use associations and service charges to achieve the same effect.
Key features
- A promise made in a deed, binding without consideration
- Positive covenants require action; restrictive covenants require inaction
- Restrictive covenants can bind successors in title; positive ones generally cannot
- Leases contain covenants on both the landlord and the tenant side
- Covenants for title are given by a seller on a conveyance
- The covenant for further assurance supports perfection of the buyer's title
How this works in Nigeria
The covenant for further assurance deserves particular attention in Nigerian conveyancing.
Perfecting title takes months and requires the seller's cooperation: signing the consent application, providing documents, attending where needed. A buyer who paid in full and then cannot find the seller has a real problem, and the covenant for further assurance is what obliges the seller to help.
That is a reason to take the covenant expressly rather than rely on implication, and to keep the seller's contact details, identification and the details of somebody who can find them.
In leases, the covenants are where the commercial risk sits. A full repairing covenant transfers responsibility for the building's condition to the tenant. A covenant not to alter without consent controls fit out. A covenant not to assign or sublet without consent controls the tenant's ability to exit. Those three clauses decide more about a commercial letting than the rent does.
The landlord's covenant for quiet enjoyment runs the other way, and it is the one Nigerian landlords most often breach by disconnecting utilities or changing locks during a rent dispute.
In estates, restrictive covenants in the deed of sublease are what a buyer is agreeing to, and they should be read before purchase rather than after building.
Covenant vs contractual term vs condition
Three ways an obligation appears in a document, with different consequences.
A covenant is a promise in a deed. It binds because of the form, and in property it can attach to the land and bind successors.
A contractual term is a promise in an ordinary agreement, binding because of consideration. It binds the parties and nobody else.
A condition, in the sense used in sale contracts, is a term so important that breach entitles the innocent party to terminate as well as claim damages, in contrast to a warranty, where the remedy is damages only.
The words are used loosely in practice. What decides the remedy is the seriousness of the breach and what the contract says about termination, rather than the label attached to the clause. A well drafted agreement states which breaches allow termination rather than leaving it to be argued.
Limits and risks
Positive covenants generally do not run with the land, so a promise to maintain shared infrastructure cannot easily be made binding on future owners directly.
Enforcement also requires somebody with the benefit. Where a developer has left and no association operates, covenants can go unenforced.
Covenants for title are also only as good as the seller's solvency and availability. A covenant for further assurance against a seller who cannot be found is worth what you can enforce.
And in leases, the burden of a covenant is often heavier than the tenant appreciated at signing, particularly full repairing obligations on older Nigerian buildings.
Worth knowing
Take an express covenant for further assurance from the seller in every Nigerian land purchase, and record their identification and contact details. Perfection takes months and needs the seller's signature, and a buyer who cannot find them holds a deed they cannot complete.
Questions people ask
What is a covenant?
A promise contained in a deed. Because it is made by deed it binds without consideration, and in property law a restrictive covenant can bind successors to the land as well as the original parties.
What is the difference between positive and restrictive covenants?
A positive covenant requires action, usually involving expenditure, such as repairing or contributing to maintenance. A restrictive covenant requires inaction. Restrictive covenants run with the land far more readily.
What covenants are in a lease?
On the tenant's side, to pay rent, to repair, not to alter, not to sublet or assign without consent, and to use the premises only for the permitted purpose. On the landlord's side, quiet enjoyment and, depending on the terms, structural repair and insurance.
What is a covenant for further assurance?
A seller's promise to do what is reasonably needed to perfect the buyer's title, including signing consent applications and providing documents. In Nigeria it is essential, because perfection takes months and needs the seller.
Which lease covenants matter most commercially?
The repairing covenant, the alterations covenant and the alienation covenant restricting assignment and subletting. Those three decide more about a commercial letting than the rent does.
Can a covenant bind a future owner?
A restrictive covenant properly created can run with the land and bind successors. A positive covenant generally cannot, which is why estates use associations and service charges to achieve the same effect.