Glossary · UK
What is Restrictive Covenant?
A binding obligation that limits how land, property or a person can be used, such as restricting building work or post-employment competition.
Full Definition
A restrictive covenant is a legally binding promise that limits what someone may do, most commonly attached to land and property or written into employment contracts. In a property context, a covenant in the title deeds might prevent building extensions, running a business from home, or keeping certain animals; these obligations usually bind future owners and are enforceable by whoever benefits from them. In employment, restrictive covenants in a contract or settlement agreement may stop a departing worker from competing, soliciting clients, or poaching staff for a defined period and area. To be enforceable, employment covenants must protect a legitimate business interest and go no wider than reasonably necessary. Breaching a property covenant can lead to injunctions or damages, and you may need indemnity insurance or a formal release to deal with one. Always check the deeds before buying and take legal advice before signing employment restrictions, as overly broad clauses may be unenforceable but can still cause costly disputes.