Underwriting Manual: Covenants, Conditions, And Restrictions

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Underwriting Manual Subtopic

In General

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Restrictions on the user of the land fall into two general classifications: private restrictions and public restrictions. Public restrictions refer strictly to zoning ordinances under a state's police power. Private restrictions are created by land developers rather than public agencies and usually constitute both a benefit and a burden to the land. To the extent that a landowner is restricted in the use that the landowner may make of the land, the restriction is considered to be a burden, but to the extent that the land owner has a right of enforcement against other landowners, it is considered a benefit. This section will only cover Covenants, Conditions and Restrictions. For a discussion of zoning ordinances, see Zoning Coverage.

Deeds or other instruments may impose restrictions on the use of property for any legitimate purpose. The right to acquire and possess property includes the right to dispose of all or any part of, and to impose upon the grant whatever reservations or restrictions the grantor may see fit; provided, that they are not contrary to prohibitions prescribed by law.

Private restrictions are classified generally as covenants and conditions. The distinction between these two terms is based primarily upon the right of enforcement in the event of a breach. Historically, restrictive provisions in deeds, if they did not fall into the category of conditions, were called covenants, i.e., a promise or agreement to do or not to do certain things. The grantor could enforce the covenant only by suing for damages if the covenant was violated. Commencing about a hundred years ago, the courts began to enforce restrictive provisions in another way; by enjoining or forbidding their violation. Injunction is now the customary method of enforcing restrictions.

Note: The term restriction is employed today as a general classification, embracing both covenants, where the enforcement may be by way of injunction or damages, and conditions where the right of enforcement may additionally result in a loss of title.

Underwriting Manual Subtopic


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A covenant is a promise or an assurance to do or not to do a certain thing.

A covenant running with the land is a real covenant as distinguished from a personal covenant. A real covenant must run with the land, touch and concern the land, and involve privity of estate between the party seeking to enforce the covenant and the one to be bound.

A restrictive covenant is one which restricts or regulates the use of real property or the kind, character, and location of the buildings or other structures that may be executed thereon. Upon violation of a restrictive covenant, the remedy is an action for damages or injunctive relief.

Underwriting Manual Subtopic

Conditions Of Restrictions

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A condition is a restriction that is coupled with a reverter clause. This clause, also known as reversionary clause, provides that in the event of violation of the restrictions, the ownership of the land will revert to the grantor in the deed.

Any mortgages or other interests in the land established after the creation of the condition will be extinguished if the condition is enforced.

Breach of a condition does not automatically effect a reversion of title. In that respect, a judicial determination is necessary.

Conditions are not favored in law because they tend to destroy estates. Therefore, a provision in a deed imposing obligations or restrictions on the grantee will be construed as a covenant, rather than as a condition subsequent, when it can be reasonably done.

Underwriting Manual Subtopic

Creation Of Restrictions

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Restrictions or conditions may be created or established by:

  • Deed, lease, or mortgage.
  • Instrument of dedication.
  • Agreement between two or more landowners.
  • Declaration of restrictions executed by the owner of the land.
  • General plan of development or improvement for a tract.
  • Plat or map of a subdivision, condominium, townhouse, etc.

    • Shown by the plat or map.
    • Contained in the dedication of the plat.

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Duration Of A Restriction

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  • The instrument sets a definite period of duration.
  • The instrument sets a definite period of initial duration with a proviso for subsequent renewal(s).
  • The instrument does not set a definite period of duration. If the period of duration is not specified, restrictions are presumed to continue for the whole duration of the estate created.


  • In most states (not in California), it is not necessary that properly created restrictions be named as covenants running with the land. They will run with the land even if the phrase is not recited.

  • The rule against perpetuities is not applicable to covenants, conditions, and restrictions.

  • The rule forbidding restraints on alienation is generally not applicable either.

  • Courts have established some grounds on which certain restrictions can be successfully attacked. Some of these are as follows:

    • Termination after a specified period of time.
    • Change of conditions in character of subdivision
    • estoppel
    • waiver
    • laches
    • acquiesence
    • rezoning
    • condemnation action
    • unconstitutional

Underwriting Manual Subtopic

Validity Of A Restriction

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Restrictive covenants and conditions are generally held valid where reasonable, not contrary to public policy or to law, and not in restraint of trade or for the purposes of creating a monopoly.

Restrictions which benefits no one, or seriously interfere with the proper development of the community, or prohibit the use of property have been held to be void.

Racial restrictions are void and in some states age restrictions have also been held invalid. See Racial Restrictions below.

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Racial Restrictions

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Restrictive covenants and conditions based on race, color, religion, sex, or national origin are considered by the Company to be unenforceable and void regardless of whether they are coupled with a reversionary or forfeiture provision, and they must not be referred to in any commitment or title policy describing the land which they purport to affect.

If a covenant of this nature is contained as one of a series of restrictive covenants in an instrument, and it is necessary to except that instrument because of some other restrictive covenants it contains, the exception must be worded as follows:

"Covenants and restrictions, but omitting any such covenant or restriction based on race, color, religion, sex, or national origin, contained in instrument recorded in Book _____ , page, on _____, in the ______ County Clerk's (Recorder's) Office (here add the basic language as to whether the instrument contains a reversionary or forfeiture provision)."

If it becomes necessary to supply, in conjunction with a commitment, title report, or policy, a copy of an instrument that imposes a restrictive covenant or condition based on race, color, religion, sex, or national origin, the copy should be prepared in such a manner that the covenant based on race, color, religion, sex, or national origin would be capable of being omitted in one of the following forms:

  • By leaving a blank where the racial covenant appears and inserting in lieu thereof the following phrase: "This covenant omitted."
  • By crossing out the racial covenant.
  • By stamping, typing or printing across the racial covenant or in the margin beside it the following: "This covenant omitted."

The United States Court of Appeals, in Mayers v. Ridley, 465 F.2d 630 (D.C. Cir. 1972), has held that the Fair Housing Act of 1968, 42 U.S.C.A section 3604 forbids a recorder or register of Deeds from accepting for recordation, any instrument containing a racially restrictive covenant based on race, color, religion, sex, or national origin.

Accordingly, do not accept for recording purposes any document which contains racial restrictions.

Underwriting Manual Subtopic

Termination And Extinguishment Of A Restriction

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Termination and extinguishment is one of the most frequently litigated areas of covenant law. The most common litigated matters are:

  • Expiration of the duration by express termination dates within covenants.
  • Statutes limiting the duration of covenants.
  • Merger of the title or ownership.
  • Release or agreement by all beneficiaries.
  • Abandonment.
  • Change of conditions or other circumstances that cause the courts to deny enforcement of the restrictions on the grounds that the enforcement would be inequitable or oppressive.
  • In some cases, lands acquired for public uses are released from private restrictions at least during the time the property is in public ownership.
  • Foreclosure of prior mortgages, liens, or taxes.
  • In some states, tax foreclosures.
  • Condemnations could potentially eliminate restrictive covenants if the taking is total.

Before you decide to insure over restrictions, you need prior approval from a Senior Underwriter.

Underwriting Manual Subtopic

Release Of Covenants, Conditions, Or Restrictions

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The release of any covenants, conditions, or restrictions requires special care and consideration. You must have prior approval from a Senior Underwriter before you write over any restrictions.


Any release, generally in the form of a quitclaim deed, must be executed by the former grantor, and if deceased by his heirs or devisees. If a legal entity, and no longer in existence, by its assigns, successors, or legal representatives.

Covenants and Restrictions

Any attempt to release needs to take into consideration whether:

  • The time or period of the release is a permissible time or period as provided by the instrument that established the restrictions. In the event that the instrument did not establish any, the above statement may be ignored.

  • The necessity of obtaining proper releases from all the necessary parties who are affected or benefited by the restrictions. In order to determine all necessary parties, an examination must be made as to all the related land owned by the grantor at the time of the establishment of the restrictions. All the owners and encumbrancers must also join in the execution of the release.

  • The instrument that established the restrictions makes provision in regard to the necessary number of owners that must execute the release. If the instrument is omissive in this regard, the totality of owners and their spouses and encumbrancers must be required.