What Are Restrictive Covenants?
A restrictive covenant is a legal obligation that restricts how a property can be used. In condominium management, restrictive covenants can regulate:
Architectural control (e.g., limiting exterior modifications)
Usage restrictions (e.g., prohibiting short-term rentals)
Pet and smoking policies
Parking and storage limitations
Restrictive covenants are registered on the land title and are legally binding on current and future owners.
Legal Basis in Alberta
Under the Land Titles Act (Alberta), a restrictive covenant must be registered on title to be enforceable. It runs with the land, meaning future owners are also bound by the restriction.
Key Consideration: Restrictive covenants must align with the Condominium Property Act (CPA) and cannot contradict bylaws or provincial legislation.
When Is a Restrictive Covenant Needed?
A condominium corporation may implement a restrictive covenant when:
A developer establishes architectural guidelines for a community.
The board wants to limit property modifications (e.g., preventing balcony enclosures).
Owners approve restrictions on property use, such as short-term rentals or business operations within units.
There is a need to protect common property, such as restricting heavy vehicles in parking areas.
Example Scenario: A condominium board wants to prevent unit owners from installing satellite dishes on exterior walls. A restrictive covenant can legally enforce this restriction.
Creating an Effective Restrictive Covenant
Step 1: Drafting the Covenant
A restrictive covenant must:
Clearly define the restriction (e.g., “No unit shall be used for short-term rentals of less than 30 days”).
Identify affected properties (e.g., all residential units or specific buildings).
Specify enforcement measures (e.g., fines for non-compliance).
Align with the CPA and provincial laws to avoid legal challenges.
Step 2: Registering the Covenant
Once drafted, the covenant must be:
Reviewed by legal counsel to ensure compliance.
Approved by the board and, in some cases, by unit owners.
Filed with the Land Titles Office to make it legally binding.
Impact of Restrictive Covenants on Property Value and Governance
Positive Impacts
Maintains community standards and architectural consistency.
Enhances property values by preventing undesirable modifications.
Provides legal clarity on what is allowed within the condominium.
Potential Drawbacks
May limit owner flexibility and use of their property.
Overly restrictive covenants can deter potential buyers.
If not properly drafted, a covenant may be challenged in court.
Best Practice: Restrictive covenants should be reasonable, enforceable, and beneficial to all owners.
Restrictive Covenant Drafting Exercise
Task:
Draft a restrictive covenant for a condominium property and justify its use.
Scenario:
A condominium corporation wants to prevent owners from converting balconies into enclosed spaces. The board is concerned about structural integrity, aesthetic consistency, and safety regulations.
Instructions:
Draft the restrictive covenant by consulting with the condominium corporation's legal council, ensuring it:
Defines the restriction clearly.
Identifies affected properties (all balconies).
Specifies enforcement mechanisms (fines or removal orders).
Aligns with the CPA and municipal bylaws.
Justify the covenant:
How does it benefit property values?
How does it prevent structural issues?
How does it maintain community aesthetics?
Submit your drafted restrictive covenant for review and discuss its implications with the board.
