Is Restrictive Covenant Legal?

In real estate transactions, restrictive covenants are binding legal obligations written into the deed of a property contract, usually by the seller. These covenants can be simple or complex and can levy penalties against buyers who fail to obey them.

Is a restrictive covenant enforceable?

How enforceable are restrictive covenants? The general position is that post-termination restrictive covenants are void on public policy grounds as being in restraint of trade, unless they are being used by the employer to protect a legitimate business interest.

What makes a restrictive covenant legal?

To be enforceable, the restrictive covenant must define reasonable limits, either according to a period of time, geographical area, or type of work. In some states, such as California, there are specific laws that make non-solicitation agreements unenforceable unless they are introduced to protect trade secrets.