Continuous Use Covenant

Continuous Use Covenant

A Continuous Use Covenant is a contractual agreement commonly found in real estate leases or purchase agreements that stipulates the property must be used for a specific purpose without interruption for a defined period. This type of covenant ensures that the property is actively utilized in accordance with the terms set forth in the agreement, which may seek to maintain property value, uphold community standards, or fulfill zoning requirements.

The Continuous Use Covenant typically outlines the obligations of the property owner or tenant to maintain and operate the property in a manner consistent with the covenant’s terms. For example, a commercial property leased to a restaurant may include a Continuous Use Covenant requiring the tenant to operate the restaurant continuously and not let it sit vacant for an extended period. If the tenant were to close the restaurant for a lengthy duration, they could be in breach of the covenant.

In some cases, failure to adhere to the Continuous Use Covenant can lead to legal consequences, including the termination of the lease or the imposition of penalties. Additionally, such covenants can be an essential consideration for prospective buyers or investors, as they can significantly impact the property’s marketability and potential income generation.