Final answer:
A covenant against encumbrances is a guarantee that a property is free from undisclosed legal burdens, including restrictive covenants. It assures the buyer that they are informed of any restrictions that might affect the property's use and value.
Step-by-step explanation:
A covenant against encumbrances is a type of guarantee included in the deed of a property asserting that the property is free from any encumbrances (such as liens, outstanding loans, or restrictive covenants) that have not been disclosed to the buyer prior to the sale. This covenant protects the buyer by ensuring they are aware of any legal obligations associated with the property.
Historically, restrictive covenants have been used in various ways, sometimes including discriminatory practices that aimed to control the ethnic composition of neighborhoods.
For instance, covenants might prevent the sale of property to certain racial or ethnic groups, as was practiced in the United States following the Civil War. However, these covenants became unconstitutional over time.
In modern real estate transactions, restrictive covenants can dictate the aesthetic aspects and usage of a property, with the intention of maintaining the value and appearance of a neighborhood.
The covenant against encumbrances reassures the purchaser that the property adheres to these covenants and is not subject to undisclosed restrictions that could affect its use and value.