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Firstly, they do not run with the land which means unless there is a chain of indemnity or a renewed covenant between the parties, the burden of the positive covenant such as repairing a fence does not pass on to the new owner. That is why it is important for a seller who is bound by positive covenants of their land to insist their buyer to enter into a direct Deed of Covenant thereby making the buyer to perform the positive obligations in relation to the land.
The other respect in which positive covenants are different is that they may be legally enforceable even though the person who has the burden of the covenant owns no land. An affirmative covenant is a type of promise or contract that requires a party to adhere to certain terms. What Is a Bond Covenant? A bond covenant is a legally binding term of an agreement between a bond issuer and a bondholder, designed to protect the interests of both parties.
Restrictive Covenant A restrictive covenant is an agreement that requires the buyer to either perform or abstain from a specific action. Understanding Covenants A covenant is a commitment in a bond or other formal debt agreement that certain activities will or will not be undertaken.
What Is a Trust Indenture? A trust indenture is an agreement in a bond contract made between a bond issuer and a trustee that represents the bondholder's interests. How to Not Break a Negative Pledge Clause A negative pledge clause disallows a corporation from pledging any of its assets to another lender if doing so gives existing lenders less security.
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Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Investing Investing Essentials. What Is an Affirmative Covenant? Key Takeaways Affirmative covenants are legal promises to engage in certain activities or meet certain benchmarks added to a financial contract that an issuer must follow. Affirmative covenants are essentially protections for investors, if there are problems with the company the covenant calls for remediation.
In recent times, investors have taken a more lax attitude towards affirmative covenants. Affirmative or positive covenants can be compared to restrictive or negative covenants, which require a party to cease or avoid doing something, such as selling certain assets.
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