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If you’re signing an employment agreement or a rental contract, you’ll need to understand what a restrictive covenant is. Learn more in the MoneySense Glossary.
A restrictive covenant is a statement that is included in a legal agreement between two parties. One party agrees to not do something as defined by the contract. Examples of restrictive covenants include non-competes, non-solicitation and non-disclosure agreements. They can also be used in real estate transactions, such as when a landlord specifies certain limitations on how a rental property can be used, like no smoking or having no pets.
Example: “Make sure you know about any restrictive covenants in a contract before you sign it.”
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