Wednesday, June 20, 2012

Postive vs. Negative Covenants (and Easements)

The following was asked on the Asked & Answered Facebook page @ http://www.facebook.com/barexaminstruction

"Can you blog about the difference between affirmative and negative covenants? Thanks."

Response:

Because a covenant is a promise, the distinguishing factor between a a positive (affirmative) covenant, and a negative (restrictive) covenant, is whether someone has promised to perform an act, or instead promised to refrain from performing an act.

Let's use the example of a small business taking out a loan from a bank. The loan agreement between the bank and the small business is likely to contain both positive and negative covenants.

Because positive covenants are those that require the small business to perform an act, examples may consist of requiring the business to maintain insurance, pay taxes, maintain a positive cash flow, etc. Because negative covenants are those that require the small business to refrain from performing an act, a common example in this context may be requiring the small business to refrain from borrowing money from any other lender.

On the MBE, however, you are more likely to see the distinction between positive (affirmative) and negative easements. In that respect, an affirmative easement is one in which the holder of the easement is entitled to make affirmative use of the servient tenement (the land burdened by the easement). A classic example would be x granting y an easement to cross the property of x. A negative easement entitles the holder of the easement to compel the possessor of the servient tenement to refrain from engaging in an activity on the servient estate. An example would be x, the holder of the easement, compelling y to refrain from building a structure in excess of five stories on y's property.



3 comments:

  1. You are doing a great job. Your explanations and analysis clear a lot of the concepts. Please keep going, and thanks a lot!

    ReplyDelete
    Replies
    1. Absolutely, and glad you find it helpful!

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  2. great / clear analysis and explanation

    ReplyDelete