Covenant
A real estate covenant is a contractual promise that runs with the land — commonly used in commercial real estate for restrictive covenants (use restrictions, no-build zones) or in financing for loan-level covenants (DSCR, occupancy, reporting).
What it means
Two main contexts in CRE. (1) Deed-level covenants impose use or development restrictions — CC&Rs in a retail center, restrictive covenants in a master-planned development, or environmental covenants restricting land use post-remediation. These run with the land and bind subsequent owners.
(2) Loan-level covenants are contractual requirements in a mortgage: minimum DSCR, minimum debt yield, reporting requirements, occupancy thresholds. Violation can trigger default, acceleration, or special servicing transfer in CMBS.