Restrictive Covenants In Shareholders Agreements In Texas
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A bill was introduced in Texas in 2007 to create covenant marriage in the state, but it failed to pass. Biblical teachings are the backbone of covenant marriage, with the belief that marriage is a lifelong promise between both parties to the marriage and God.
The new law will require that homeowners association policies must include general categories of restrictive covenants for which the association may assess fines, a schedule of fines for each category of violation, and information on hearings.
A bill was introduced in Texas in 2007 to create covenant marriage in the state, but it failed to pass. Biblical teachings are the backbone of covenant marriage, with the belief that marriage is a lifelong promise between both parties to the marriage and God.
Notably, deed restrictions are not always legally enforceable in Texas. In order to be legally valid, a deed restriction must be reasonable, lawful, and consistent with public policy.
Covenants are either personal, restricting only the party who signs the agreement, or they "run with the land," passing the burden along to subsequent property owners. A restriction is simply a limitation on the use of the land.
Texas law uses the term “restrictive covenants.” Texas Property Code, Section 202.001(4) states: (4) "Restrictive covenant" means any covenant, condition, or restriction contained in a dedicatory instrument, whether mandatory, prohibitive, permissive, or administrative.
Ingly, if, for example, a restrictive covenant between employer and employee includes a five-year term, the covenant is unlikely to be deemed enforceable by a court. In the sale of business context, courts typically are more willing to enforce covenants lasting longer than 1-2 years.
Amendment:If the restriction is contained in a deed, it can be amended by a majority vote of the property owners who are subject to the restriction. Eminent domain:If the restriction is considered to be an unreasonable burden on the property, it may be possible to remove it through eminent domain.
Any non-compete agreement that is void under existing law is unenforceable, “regardless of where and when the contract was signed” or where employment was maintained.
