covenant

A written and legally binding promise to do something, or to refrain from doing something. For example, when you apply for a mortgage, you will sign a covenant promising to pay your property taxes, promising to not destroy the house, and promising to repay the mortgage loan in full. Failing to fulfil a covenant, regardless of circumstances, leaves you liable to be sued. (For example, some people believe that if their home is sold under power of sale, they can then “walk away” from the mortgage. This is not true. Because they signed a covenant to repay the mortgage loan, they are obligated to do so regardless of circumstance. Though the proceeds of the power of sale are applied to the outstanding loan amount, the person would still be on the hook for the remainder.)

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