Restrictive covenant examples fall into two broad groups. On the employment side, you’ll see non-compete agreements, non-solicitation clauses (for both customers and coworkers), confidentiality agreements, and garden leave provisions. On the property side, you’ll see architectural rules, use restrictions, and structural requirements written into a deed or a community’s recorded Covenants, Conditions, and Restrictions (CC&Rs). Both kinds create enforceable obligations that can follow you for years, which is why recognizing them before you sign or buy matters far more than untangling them after a dispute begins.
Employment Restrictive Covenants
Employment covenants protect an employer’s competitive advantages: client relationships, trade secrets, internal know-how, and workforce stability. They usually appear in an offer letter, an employment contract, or a severance package. They bind only the people who sign them, and they expire after a defined period.
Non-Compete Agreements
A non-compete stops you from working for a competing business or launching a similar venture for a defined period within a defined area after you leave. Courts in most states enforce one only when three limits are all reasonable: duration (commonly six months to two years), geographic reach, and the scope of restricted activity. A two-year, citywide restriction on a senior sales director with deep client knowledge looks very different from a five-year, nationwide ban on a junior analyst who never touched proprietary data.
Non-competes are the most heavily litigated restrictive covenant because they directly limit a person’s ability to earn a living. Judges scrutinize them harder than other restrictions, and an agreement that looks even slightly overreaching risks being thrown out entirely. A handful of states void nearly all non-competes, and roughly 34 states plus the District of Columbia impose some statutory restrictions on them.
Non-Solicitation of Customers
A customer non-solicitation clause prevents you from reaching out to your former employer’s clients after you leave, typically for one to two years. It’s narrower than a non-compete because it doesn’t bar you from the industry entirely. You can join a competitor; you just can’t chase the specific clients you built relationships with on your former employer’s time.
Enforcement usually turns on who initiated contact. If a former client tracks you down independently and asks to keep working with you, most courts won’t call that a violation. The restriction targets your outreach, not the client’s free choice. The line between “I reached out” and “I made myself easy to find” gets litigated often, so documenting every interaction during the restricted period is the safe habit.
Non-Solicitation of Employees
Sometimes called a no-poach clause, this one stops you from recruiting your former coworkers to a new company. The concern is obvious: losing one senior person is manageable, but losing that person plus the three teammates they take with them is a staffing crisis.
When this clause sits inside a single employment agreement between an employer and a departing worker, courts treat it like any other restrictive covenant and evaluate it for reasonableness. It’s different when competing companies agree with each other not to hire one another’s employees. The FTC and DOJ have jointly stated that inter-company no-poach agreements can lead to criminal antitrust liability, because they suppress wages and restrict worker mobility rather than protect any legitimate business interest.1Federal Trade Commission. FTC and DOJ Jointly Issue Antitrust Guidelines on Business Practices That Impact Workers
Confidentiality Agreements
A confidentiality agreement, often called an NDA, restricts you from sharing proprietary information you learned on the job: formulas, algorithms, pricing strategies, client lists, internal processes. Unlike a non-compete, it doesn’t stop you from working anywhere. It only stops you from revealing or using specific information that belongs to the employer.
That narrow reach makes confidentiality agreements far easier to enforce. Courts rarely strike them down because they impose the lightest burden on your ability to earn a living. Many states recognize a common-law duty of confidentiality even without a written agreement, meaning you may owe this obligation whether you signed anything or not. What the clause can’t do is prevent you from using general skills and industry knowledge you developed on the job. The restriction covers secrets, not expertise.
Garden Leave Clauses
A garden leave clause keeps you on the payroll during your notice period but requires you to stay away from the office, clients, and work duties. You’re technically still employed, so non-compete restrictions don’t need to start yet, but the employer gets the same cooling-off window as client relationships shift to other staff. The term comes from the idea that the departing employee is paid to tend their garden at home.
Garden leave shows up most in industries where client relationships are intensely personal, like financial services and executive recruiting. Because the employee keeps getting paid during the restriction, courts view these clauses more favorably than unpaid non-competes. For the same reason, garden leave is gaining traction in states that have otherwise tightened the rules around traditional non-competes.
Property and Real Estate Restrictive Covenants
Property-based restrictive covenants control what you build, how your home looks, and what activities happen on your land. Unlike employment covenants that expire after a set period, property covenants often “run with the land,” meaning they bind every future owner, not just the person who originally agreed to them. They typically appear in a recorded Declaration of Covenants, Conditions, and Restrictions filed with the county, and they remain legally binding on anyone who later buys property in that community.2Legal Information Institute. Covenants, Conditions, and Restrictions
Architectural and Aesthetic Covenants
These are the restrictions most homeowners encounter first: rules about exterior paint colors, fence heights, roofing materials, mailbox styles, and whether you can mount a satellite dish where the neighbors see it. The goal is visual consistency, which in turn supports property values across the neighborhood.
A Homeowners Association architectural review board typically enforces these rules. You submit plans for any exterior modification before the work begins. The board reviews them against published standards and either approves, denies, or requests changes. Work done without approval can draw fines, and the HOA may require you to undo the modification at your own expense until the violation is corrected.
Use Restrictions
Use restrictions control what activities happen on the property. The most common example is a ban on operating a commercial business from a residential home, though many CC&Rs carve out an exception for low-traffic home offices. Other typical use restrictions include limits on short-term rentals, caps on the number of unrelated people living in a single dwelling, and rules about which animals you can keep. A covenant that allows dogs and cats but bans livestock or poultry is standard in most planned communities.
These rules exist to preserve the residential character buyers expected at purchase, and they can be strictly enforced. An HOA that discovers you’re raising chickens in a community that bans poultry has standing to demand removal, and fines can accumulate daily until you comply.
Structural Covenants
Structural covenants set physical parameters for building and renovation: minimum square footage for finished living space, maximum building height, required setback distances from property lines, and sometimes approved construction materials. A minimum-size rule prevents someone from putting up a tiny structure that would look out of place. Height limits keep one home from blocking another’s sunlight or views.
Setback requirements deserve particular attention because they often exceed what your local zoning code demands. You might satisfy the city’s building code and still violate your CC&Rs if the community imposes a larger buffer between your structure and the property line. Fixing a structural violation after the fact is expensive, so checking both municipal zoning and your CC&Rs before construction is time well spent.
What Makes a Restrictive Covenant Enforceable
Not every restriction written into a contract or deed survives a legal challenge. Courts evaluate restrictive covenants against a set of requirements, and a covenant that fails any one of them can be voided or narrowed.
The Reasonableness Test
For employment covenants, courts apply a three-part reasonableness analysis: the restriction must be reasonable in duration, in geographic scope, and in the range of activities it prohibits. A non-compete lasting six months that covers one metropolitan area and restricts only direct competitor employment is far more likely to survive than a three-year restriction covering an entire state and barring any work in a broad industry. When a covenant fails on any single dimension, some courts void it entirely. Others apply what’s known as the “blue pencil” doctrine, which allows the court to narrow the overbroad terms rather than throw out the whole agreement. Whether a court rewrites or rejects depends on your state.
Legitimate Business Interest
The restriction has to protect something specific and valuable: trade secrets, proprietary client relationships, confidential business strategies, or specialized training the employer paid for. An employer cannot impose a non-compete on someone who never accessed sensitive information and whose departure poses no competitive threat. This is where many blanket non-competes for entry-level workers fail. Without a concrete interest to protect, the covenant is unnecessary and unenforceable.
Adequate Consideration
A contract needs consideration on both sides to be enforceable, and restrictive covenants are no exception. When you sign a non-compete as part of a new job offer, the job itself is the consideration. The harder question comes up when your employer asks you to sign one after you’ve already been working there for a while. In a majority of states, continued at-will employment counts as adequate consideration. But a meaningful number of states disagree, requiring something beyond keeping your existing job: a raise, a promotion, a bonus, stock options, or access to new confidential information. If your employer slides a non-compete across your desk two years in with nothing new attached, enforcement may be difficult depending on where you live.
Public Policy Limits
Every restrictive covenant is subject to a public policy override. A court will not enforce a covenant that violates state or federal law, however cleanly it’s drafted. The clearest example on the employment side is the outright bans on non-competes that several states have adopted. On the property side, covenants that discriminate based on race, color, religion, sex, disability, familial status, or national origin are unenforceable under federal fair housing regulations, which specifically prohibit enforcing deed provisions that restrict property sales or rentals on discriminatory grounds.3eCFR. 24 CFR Part 100 – Discriminatory Conduct Under the Fair Housing Act The Supreme Court held in 1948 that courts cannot enforce racially restrictive covenants, because doing so would be state action that violates the Fourteenth Amendment’s equal protection clause.4Justia. Shelley v. Kraemer, 334 U.S. 1 (1948) These provisions are legally dead even if they still appear in the text of an older deed.
Consequences of Violating a Covenant
Breaching a restrictive covenant triggers real consequences, and the remedy depends on the type of covenant and how urgently the other party needs relief.
For employment covenants, the most common remedy is an injunction: a court order forcing you to stop whatever violates the agreement. An employer who discovers a former employee soliciting restricted clients can seek a temporary restraining order, sometimes within days. If the employer shows a likelihood of success and irreparable harm that money alone cannot fix, the court may issue a preliminary injunction that stays in effect throughout the litigation, with a permanent injunction possible in the final judgment.
Monetary damages are the other main lever. For an employer, damages typically measure lost revenue or competitive harm. For a former employee wrongfully restrained by an unenforceable covenant, damages might include lost wages. Many agreements include a liquidated damages clause that pre-sets the dollar amount owed on breach. Courts enforce these clauses only when the amount is a reasonable estimate of the anticipated harm and when actual damages would be hard to calculate. A clause designed to punish rather than compensate is treated as an unenforceable penalty.
Property covenant violations follow a different path. An HOA typically sends a notice of the violation, holds a hearing, and then imposes fines if the violation continues. Daily or per-occurrence fines vary widely, with some states capping the amounts and others leaving it to the HOA’s governing documents. Unpaid fines can lead to court collection, and in some states the HOA can place a lien on the property, though whether that lien can lead to foreclosure varies significantly by jurisdiction.
Why Property Covenants Follow Every New Owner
The most important feature of property covenants is that they bind more than just the original parties. A covenant that “runs with the land” attaches to the title itself, so every subsequent owner inherits the obligation. Courts traditionally require four elements for a covenant to run: the original parties intended it to bind successors, the subsequent owner had notice (usually through the recorded deed), the restriction directly relates to the use or enjoyment of the land, and privity of estate exists between the parties.5Legal Information Institute. Covenant That Runs With the Land
The practical consequence is simple. If you buy property in a community with recorded CC&Rs, you’re bound by those restrictions whether you read them before closing or not. The recording in the county records counts as constructive notice. Reviewing CC&Rs before purchasing property in any planned community is one of the few steps in real estate due diligence where the cost of skipping it can easily exceed the cost of doing it.
Where Non-Compete Law Stands Now
Non-compete law is in the middle of a significant transition. In April 2024, the FTC announced a sweeping rule that would have banned virtually all non-compete agreements nationwide.6Federal Trade Commission. FTC Announces Rule Banning Noncompetes A federal court in Texas blocked the rule before it took effect, the FTC abandoned its appeal in September 2025, and the rule was removed from the Code of Federal Regulations entirely in early 2026.
The agency hasn’t walked away from the issue. It retains authority under Section 5 of the FTC Act to challenge specific non-compete agreements it considers unfair on a case-by-case basis, particularly agreements imposed on lower-wage workers or those with exceptionally broad terms. State legislatures have been filling the gap, with four states banning non-competes entirely and over 30 others restricting them through income thresholds, industry-specific bans, or other limits. If you’re subject to a non-compete, the enforceability question depends almost entirely on your state’s current law.