A restrictive covenant states that no building on a residential lot shall exceed two stories in height. A buyer purchases a 10-acre undeveloped parcel subject to this covenant, intending to build a 3-story boutique hotel. What are the implications for the buyer?

Question: A restrictive covenant states that no building on a residential lot shall exceed two stories in height. A buyer purchases a 10-acre undeveloped parcel subject to this covenant, intending to build a 3-story boutique hotel. What are the implications for the buyer?

Answer options: ✅ The buyer is bound by the restrictive covenant, and the 3-story hotel cannot be built unless the covenant is discharged or modified.

• Restrictive covenants automatically expire after 20 years, so the buyer can disregard it.
• Restrictive covenants are only enforceable if specifically mentioned in the purchase contract.
• The buyer can apply for a municipal variance, which overrides any restrictive covenant.

Correct answer: The buyer is bound by the restrictive covenant, and the 3-story hotel cannot be built unless the covenant is discharged or modified.

Explanation: Restrictive covenants, once registered on title, 'run with the land' and bind subsequent owners, as per the Land Titles Act (Alberta). The buyer is legally bound by the covenant, and building a 3-story structure would be a breach, possibly leading to legal action by benefiting parties unless the covenant is formally removed or modified by agreement or court order.