A buyer is interested in purchasing a commercial property that has a specific zoning for 'retail use only.' The Certificate of Title also shows a registered restrictive covenant stating 'No food or beverage establishments allowed.' The buyer plans to open a restaurant. What is the most critical issue they face?

Question: A buyer is interested in purchasing a commercial property that has a specific zoning for 'retail use only.' The Certificate of Title also shows a registered restrictive covenant stating 'No food or beverage establishments allowed.' The buyer plans to open a restaurant. What is the most critical issue they face?

Answer options:

• The zoning override, as municipal zoning bylaws always supersede private restrictive covenants. ✅ The restrictive covenant, as covenants, being private agreements registered on title, can be more restrictive than zoning bylaws and are enforceable by those who benefit from them.
• The need to apply for a variance from the municipal planning commission to allow the restaurant.
• The potential for increased property taxes if the business generates high revenue.

Correct answer: The restrictive covenant, as covenants, being private agreements registered on title, can be more restrictive than zoning bylaws and are enforceable by those who benefit from them.

Explanation: Restrictive covenants and zoning bylaws operate independently. While zoning regulates land use generally, private restrictive covenants can impose stricter limitations. If a property is zoned for retail but a restrictive covenant prohibits a specific retail type (like a restaurant), the covenant usually prevails because it's a private agreement enforceable by neighbours, making the covenant the more immediate hurdle for the buyer's plans.