Is a non-compete agreement limiting commercial real estate development legal in Texas?

Asked almost 2 years ago - Houston, TX

I am planning to purchase a commercial strip center that has an additional acre of land that the seller wants to keep in order to build a warehouse for his business importing and selling office equipment. As a condition of purchasing the strip mall, I want to prevent him or any future owner of the land from developing the vacant land into a competing strip center. He would be allowed to build his warehouse but not any commercial property that could compete with the exisiting strip center for tenants. Would this be legal and enforcable to him or any future buyer of this land? How long would a non-compete be enforcable for? Thank you.

Attorney answers (3)

  1. Charles Black Mcfarland

    Contributor Level 6

    3

    Lawyers agree

    Answered . This objective can be accomplished through a deed restriction or restrictive covenant agreement. The restriction on development would run with the land and could be permanent, if agreed to by the parties. There are numerous examples of similar situations/transactions. A real estate lawyer could assist in drafting the necessary documents. It is not enough to include a restriction in the conveyance deed to you because that deed does not describe the property to be restricted.

  2. Robert Neil Newton

    Pro

    Contributor Level 16

    3

    Lawyers agree

    Answered . It is legal and there are a couple of ways to do it. First, in the actual deed conveying the property. Second, in a second deed restriction or easement agreement. It appears that you are purchasing an existing strip center so the best place for it would probably be in the deed.

    When purchasing any property tied to other land, you need to make sure that all the easements are recorded along with any restrictions. If none already exist, you'll probably want to entertain some sort of reciprocal easement agreement. It would be beneficial to hire an engineer to help you with the drawings and legal restrictions pertaining thereto. Then, you will need to hire an attorney to draft the REA. It should cover things like access, signage, utlities, maintenance, sewer, water, etc.

    Importantly, you'll want to provide for the restrictions and the easements in the contract to purchase. Those provisions (along with the representations and warranties and some other provisions) should survive the closing of the land. Otherwise, they will be merged into the deed that is filed.

    You should hire an experienced real estate attorney to assist you in the process. A good one can make referrals to you and assist you in the entire process.

    The above statements are provided as general information and not intended as legal advice. Each matter has its own... more
  3. Harry N. Konst

    Contributor Level 12

    2

    Lawyers agree

    Answered . for a restriction to be binding against future real property owners, you need more than an agreement with the current property owner. contact a local attorney to ensure your objective is legally met.

    I am not your attorney. Contact an attorney for advice immediately.

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