Can a seller be bound by a non-competition covenant when selling a commercial property along with their business?

Yes. When a commercial property is sold along with the business operating from it, it's common for the buyer to require the seller to agree not to open a competing business nearby for some period of time, protecting the value, including goodwill, the buyer is paying for. Courts treat these non-competition covenants as a form of restraint of trade and will enforce them only if they're reasonable in scope, geographic area, and duration relative to what's actually needed to protect the buyer's legitimate interest in the business being sold.

Courts tend to scrutinize non-competes somewhat less strictly in a business-sale context than they do in an employment context, since a seller who's been paid for goodwill is in a different position than an employee giving up future work options. Still, an overly broad covenant, too long a duration, too wide a geographic radius, or restrictions unrelated to the actual business sold, risks being found unenforceable if challenged later.

Sellers and buyers negotiating this kind of covenant should have it drafted narrowly enough to be defensible, tailored to the specific business and area actually being protected, rather than relying on a broad, generic restriction.