In an ideal world, we could build whatever we want. Unfortunately, something called deed restrictions are controlling what owners can and can’t do with their homes. In this article, we’ll take a deep dive into deed-restrictive communities, and why you should think twice before buying a deed-restricted home.
What is a deed restriction?
A deed restriction or restrictive covenant limits what you can and can’t do with your property. Deed restrictions are created when someone sells their property with certain restrictions. These restrictions are recorded in the registry of deeds, hence, anyone who owns the property will be legally bound to them. In some cases, they can be changed only by the individual who created the deed restriction. In addition, deed restrictions “run with the land”, which means that they’re tied to the land, and not to the structure on it.
What is a deed-restricted community?
A deed-restricted community is a development wherein a homeowners association (HOA) can prohibit what property owners can do with their properties. Such a community follows the HOA’s Covenants, Conditions, and Restrictions (CC&Rs) which outline the rules and regulations. To put it, if you were to reside in a deed-restricted community, you would have to act in accordance with their restrictions.
The failure to follow the restrictive covenants can result in a warning of non-compliance, or worse, a penalty that is imposed daily until the terms of the deed are met.
How are deed restrictions different from zoning ordinances?
Deed restrictions and zoning ordinances may seem the same, but they’re entirely different. Zoning ordinances are put in place by the local planning department. They can be placed on entire communities, impacting multiple properties. Changing the ordinances can be incredibly political and they depend on the vote of the governing board.
On the other hand, deed restrictions can be created by the property owner. They are put in place to protect their personal interests. They can also be changed at any time, as long as the person who created the deed restriction agrees to do so.
How long does a deed restriction last?
It depends. Some deed restrictions can last a couple of years, while others can last in perpetuity. This means that the deed restriction does not have a fixed expiry date. Certain deed restrictions can even reset when there’s a change in ownership. Fortunately, deed restrictions can be changed.
How can you change a deed restriction?
Deed restrictions that have a written expiration date are no longer enforceable once they expire. However, the HOA may decide to extend the expiration date should they see the need to.
There are exceptions, though. Deed restrictions that are discriminatory or unreasonable are unconstitutional and are therefore unenforceable. For example, the Fair Housing Act protects certain classes from discriminatory acts. A deed restriction that doesn’t allow you to sell the property to persons of color is discriminatory, hence it cannot be enforced.
If you want to get around the deed restrictions, you’ll have to go through the process based on your HOA’s governing documents. Here’s what you will need to do:
- Read the terms of the restriction. Request your property management company to provide you a copy of the covenant. Determine whether or not it has an expiration date. If may also specify the steps you need to take to remove the restriction.
- Consult the governing body. The covenant should clearly indicate who the governing body is. It is usually the homeowners association. Inform them that you intend to remove the deed restriction.
- Consult the community. Deed restrictions can include a clause that states that the community must agree to any changes. If you aren’t a people person, you’ll benefit from hiring a property management firm. If they agree, you’ll need to get a Restriction Release form.
- Consult the court. If neither the governing body nor the neighbors agree to change the deed restriction, you can file a petition in court. The court’s decision will prevail over the community’s.
It’s important to understand that changing deed restrictions isn’t easy. It may be better to buy a property elsewhere than to convince the association or court. Consult with a real estate professional before buying a home in a deed-restricted community.
What are some examples of deed restrictions?
Here are a couple of restrictions you can encounter in deed-restrictive communities:
#1 Number of Vehicles
This is a common restriction in deed-restrictive communities. Under this restriction, you can’t have more than a certain number of cars in your driveway. So, if you have five cars and you’re only allowed three, be careful not to breach the restriction. Similarly, some communities may have restrictions on storing non-working cars on their property.
#2 Exterior Paint
Be prepared to have your dreams of having an Andy Warhol-style home crushed. Some deed-restricted communities don’t allow owners to paint their homes in unconventional colors. Be sure to check if your community has a list of acceptable colors. Some communities can be incredibly specific — for instance, they can give the green light for one shade of yellow, but ban it in a slightly lighter shade.
You won’t be able to build a fence whenever you want to. You’ll need to get the approval of the association, as the style of the fence is one of the strictest restrictions out there. For instance, some communities won’t let you put up a privacy fence that exceeds three or four feet. This is bad news especially for homebuyers who were looking forward to sunbathing behind their house.
If you’re planning on running your business from home, don’t forget to consult the deed restrictions. Some restrictions prohibit any type of business from being conducted in residential buildings. This is put in place to prevent vehicles (i.e. delivery drivers) from constantly coming in and out of the community, as this can result in increased traffic.
The bottom line
Deed restrictions can impact what you can and can’t do with your property. While they may not be an issue now (“They’ll expire, anyway!”), they can cause unexpected problems down the line. Remember, deed-restricted communities can vote to extend the expiry, causing your investment goals to go down the drain.
If you want to find out whether a home is deed-restricted, you should consult a property management company. At Luxury Property Care, we will look into the particular property on your behalf. We’ll handle the time-consuming task of reading through the restrictions so that you don’t have to.