If you’re planning on buying a home in a neighborhood that has a homeowners association, you need to be ready to play by their rules. Restrictive covenants dictate what you can and cannot do on your property.
Below, we’ll go over the common types of restrictive covenants you might encounter while shopping around for an investment property in South Florida.
What are HOA restrictive covenants?
A homeowners association (HOA) is considered a non-profit organization that oversees the maintenance and management of a residential community. Their primary objective is to uphold property values by enforcing rules and regulations and performing projects that improve common areas such as playgrounds, parks, and the like.
Restrictive covenants are limitations implemented by an HOA. As the term suggests, it restricts homeowners from conducting certain activities. For instance, a restrictive covenant may prohibit residents from operating a business from home.
Restrictive covenants are voted on by the entire community (meaning all of the homeowners) but are enforced by the HOA board of directors. Restrictive covenants vary depending on the neighborhood where you live — some neighborhoods have strict covenants, while others have complete freedom.
When a homeowner violates the covenants, conditions, and restrictions (CC&Rs), the HOA may charge them a fine and require them to address the issue immediately. Failure to do so may compel the HOA to take legal action against the homeowner.
Remember, restrictive covenants are legally binding. The moment you buy a home, you are obligated to abide by the HOA restrictive covenants. That’s why it’s important to thoroughly understand the CC&Rs of your property. If you’re not sure where to find the CC&Rs, ask your property manager to provide you with a copy.
Why are HOA restrictive covenants necessary?
Many homeowners feel that restrictive covenants are too repressive. The truth is that restrictive covenants actually help the community. So, why are they necessary and what purpose could they possibly serve?
To understand the importance of restrictive covenants, you must understand why HOAs exist in the first place. HOAs are established in order to preserve property values. They accomplish this by implementing restrictive covenants that enhance the neighborhood’s appeal. This refers not only to aesthetic appeal but also to the overall quality of life that residents expect.
Many restrictive covenants outline how residents should and shouldn’t use their properties. For instance, an association may limit the colors you can use to paint the exterior of your house. It may seem trivial but it does prevent “quirky” neighbors from turning their homes into an artistic canvas. When rows of homes look neat and orderly, it boosts the neighborhood’s “curb appeal”, hence increasing property values.
Restrictive covenants also outline the kind of behavior that is considered acceptable in the community. If you have a neighbor who loves to throw loud parties, the association can step in to implement covenants that restrict disruptive behavior.
Is there a downside to HOA restrictive covenants?
As a property owner, it’s understandable that you want to have complete control over your home. However, restrictive covenants may hinder your plans. If you’re buying an investment property in a community that’s regulated by an HOA, you have no choice but to play by their rules.
HOA restrictive covenants can be bothersome to property owners who intend to turn a home into a rental property. HOAs have the authority to restrict a homeowner from renting out their home. Be sure to ask a property management company about the CC&Rs of a prospective home before sealing the deal.
What are examples of HOA restrictive covenants?
Below are the restrictive covenants that you may encounter while shopping for a home:
#1 House Color
HOAs are very particular about the color you paint the exterior of your home with. Many CC&Rs list the acceptable colors (e.g. neutral shades) while others explicitly state which colors are prohibited. It’s safe to assume that you will be able to paint your home in “ordinary” colors such as white, beige, and gray. It’s unlikely that the CC&Rs will allow you to use bizarre colors like neon green and hot pink.
#2 Rent Restrictions
Planning on becoming a landlord? Before buying a home, be sure to check the neighborhood’s CC&Rs. It is common for HOAs to prohibit homeowners from renting or leasing out their homes. The HOA may allow you to rent out your property for a specific period (e.g. 6 to 8 months) but not indefinitely. Similarly, many HOAs absolutely prohibit short-term rentals as they consider this a safety risk.
#3 Business Usage
Turning one room into a home office is fine. Converting the home into the headquarters of your business is not fine — that is, in the eyes of the HOA. Keep in mind that many associations don’t allow residents to use their homes for business. This is because HOAs are concerned about the traffic that your business might bring.
Your HOA may limit the size, number, and breed of the pets that you can own. For example, your HOA may allow small or medium-sized dogs on your property. This is common in multi-family properties such as condominiums and apartments. Many restrictive covenants also ban “aggressive” breeds such as Rottweilers, German Shepherds, and Pitbulls.
#5 Exterior Construction
Think you can build a shed, garage, or fence whenever you want? Think again. Many CC&Rs prohibit the modifications that you can do to the exterior of your property. In most cases, you will have to gain approval from the HOA especially if your design isn’t the most attractive.
The Bottom Line
Before buying a home, be sure to read and understand the restrictive covenants or CC&Rs of your HOA. Otherwise, you might end up with a home that you can’t paint, design, or use the way you wanted to!
Luxury Property Care can help you navigate the HOA’s long list of restrictive covenants. Our property managers will explain to you in detail the rules and regulations of the neighborhood, ultimately helping you make an informed decision.