There are a number of critical steps you must take before buying a home, and one of those is to find out whether the property belongs in a deed-restricted neighborhood. But, what is a deed-restricted community anyway? And how does it affect you as a potential homeowner?
What does deed-restricted community mean? To put it plainly, a deed-restricted community is a complex or development where homeowners can’t do certain actions. Such communities are typically governed by a private entity known as homeowners associations. These associations follow a set of governing documents, which includes the Declaration of Covenants, Conditions, & Restrictions (CC&Rs).
What is a deed restriction? Otherwise known as restrictive covenants in HOAs, these are agreements that limit or prohibit certain activities typically involving the property use, maintenance, and appearance. So, what does it mean when a property is deed-restricted? Simply put, it means you must adhere to certain rules and covenants restricting how you use that property.
Deed restrictions typically run with the land. That means they are attached to the land itself and not the home on top of it. Many deed restrictions also come from homeowners associations. For this article, we will be focusing on the HOA deed restrictions.
What is an example of a deed restriction? Although deed restrictions are very common in HOA communities, not all associations have the same exact set. Some of the most common restrictive covenants you might come across, though, include but are not limited to:
Living in a community with deed restrictions obviously has both advantages and disadvantages. As a potential homeowner, you need to weigh these two against each other to determine whether or not living in a deed-restricted community is right for you.
Here are the benefits of living in a community with HOA deed restrictions:
Here are the drawbacks of living in a community with HOA restrictions:
Homeowners tend to place significance on HOA dues more than anything else. After all, agreeing to live in an HOA community means having to pay these dues for as long as you are a member. If you stay for the next decade and need to pay $300 every month, that equates to $36,000 — and that doesn’t even factor in dues increases (which are practically inevitable).
All things considered, are HOA fees worth it? Most people would say yes. Thanks to regular neighborhood maintenance, homes in HOA communities are likelier to maintain their value over a longer period of time. Additionally, like it or not, the way your neighbor’s house looks can also affect the value of your home. When you examine the pros and cons, the former definitely outweighs the latter.
Within the context of HOAs, the developer of the planned community usually establishes the first deed restrictions. After control is passed on to the homeowners association, more deed restrictions can then be created and added to the governing documents. Creating and amending deed restrictions, though, usually involves a lot of work.
The HOA board will first need to review and discuss a proposal of the addition or change. Homeowners can also provide their input during the meeting. Then, voting takes place. For many associations, passing an amendment requires a majority vote from the entire membership. This process can vary, though, from association to association. To learn more about your guidelines for amending deed restrictions, check your governing documents.
Some homeowners live for years on end without knowing their property is deed-restricted. This is why it is important to learn how to find deed restrictions on a property.
Such restrictions should appear within your property’s deed. If you can’t find your deed, you can ask for a copy of it from the recorder’s office where it was first filed. The process for how to find out deed restrictions can often take a long time, though, since they usually consist of hundreds of pages.
If you have yet to buy a home and wish to find out whether it is deed-restricted, your first course of action should be to check with your real estate agent. You can also conduct a title search or speak directly with the HOA as many deed restrictions do come from these associations.
The body that enforces deed restrictions is usually the body that created them in the first place. It may be the local government or the developer of the property. Who enforces deed restrictions in an HOA? If the property belongs in an HOA community, the HOA enforces the deed restrictions.
The HOA usually enforces deed restrictions by conducting regular inspections of the properties in the community. Since many restrictions have to do with architectural changes, HOAs usually have members follow an application and approval process. In larger associations, there are Architectural Control Committees that handle this type of thing.
In homeowners associations, when you fail to follow deed restrictions, it can lead to a number of possible consequences. These can differ depending on the HOA, though you can expect most to start with sending a notice of the violation. The HOA may also issue a fine against you after going through a disciplinary hearing.
Depending on state laws and the extent of the HOA’s authority, the association may also place a lien on your property. This will make it difficult for you to sell your home, especially when you have unpaid fees. Some associations can even foreclose on the lien.
What happens if you break a deed restriction in a non-HOA environment? Typically, the developer will initiate a lawsuit against the property owner. Lawsuits can be very expensive. Moreover, if you lose, you might have to pay for the developer’s legal fees as well.
How do I get around deed restrictions? Short of selling the property and moving out, there is really nothing you can do to fight deed restrictions. In HOAs, you may be able to change deed restrictions by going through the process spelled out within the governing documents.
But, there are certain exceptions. Some deed restrictions may not be enforceable if they are illegal, unreasonable, or outdated. Discriminatory deed restrictions, for one, are downright unconstitutional. The Fair Housing Act and state Fair Housing laws protect certain classes of individuals. For instance, a deed restriction that says you can’t sell the property to non-whites is illegal and unenforceable.
Make sure to check federal and state laws to ensure the deed restrictions on your property are legal and enforceable. Similarly, HOAs should remain up-to-date on these laws to avoid potential liability.
Deed restrictions can vary in terms of lifespan. Some only go on for 25 to 30 years, while others can last 30 to 45 years. Certain deed restrictions also restart the clock every time the property changes ownership. There are even deed restrictions that exist in perpetuity, meaning they have no expiry date.
When deed restrictions expire, they are no longer enforceable. In homeowners associations, though, there are cases where deed restrictions can be reinstated after expiry. This usually requires a majority vote from the membership, but it really all comes down to what it says in your governing documents.
More and more people are choosing to buy homes in a deed-restricted community. Considering the benefits of such properties, this growing popularity does not come as much of a surprise. Although some HOA fees can be quite expensive, there is no denying that they come with a lot of perks in exchange. If you think of deed restrictions as guidelines to help boost property value, then they are definitely worth it.
Most deed-restricted communities are run by a set of board members with the help of an HOA management company. Our online directory makes it easy to look for management companies and vendors in your area. Start using it today!