What is a deed-restricted community?
You just bought a new house and you can’t wait to start making it your own: replacing the old fence, giving the exterior a fresh coat of paint and maybe even expanding the garage. Shouldn’t be a problem, right? It is your property, after all, and you can do whatever you like with it. A deed-restricted community is one in which you might not have all of that freedom.
Homeowner’s associations may have deed restrictions that limit how you manage your property. Deed restrictions are something to consider as you navigate the homebuying process, checking mortgage rates, securing a home loan and scheduling inspections. The last thing you want is to buy a home and feel like it's not all yours.
what does deed-restricted community mean?
Simply put, a deed-restricted community places limitations on what homeowners can do with their property. Often, homeowner’s associations will impose deed restrictions to preserve the residential nature of the area and boost curb appeal. These constraints can cover anything from the paint colors used on your siding and the type of fence you put up to the lawn ornaments you place in your yard and businesses you run out of your house. Depending on what you envisioned life to be like in your new home, deed restrictions can be pretty, well, restrictive.
These types of stipulations are also known as restrictive covenants. So, don’t get confused if you come across either term. They refer to the same basic homeownership principle. You shouldn’t have to worry too much about such restrictions slipping under the radar, though; they’ll typically come up during any routine title search.
Who issues deed restrictions?
The source of a deed restriction is usually either a homeowner’s association (HOA) or the developer for that property. It’s easy to confuse deed restrictions with HOA by-laws, but even though the two sometimes overlap, they’re not the same at all. In particular, keep this important distinction in mind: HOA by-laws can be changed or removed with relative ease if the community is in full agreement on a new amendment. Getting rid of a deed restriction will prove to be a much bigger ordeal for homeowners, however, even if everyone in the HOA thinks that rule needs to go.
New homeowners may also come across covenants, conditions & restrictions (CC&R), which are enforced by the HOA. CC&R covers the same ground as deed restrictions, dictating the free use of property. Generally speaking, deed restrictions and CC&R are different in name only. Some states use deed restrictions, while others use CC&R. Just know that they refer to essentially the same types of restrictions.
7 common deed restrictions to avoid
As we noted, deed restrictions can cover a lot of ground. But there are several types of deed restrictions that are more common than others. When buying a house, you’re more likely to run into these community-approved limitations:
- Number of bedrooms: It’s tempting to buy a smaller (and more affordable) house today and add onto it later to suit your needs, especially in a competitive real estate market. Deed restrictions may make it impossible to expand your house and build extra bedrooms to support a growing family or visiting guests.
- Color palettes: Want to update your house’s drab exterior with some splashy pastels and other eye-catching hues? Not so fast. Your deed-restricted community may have clear guidelines to follow when repainting your home.
- Home businesses: It seems like everyone has a side hustle these days, but deed restrictions may shut your at-home business down for good. If you’re planning to start a home bakery, sell custom-designed crafts online or run an at-home daycare, be sure to get your HOA’s blessing first.
- Vehicles on your property: HOAs can be pretty fussy when it comes to storing vehicles in your driveway or in your yard. That’s especially true for anything that might be considered an eyesore, like a broken-down car in need of restoration or a boat stored on a trailer. But deed-restricted communities may just as quickly blanch at the idea of perfectly running cars and motorcycles sitting in residents’ driveways.
- Types of fences: When you think of an HOA community, you probably conjure up images of cookie-cutter houses with uniformly pristine lawns. HOAs communities often push back on any development plans that veer from the status quo, and that includes fences. If your deed-restricted community does allow them, you may be limited to certain types of fences like the classic white picket. Chain-link fences or privacy fences are usually frowned upon in these scenarios.
- Building structures: A lot of people would say that putting up a tool shed is a pretty routine and inoffensive home improvement project, but deed-restricted communities might see things differently. Deed restrictions can prevent homeowners from building any type of exterior structure on the property, including garages, work spaces and home studios.
- Obstructing views: Planting trees, building a walkout deck from your master bedroom or even putting up a swing set might be a no-go if those additions block your neighbor’s view. These types of deed restrictions aren’t limited to areas with obvious sights to behold like mountains, seasides or city skylines. Even in a garden-variety suburb, your HOA could argue that your new sapling or trampoline obstructs your neighbor’s view.
You’ve probably noticed that a lot of these limitations revolve around making alterations to your property and your home. That’s good to keep in mind if you’re thinking about, say, taking out a home equity line of credit (HELOC) loan to give your new house a facelift.
What happens if you violate deed restrictions?
It’s up to the courts to enforce restrictive covenants, and while there are some scenarios where a court may rule in the homeowner’s favor, you shouldn’t count on it. Generally speaking, deed restrictions are only thrown out when they discriminate against a particular group or infringe upon what would be a reasonable expectation of free use with your property. The latter doesn’t include building garden sheds or painting your house a particular color.
In some cases, courts may also determine that the deed restrictions in place are too vague to be applicable. That being said, you’d be hard-pressed to prove that any of the preceding examples fall into that category. “No fences” is a pretty cut-and-dry rule to follow, after all.
If a court finds that you’re in violation of a deed restriction, it’ll likely require you to return your property to its original state. In some rare cases, a judge may even assess monetary damages, but it happens so infrequently, you probably shouldn’t worry about it.
Should you buy property with deed restrictions?
It’s difficult to make a blanket statement about avoiding deed-restricted communities because it really depends on the individual homeowner. If you love your new house just the way it is and have no plans to alter the property in any meaningful way, you may never have to deal with any restrictive covenants that are on the books. Also, people who want to preserve their curb appeal may actually welcome deed restrictions. Heck, they may be in favor of expanding free use limitations with even more restrictions.
On the other hand, if you know for a fact that deed restrictions are going to stand in your way of turning a nice house into your dream home, you might want to consider other options. Keep in mind that deed restrictions are extremely difficult to remove, so don’t buy a house thinking you can work around existing limitations whenever you decide to take on a new home improvement project. It’s probably not going to happen.
A deed restriction limits the free use of a piece of property, even if you own your home outright. Such restrictive covenants typically focus on the aesthetic qualities of the home, such as paint colors, external structures and fences. However, deed-restricted communities may also dictate how many bedrooms your house can have, what kinds of businesses you can run out of your home and even the number of pets or type of dog you can own.
Some homeowners may be willing to live within these parameters, but you may understandably chafe at the idea of someone else dictating what you can do on your own property. Before closing on a house with deed restrictions, really think through what they’ll mean for you as a homeowner. You deserve to live in a house you truly love, and you shouldn’t have to compromise on your vision of the perfect home.
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