Should You Invest in a Deed Restricted Community?

When you buy a real estate investment, you are free to do whatever you want with it, right? No, that is not always the case. If deed restrictions have been placed on the community, there will be some limitations on what you can or can’t do on your property. Before buying property in a deed restricted community, be sure to get familiar with these limitations.

What Is a Deed Restricted Community?

A deed restricted community is a planned development where all homes come with conditions that are created and enforced by a homeowner’s association (HOA). Anyone that purchases property in a deed restricted area is required to abide by the restrictions. At times, you will hear people referring to deed restrictions as restrictive covenants.

One of the main benefits of deed restrictions is supporting property values by maintaining the neighborhood’s aesthetic. This is the reason why most common restrictions regulate the appearance of your home. A deed restriction will also ensure that communal amenities like tennis courts, gyms, and pools are well taken care of. Finally, residents can share expenses involved in communal maintenance activities like lawn care and snow removal.

On the downside, deed restrictions could turn out to be more oppressive than beneficial. This is the case especially in older communities where the rules are outdated. Owning property in a deed restricted community also means that you will pay HOA fees which usually increase over time.

When you violate a deed restriction, you could be slapped with a fine or even get foreclosed in extreme cases.

Common Deed Restrictions

Here are some of the restrictions you are likely to find in a deed restricted neighborhood:

• Pet and animal restrictions: Quite often, HOAs use deed restrictions to regulate the type of animals you can keep on their property. Cows, pigs, chickens, and other livestock are usually banned in residential areas. There might also be restrictions on pets like dogs and cats. For example, a deed restriction could specify that you are not allowed to have a dog that makes too much noise
• Vehicle restrictions: HOAs can limit the type or number of vehicles you can have on the property. Travel trailers, boats, and motor homes are some of the commonly banned vehicles. This restriction is useful for conserving street parking.
• Restrictions on the type of fence: You might see a restriction on specific types of fencing. For example, some communities ban very tall privacy fences and chain-link fences
• Restrictions on obstructing a neighbor’s view: This restriction could mean that you cannot plant tall trees or shrubbery. In addition, it could prevent you from building fences or sheds on your property. View obstruction restrictions are usually found in popular vacation destinations and resort areas
• Approval requirements for building: Before you can renovate or build a new structure, you will be required to get approval from your HOA. This restriction helps keep properties within the development looking uniform
• Restrictions on home-run businesses: Some communities place limitations on the kind of business residents can run from their homes. Such restrictions promote security and prevent excess traffic
• Prohibitions on specific items on your driveway or yard: Common examples of banned items include work trucks, boat trailers, vehicles without license plates, and storage sheds. This restriction keeps your yard from getting too cluttered
• Restrictions on exterior colors: Your HOA might have a list of colors that are not allowed, and a list of approved colors to choose from. In extreme cases, the HOA might not even allow you to change your property’s color

Deed Restrictions vs Zoning Ordinances 

A distinction needs to be made between deed restrictions and zoning ordinances. Zoning ordinances are put in place by local municipalities as part of the overall plan for how they want to see the entire community laid out. This means that a zoning ordinance affects several properties in a neighborhood, not just one single home.

Creating or altering a zoning ordinance can only happen through the vote of a local planning board. The community is also invited to provide their input. A homeowner can ask for a change in the zoning ordinance if they can explain how it will benefit the entire neighborhood without affecting the master plan.

On the other hand, owners of real estate can create deed restrictions without the input or approval of any other party. Deed restrictions don’t impact the entire neighborhood, and can only be changed with the approval of those who created the restrictions.

How to Know Whether a Home Is Deed Restricted 

Before making an offer on a home, be sure to read and comprehend any deed restrictions you will encounter. Here are some of the ways you can tell if a property is deed restricted:

• Get a title company to conduct a search: A title search will always reveal any deed restrictions on a property
• Talk to your realtor: Your realtor or real estate agent can look at previous listings of the home to see if there are any restrictions. They can also check property records for any noted restrictions
• Talk to your local government: Urban planning departments and municipal clerks maintain property records on file. You could discover restrictions on a home by doing a search on your local municipality’s website
• Speak to the head of the HOA: The head of the HOA can show you any restrictions on the property records

Can You Alter a Deed Restriction?

Changing a deed restriction is difficult, but not impossible. Here are the steps you’ll need to take to remove or change a restriction:

• Get a copy of the covenant: This is a contract that outlines a deed restriction’s full set of terms. Your title company or real estate agent should be able to get you a copy of the covenant. Alternatively, you could visit the local courthouse or clerk’s office to obtain it
• Read the covenant: Take time to read the terms of the restriction. You might be pleasantly surprised to discover the restriction has an expiration date that has passed. If it doesn’t include an expiration date, it might explain the procedure for removing or altering the deed restriction
• Talk to the governing body: Speak to the HOA, community association, or city council to change the restriction. Even if they don’t make the changes, you might get special permission to disregard the deed restriction
• Talk to your neighbors: At times, deed restrictions contain clauses that say one or more neighbors should agree to the changes. Work with your neighbors to enhance your chances of success
• Go to court: If you cannot get approval to remove or change the deed restriction from the governing body, you could petition a court to void it. An order from the judge will override any decision from those who own the restriction. However, a court ruling only works if the restriction is outdated, discriminatory, or illegal

Conclusion 

The decision of whether or not to buy property in a deed restricted community is tough. Before making a purchase, be sure to get familiar with the common deed restrictions you are likely to encounter. Consult your agent, local government, or title company to find out if the home you are interested in has any restrictions. If you find that the home has a current deed restriction, you could try to alter or void it. However, since changing a deed restriction can be a long and complicated process, the best option would be to look for property elsewhere.

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