Deed restrictions can impose different types of restrictions, including:
How the property is used (i.e. residential, commercial, etc.)The type of activities that can be carried out on the propertyWhat kind of structures can be built on the property
Deed restrictions can take the form of conditions, covenants, or restrictions (CC&Rs). These are rules that dictate how a piece of real estate can be used. For example, say you want to put up a fence to enclose your backyard. Deed restrictions may require you to construct a particular type of fencing, such as vinyl or wood paneling, and prohibit you from putting up chain link fencing.
How Deed Restrictions Work
Deed restrictions work by specifying rules of a property, namely which activities and uses are allowed and which are not. They essentially impose rules on specific property, and property owners must adhere to them. So everyone who owns a home in a subdivision that has deed restrictions, for example, must follow them. For example, they can be used to prevent commercial or industrial activity from taking place in what’s meant to be a residential area. What you’re restricted to depends on the limits or rules imposed by your homeowner association. For example, your HOA agreement might specify that you cannot:
Park boats, boat trailers, or RVs in or around your homePlant hedges or ornamental trees within so many feet of your property lineBuild any type of wall or fencing near the sidelines of a golf courseConstruct outbuildings without HOA approval and within so many feet of your property lineBuild near an easementChange the exterior color of the homeRun a business of any kind from your homeRaise livestock, including poultry, pigs or cows, on your propertyPlace placards or signs on your property without HOA approval
You may also be prevented from renting or leasing out any part of your home or property through a deed restriction. For example, say you own a vacation home in a subdivision that’s located in a popular tourist area. You’d like to rent it out during the year when you’re not using it to earn some extra income. If the deed restrictions for your property expressly prohibit short-term rentals, you wouldn’t be able to rent it to vacationers without violating your HOA agreement.
Special Considerations for Homebuyers
Buying a deed-restricted property could create problems if you’re not aware of what is or isn’t allowed before signing off on the paperwork. For example, you don’t want to find out after you’ve spent $5,000 on a new fence that you were never allowed to put it up. There are, however, a few things you can do to avoid situations like this when buying a home. The first step is researching the property you’re interested in to determine whether there are any deed restrictions in place. Again, this can be as easy as searching the property address in public real estate records through the register of deeds. You or your real estate agent can conduct the search. You can also ask the HOA whether there are any deed restrictions. If you’re buying a home in an older subdivision, the restrictions may have expired. If you’re looking at a newer subdivision, on the other hand, you may be stuck with them for decades. You’ll have to decide whether to move ahead with purchasing a deed-restricted property. Consider how comfortable you are with the exact restrictions, how interested you are in the property, and how long you plan to own it. Depending on where you plan to buy, deed restrictions may be a non-negotiable part of the package. Before you commit to paying a mortgage, property taxes, homeowners insurance, and HOA fees or dues, consider what kind of trade-offs you might be required to make with a deed-restricted property.
