What is a deed-restricted community?

Most prospective homeowners have an idea of what their dream home should look like. This dream home usually falls along the line of having a beautiful garage, a nicely shaped fence, and other indoor amenities.

While planning your potential purchase, it is essential to consider what type of community hosts this dream home.

Is this community deed-restricted or non-deed restricted?

In 2020, just over 67% of single-family homes were built in deed-restricted communities or a community with a homeowner’s association.

What is a Deed Restricted Community?

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If you plan to buy a home in a deed-restricted community, you need to answer these questions before purchasing.

  • What is a deed-restricted community?
  • What are some common deed restrictions? 
  • How are property owners affected by specific rules within these communities?
  • What are the benefits and risks of living in these communities?
  • Is a deed-restricted community more expensive to live in?

This article provides an insight into what a deed-restricted community entails; its duration, benefits, risks, drawbacks, etc.

What is a deed-restricted community?

 

What is the definition of deed restriction?

A deed restriction or restrictive covenant is an agreement that prohibits what can be done to a property. For instance, certain rules may prohibit the installation of very tall privacy fences in neighborhoods.

A deed restriction is a legal arrangement limiting what you can do with your home. This deed restriction usually involves regulating what can be built, renovated, or harbored on your property.

Most deed restrictions are either attached to the land or created by a homeowner association (HOA). The HOA typically makes this deed to maintain the community’s appearance and property value.

So, what then is a deed-restricted community? A deed-restricted community is primarily a neighborhood or development where certain actions of homeowners are limited. In this community, property owners must abide by certain rules and regulations which dictate what they can and cannot do with their property. These restrictions and limitations are kept in place and enforced by the community homeowners association (HOA) – a private entity governed by CC&R (covenants, conditions, and restrictions) documents.

Common deed restrictions

Hoa communities don’t necessarily share a uniform set of rules. In practice, every community has a distinct goal they plan to achieve and crafts deed restrictions aligned to meet this expectation. This leads to each HOA community having different and unique deed restrictions within their community.

But what is an example of a deed restriction? Some of the most common deed restrictions to expect include:

  • Fencing limitations: An HOA may stipulate fencing requirements such as what materials to use, height measurements, weight, etc.
  • Property appearance: limits how much influence you have on the exterior of your home. What color to use, types of windows, doors, and sidings to install.
  • Renovations and modifications: modifications made to the garage, roof, or porch on your property can be subject to the deed restrictions. This also extends to other structural additions (i.e., greenhouses, pools, tennis courts, sheds, etc.)
  • Restrictions and limitations: on outdoor cooking such as grilling, frying, and baking.
  • Mailboxes: many HOA communities restrict homeowners from customizing their mailboxes.
  • Property usage: may restrict a property owner from using the property for business or religious purposes.
  • Vehicle rules: deeds can also include restrictions on the types of vehicles allowed in the community and where they can park.
  • Pet restriction: the type of pets allowed, their numbers, and breed.
  • Age restrictions: Older communities housing senior citizens and the older population tends to have age limits (i.e., above 55years). People below the stated age limit can’t live within these communities.
  • Limitations on: landscaping activities (tree removal) in the neighborhood.
  • Requirements and rules: regarding outdoor laundry and trash can replacement. 

Some state and local government authorities may prohibit an HOA from placing some of these limitations on homeowners.

The Benefits, Risks, and Drawbacks of Living in a Deed Restricted Community

A deed restriction can either be beneficial or detrimental to you. It all depends on what you seek in a new house.  While some people may find it easy to abide by rules guiding, say a community of motor homes, others may find it bothersome. to follow deed restrictions.

If you are in the market for a new house, you need to gauge the benefits and risks to know if a deed-restricted community is a good choice.

Benefits to a Deed Restricted Community

Below are some benefits of living in Hoa communities with deed restrictions;

  • Quality amenities: With deed restriction comes access to high-quality community amenities and facilities. Homeowners in these neighborhoods have exclusive access to specific amenities such as pools, parks, clubhouses, tennis courts, libraries, and other resort areas.
  • Adequate Maintenance: Some homeowners associations may provide members with maintenance services. For Instance: paying utility bills, snow removal, disposing trash at your front yard, etc.) Constant maintenance goes a long way in creating a serene environment for homeowners.
  • Resolution of conflict: Deed restrictions prevent conflicts by elaborating strict rules all homeowners must follow. If a homeowner breaches these rules, there are fines kept in place to solve any problem that may arise. By resolving disputes, community associations help to maintain peaceful cohabitation among neighbors.
  • Increase in home values: Most homeowners expect their prospective home to have a higher resale value to future owners.  If you fall under this category, Deed restrictions would be the ideal choice for you. Deed restricted communities have several benefits (i.e., maintenance, uniformity, security) that positively impact neighborhoods and property values.

Risk/Cons of a Deed Restricted Community

Below are some risks and drawbacks of certain deed restrictions;

  • Payment of monthly dues: Most common deed restrictions compel members to pay monthly fees/dues directly to homeowner’s associations. These fees, otherwise known as HOA fees, are primarily spent on maintaining community facilities and covering expenses.  Apart from these monthly fees, homeowners may be required to contribute additional fees towards a particular project.
  • Limits and restrictions on what you can do: Many deed restrictions are typically restrictive covenants on what you do with your home. The level of restriction in a community depends on the Hoa association in question. In some cases, the HOA community may compel a homeowner to carry out certain acts such as mowing lawns or emptying trash.
  • Reselling the home can be challenging: Your home deed makes resale more difficult. Potential buyers are discouraged by the prospect of having their freedom restricted. Also, in cases where deed communities stipulate age restrictions, finding new owners who fulfill this requirement can be problematic. For these reasons, it is understandable why reselling your home would be challenging.
  • Monetary penalties for breach of rules: Unlike other neighborhoods, a breach of rule and regulation in a restrictive covenant comes with a fine and monetary penalty.

Summary of Pros and Cons of Living in a Deed-Restricted Community

Pros:

  • high property value;
  • quality maintenance service;
  • efficient conflict resolution system;
  • peaceful and serene environment;
  • access to neighborhood facilities.

Cons:

  • limited property rights;
  • fine must be paid for breach;
  • Certain actions are prohibited;
  • selling homes in these communities;
  • Buying deed-restricted homes can have complications

How do I identify deed restrictions on my home?

Many people live in their homes with property deeds for years without knowing. They fail to have a complete understanding of their property.  Here are ways you can find deed restrictions on your property:

  • Check the property’s deed for any restrictions.
  • If your property deed is missing, consult the recorder’s office for a copy.

As prospective homeowners, you can get a full understanding of deed restrictions from your real estate agent or the homeowners association.

Note: Tracing your home’s deed can take a long time due to the numerous paperwork you may have to go through.

Should I go for a home in a deed-restricted neighborhood?

There is no specific answer to this question. Some people may find specific deed restrictions more beneficial than others. You can try answering some of the questions below to weigh your options,

  • Are you comfortable with restrictions on what you can and cannot do with your property?
  • Would you pay dues if necessary?
  • Are you financially capable of paying monetary penalties and fines?
  • Are you comfortable following the neighborhood’s set rules and regulations?
  • Can you tolerate restrictions on planting certain trees around your property?
  • Are HOA fees worth it?

If your answer to these questions is mainly positive, you can opt for a home in deed-restricted communities.

How are deed restrictions enforced? 

Deed restrictions are typically enforced by whichever organization creates such restrictions.  Ordinarily, these deeds can be enforced by either a local government or the property developer.

Note: Properties within homeowner communities have their deeds enforced by the community association.

How does an HOA enforce these deed restrictions? They do this by approving or rejecting construction applications and regular inspections of properties.

How do I fight a deed restriction?

Apart from selling your home and relocating, there isn’t much you can do to fight restrictive covenants on your property.

In certain instances, a restrictive covenant can be unenforceable.  Generally, any deed restriction contrary to the Federal housing act is illegal and deemed unenforceable. This includes deed restrictions considered unconstitutional or discriminatory to a certain race or people with disabilities.

This is why it is essential to consult your real estate attorney on the available options you can take.

What is the lifespan of a deed restriction?

The lifespan of a deed restriction differs depending on the actual property. In some restrictive covenants, the lifespan is within 20-30 years and can extend up to 50years. Others may run in continuity with no expiry date.

It would help if you adequately research deed restrictions before buying a home.

A deed restriction that has run its course loses enforceability if not reinstated.

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