Restrictive covenants explained

Your offer was accepted, and you’re one step closer to owning a home. Before closing, though, reviewing property records can help protect your investment and prevent surprises later.

One essential detail to look for is whether your prospective home has restrictive covenants attached to its deed. Restrictive covenants are legally binding rules recorded in property deeds. We’ll go over what they cover.

Key takeaways:

• Restrictive covenants are legally binding deed provisions that dictate how you can use, maintain, or alter your real estate property.
• These rules help maintain neighborhood aesthetics and preserve property values, though they also place limits on your personal choices as a homeowner.
• Always review CC&Rs and title records before closing, as violating restrictive covenants can lead to warnings, fines, forced corrections, or property liens.

What is a restrictive covenant?

A restrictive covenant is a legal agreement or deed provision that limits how property can be used or managed by an owner. In real estate, these covenants are recorded in public records and dictate specific standards for land use, architectural choices, and property maintenance. They’re designed to preserve neighborhood aesthetics, maintain safety standards, and protect home values. That said, what might seem like a small rule can have a significant impact on your daily life. You may also want to consider that a majority of HOA residents don’t like having one.

While restrictive covenants are most frequently associated with real estate, the term also applies to other legal contracts. In business and legal contexts, restrictive covenants can govern employment agreements or corporate finance terms.

What does ‘run with the land’ mean?

Most real estate restrictive covenants "run with the land." This means the legal restrictions are tied to the property itself rather than to the individual who owned it when the covenant was written.

When ownership transfers to a new home buyer, the covenants remain on the deed. Future owners are legally bound to follow the existing restrictions regardless of when the covenant was originally established.

Positive vs. negative restrictive covenants

Real estate restrictive covenants generally fall into two categories:

• Negative covenants: These prohibit specific actions or land uses. Common examples include banning short-term vacation rentals, limiting fence heights, or prohibiting commercial vehicle parking.
• Positive covenants: These require property owners to take affirmative actions. Examples include maintaining your front yard landscaping, keeping house paint in good repair, or paying mandatory dues for common area maintenance.

Restrictive covenants vs. HOA rules and CC&Rs

Home buyers often confuse restrictive covenants with homeowners association (HOA) rules. While they work together to govern planned communities, they serve slightly different legal functions.

Restrictive covenants are the foundational legal conditions recorded against the land. HOA rules and regulations are established by the association’s board to enforce and administer those overarching covenants on a daily basis.

What are CC&Rs?

Covenants, conditions, and restrictions (CC&Rs) are the official legal documents recorded with the county recorder’s office for a planned development or condominium complex.

This comprehensive set of governing documents outlines the rights and responsibilities of property owners. CC&Rs define architectural guidelines, outline common area uses, establish maintenance obligations, and give the HOA legal authority to collect dues and issue penalties.

Can a property have deed restrictions without an HOA?

Yes, a property can have deed restrictions even if there is no active HOA. Real estate developers, past landowners, or municipal planners can place restrictive covenants on a property deed before selling the land.

For example, a previous owner might add a covenant preventing future owners from subdividing the lot or building structures taller than one story. These standalone deed restrictions remain legally binding and can be enforced by neighboring property owners who benefit from the restriction, even without an association managing the neighborhood.

Common examples of restrictive covenants in real estate

Restrictive covenants cover a wide variety of property uses and aesthetic standards. Understanding the most common examples can help you determine whether a home aligns with your lifestyle.

Rental, lease, and short-term rental restrictions

To maintain community stability and minimize noise or traffic, many developments limit property leasing. Covenants may ban short-term rentals (such as those offered through Airbnb) altogether, limit the number of units that can be rented out at once, or require minimum lease lengths, such as 6 or 12 months. 

Exterior, architectural, and landscaping restrictions

Architectural controls help create a uniform look across a neighborhood. These rules can dictate:

• Approved exterior paint colors and siding materials
• Acceptable roofing types and solar panel placements
• Permitted tree species, grass types, and garden layouts
• Required maintenance schedules for lawns and gutters

Fence, building, height, and setback restrictions

Covenants often dictate physical construction parameters to preserve neighborhood views, natural light, and safety. These include maximum fence heights, prohibited fence materials (like chain link), building height caps, accessory dwelling units (ADUs), and setback rules that establish how close a structure can be built to property lines or streets.

Parking, vehicle, pet, and occupancy restrictions

Communities frequently implement guidelines to protect curb appeal and infrastructure, including:

• Prohibitions on parking recreational vehicles (RVs), boats, or commercial trucks on driveways or streets
• Caps on total household occupancy based on square footage or bedroom count
• Limits on pet quantities, weight caps, or specific breed restrictions

Commercial use and home business restrictions

To protect quiet residential settings, covenants often restrict commercial activity. Rules may ban customer-facing home businesses, prohibit commercial signage on residential lots, or restrict frequent delivery traffic to the home.

How restrictive covenants affect home buyers and homeowners

Restrictive covenants offer clear benefits, such as preserving property values and preventing disruptive land uses next door. However, they can also limit your freedom to renovate or use your land as you see fit.

What to review before you buy

Before completing a home purchase, buyers should carefully review all governing documentation. You can examine:

• Title search results: A professional title search uncovers deed restrictions recorded against the property.
• Seller disclosures: Sellers are typically required to disclose known restrictions and HOA governance.
• The CC&Rs declaration: Request a copy of the official CC&Rs, bylaws, and HOA meeting minutes to review all current rules and pending assessments.

Costs, fees, and penalties to consider

Living in a covenant-controlled community often carries financial obligations. Homeowners may be responsible for monthly or annual HOA dues to fund common maintenance, special assessments for unexpected repairs, or fines if property standards are not met.

Who enforces restrictive covenants?

In planned developments, covenant enforcement is primarily managed by the HOA or condo board. The board monitors compliance, addresses complaints, and enforces community standards.

In neighborhoods without an HOA, enforcement rights belong to the neighboring property owners who benefit from the covenant. If a homeowner violates a deed restriction, affected neighbors can take legal action to enforce compliance.

What happens if you violate a restrictive covenant?

Failing to abide by restrictive covenants can lead to escalating enforcement steps:

1. Written warnings: Most associations begin by sending a formal notification detailing the violation and requesting correction.
2. Monetary fines: Continued non-compliance typically results in recurring fines assessed against the homeowner.
3. Loss of amenities: HOAs may temporarily suspend access to community facilities like pools or clubhouses.
4. Self-help remedies: For maintenance violations (such as overgrown lawns), an HOA may enter the exterior of the property to resolve the issue and bill the owner for the cost.
5. Legal action and property liens: Unpaid fines or uncorrected violations can lead to lawsuits or a legal lien recorded against the property, which could eventually jeopardize homeownership through foreclosure if left unresolved.

Can restrictive covenants be removed or changed?

Modifying or removing a restrictive covenant is possible, but it can be a complex process. Standard methods include:

• Community votes: HOAs usually allow rules to be updated if a specific supermajority of property owners votes to amend the CC&Rs.
• Expiration clauses: Some covenants include built-in sunset provisions that automatically terminate the restriction after a set number of years unless renewed.
• Legal challenges: A property owner can ask a court to void a covenant if it’s unconstitutional, vague, abandoned through lack of historic enforcement, or no longer applicable due to significant neighborhood changes.

Consulting a real estate attorney is recommended if you need to challenge or remove an outdated deed restriction.

Are restrictive covenants enforceable?

To be legally enforceable, restrictive covenants must be reasonable, clearly documented, consistent with public policy, and properly recorded in public land records. Courts generally will not enforce covenants that are overly vague, arbitrarily enforced, or in direct violation of state or federal laws.

Discriminatory covenants and the Fair Housing Act

Historically, restrictive covenants were used as discriminatory tools to prevent racial, ethnic, and religious minorities from purchasing homes in specific neighborhoods.

In the landmark 1948 case Shelley v. Kraemer, the U.S. Supreme Court ruled that racially restrictive covenants cannot be enforced by state courts. Later, the federal Fair Housing Act of 1968 explicitly outlawed housing discrimination.

While discriminatory language may still appear in older property deeds, these clauses are legally void, completely unenforceable, and prohibited by federal law.

The history of restrictive covenants

Restrictive covenants developed in the late 19th and early 20th centuries as suburban land developments expanded across the United States. Early real estate developers used them as private zoning instruments to control building density, establish architectural aesthetics, and protect land values before comprehensive municipal zoning laws existed.

Over time, covenants evolved into the primary governing framework for modern master-planned communities, condominiums, and homeowners associations nationwide.

Restrictive covenants outside real estate

While property deed restrictions are the most common form, restrictive covenants are also widely used across other areas of business and finance.

Restrictive covenants in employment agreements

In commercial and employment law, restrictive covenants protect a business’s trade secrets, proprietary customer data, and competitive edge. Common employment clauses include:

• Noncompete agreements: Restrict former employees from working for a direct competitor within a specific geographic area for a set time frame.
• Nonsolicitation agreements: Prevent departing employees from poaching former clients, customers, or co-workers.
• Nondisclosure agreements (NDAs): Prohibit the unauthorized sharing of confidential company information.

Restrictive covenants in corporate finance

In corporate finance, bond contracts and commercial lending agreements often incorporate financial covenants to protect lenders from default.

These terms might require a borrowing corporation to maintain minimum cash reserves, limit the amount of additional debt the company can incur, or cap dividend payouts to shareholders while the loan remains active.

FAQ

Here are the answers to some common questions about restrictive covenants.

What is an example of a restrictive covenant?

A common example of a real estate restrictive covenant is a deed rule prohibiting property owners from running a customer-facing business out of their home or banning the installation of privacy fences over 6 feet tall.

What are the most common restrictive covenants?

The most common real estate covenants involve home exterior paint colors, short-term rental bans, lawn maintenance requirements, parking limits for RVs and commercial vehicles, and pet size or breed caps.

How is a restrictive covenant different from an HOA?

A restrictive covenant is the actual legal rule recorded on a property deed. A homeowners association is the organization established to manage the community, enforce those covenants, and oversee common facilities.

Can you remove a restrictive covenant?

Yes. Restrictive covenants can be removed or altered through an HOAcommunity vote, an automatic expiration clause, or by securing a court order if the restriction is outdated, illegal, or abandoned.

Can I find out if a house has a restrictive covenant before I buy it?

Yes. Ordering a title search during the home buying process uncovers deed restrictions. You can also review seller disclosures and request a copy of the community’s declaration of CC&Rs from your real estate agent.

Are there limits on restrictive covenants?

Yes. Restrictive covenants must comply with local, state, and federal laws. Covenants that violate the Fair Housing Act or infringe on legal rights cannot be enforced.

What if I violate a restrictive covenant?

Violating a covenant can lead to warning letters, monetary fines, loss of community facility access, forced compliance corrections by the HOA, legal action, or property liens.

The bottom line: Understand restrictive covenants before you buy

Restrictive covenants play a major role in defining homeownership, affecting everything from your exterior paint choices to your ability to host short-term guests or run a home business. Reviewing deed restrictions, CC&Rs, title search results, and seller disclosures before closing ensures you fully understand your rights and responsibilities as a property owner.

If you’re ready to buy a home, you can reach out to Rocket Mortgage and apply for a loan.

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