Restrictive covenants in real estate: What they are and how they affect you

In real estate, restrictive covenants limit how homeowners (or tenants they lease the property to) can use the property. They’re common in communities with a homeowners association (HOA).

There are benefits and drawbacks of restrictive covenants as well as different types of covenants you might see when house hunting.

What is a restrictive covenant?

A restrictive covenant is a clause in a property deed that outlines limits on an owner's use of a property. Often these types of agreements are made with homeowners associations. In the case of an HOA, restrictive covenants are general rules that members of your HOA vote on that all property owners living in the area must follow.

The covenant may include actions you can’t take with your property, like raising livestock or running a business from your home. It will also include actions you must take, like mowing your lawn regularly and/or maintaining your landscaping to HOA standards.

The covenants you need to follow will vary depending on where you live. Some HOA communities have many restrictions, some have only a few and others have none at all.

You can usually find them in the HOA document known as the CC&R agreement (covenants, conditions and restrictions).

Types of restrictive covenants

There are several common types of restrictive covenants you might encounter when you shop for a home.

Limitations on home color

HOAs can be very picky about paint color and include this restriction in many CC&Rs. Most paint limitations specify a list of acceptable home colors and ban all others. Assume your design choices will only be between neutral shades if you’re looking at a home with a covenant on paint colors.

Rent and lease restrictions

You’ll have to check your CC&R first if you want to rent out your home. Many HOAs severely limit your ability to rent or lease out your home. You may only be able to rent out your home for a few months of the year, or you may not be able to rent your home out at all.

Restrictions on home businesses

Your CC&R may include a covenant that prohibits you from operating a business out of your home. This covenant can quickly create a big problem if you’re self-employed. While most HOAs won’t care if you turn your spare bedroom into a home office, anything that causes an increase in traffic for your neighbors may set off red flags and lead to you getting fined.

Limitations on permissible pets

Some HOAs place limitations on the types of pets you can have on your property. Your CC&R can also put limits on the size of your pets. For example, your HOA could tell you that you can only own a small- or medium-sized dog.

Your HOA can also put restrictions on the breed of dog you may own. Many covenants ban dog breeds, like pit bulls and German shepherds, that some people deem highly aggressive.

Requirements for exterior maintenance

Your CC&R will likely lay out what type of maintenance you need to perform on your property. You may need to mow your lawn every so often, remove holiday lights after a certain date or only place your trash outside on trash day. The HOA will make sure the exterior of your property is up to code if you live in a development that provides exterior maintenance.

Restrictions on exterior constructions

CC&Rs may include restrictions on modifications and buildings you make on your property. You may not be able to build a shed, fence or detached garage without first getting the design approved by the HOA. Some CC&Rs ban additional construction altogether.

Required maintenance

In addition to rules on what you can’t do with your home, your restrictive covenants can include things you need to do. Maintenance standards may dictate rules like how often you need to repaint your home or fix a fence. Depending on your HOA and your agreement, the cost of maintenance might come out of your HOA fees.

Are there limits on restrictive covenants?

There are limits on the specific covenants your HOA can place on the development. For example, they can’t use restrictive covenants for discriminatory purposes based on things like religion, race and sexuality. Nor can they implement covenants that violate state or federal laws.

Your HOA can’t fine or punish you for something not addressed in the list of restrictive covenants you signed when you moved in. Your HOA also can’t engage in selective enforcement practices, which is fining you for an action that other people who live under your HOA’s rules are taking.

History of restrictive covenants

In the past, restrictive covenants were used to maintain the demographic conditions of certain neighborhoods. For example, in the 1940s, it was common for covenants to bar home sales to Black families.

However, the practice is illegal today. It was outlawed as part of the Fair Housing Act passed in 1968.

FAQs about restrictive covenants

The concept of restrictive covenants can be confusing at best. Here are the answers to a few frequently asked questions to help you better understand your rights and responsibilities.

Are restrictive covenants in real estate legal?

Yes, but only to an extent. HOAs can’t use restrictive covenants to enforce discriminatory practices. Any covenants restricting who can live in the neighborhood or discriminate against an individual based on a protected class are illegal and unenforceable. These include discrimination based on the following:

• Race
• Religion
• National origin
• Sexuality
• Gender identity
• Family status
• Disability
• Color

How can I tell what covenants my HOA will enforce?

Your HOA’s CC&R should outline which (if any) covenants they’ll enforce. If your HOA enforces a rule that’s not explicitly outlined in their CC&R document, you may want to consult an attorney. They’ll be able to represent you and potentially stop the HOA from enforcing an unofficial rule.

Can condominium associations have restrictive covenants?

Yes. Many condo associations have covenants in place to maintain the look and feel of their common areas. Violating those covenants will likely result in a fine, just as it would in a traditional HOA.

Can I find out if a home has restrictive covenants before I buy it?

Yes. If the homeowner doesn’t disclose the existing covenants, the title search process should uncover them for you. You can also ask your real estate agent to find out if the home is subject to restrictive covenants prior to making an offer.

What happens if I violate a restrictive covenant?

It depends. Many HOAs will ask you to correct the violation as soon as possible without fining you. Others will fine you and expect you to correct the violation immediately. If the situation escalates far enough, your HOA may even have the right to force you to sell the property. Check your CC&R for details about the enforcement of your HOA’s covenants.

The bottom line

Be sure to ask about restrictive covenants before you close on the property. If you violate the covenants you agreed to when you move in, your HOA can fine or sue you to correct the issues.

Regardless of whether you’re interested in a home with an HOA or one without one, you may need a mortgage to finance the purchase. Start an application online with Rocket Mortgage^® today.