A Beginner’s Guide To Restrictive Covenants In Real Estate

Want to buy a home in an area with a homeowners association (HOA)? Be ready to play by the HOA’s rules, otherwise known as restrictive covenants. Understanding restrictive covenants is essential if you’re thinking of buying a home with an HOA agreement.

We’ll take a closer look at restrictive covenants and explore the different types of covenants you might see. We’ll also consider the benefits and drawbacks of restrictive covenants.

A restrictive covenant is an agreement you make with a homeowners association that limits the way you can use a property. 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 Exact Covenants Will Vary

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 read about a development’s restrictive covenants in a document called the covenants, conditions and restrictions, or CC&R for short. Furthermore, restrictions can change if your HOA votes to add or remove a rule.

What Happens If You Don’t Follow The Covenants?

HOA bylaws allow the association to take a wide range of actions to correct a violation. Your HOA can fine you until you address the issue. The HOA also has the right to sue you if you don’t fix the problem or pay your fines. In some extreme cases, an HOA can even force your home into foreclosure for repeated violations. This is why it’s very important to read and understand any restrictive covenants on a home before you buy it.

An HOA Has Limitations

There are limits on the specific covenants your HOA can place on the development. An 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.

Finally, while your HOA can’t place restrictive covenants that violate state or federal laws, they can still limit your rights within reason. For example, an HOA can’t ban you from displaying an American flag on your property, but they can limit the size and placement of your flag.

Let’s examine some of the most common types of restrictive covenants you might see when you shop for a home.

Limitations On Home Color

HOAs are very picky about paint color and include this restriction in almost every CC&R. 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 to be highly aggressive.

The CC&R may also place strict limits on commercial breeding. You might be able to have a pet, but you usually can’t breed or sell animals from your residential property under most covenants. Most covenants also ban rearing livestock or owning farm animals as pets.

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 mow your lawn, 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.

Restrictive covenants enforce a standard of uniformity across a development. These covenants stop your neighbors from letting their homes fall into decay and lowering your property values. They also give buyers peace of mind when they purchase a home, and they may make your home easier to sell later on.

However, the use of these covenants can be both a benefit and a drawback for homeowners.

Benefits Of Covenants

Let’s take a look at some of the biggest benefits of restrictive covenants.

• Your neighborhood maintaining its look: Restrictive covenants can keep the look and feel of a neighborhood uniform. For example, your neighbor can’t decide to buy goats or chickens or leave trash on their lawn.

• More value protection: Restrictive covenants help retain your home’s value. They can also ease some of the worries potential buyers may have about your home and allow you to sell it with less hassle later on.

• Dispute mediation: CC&R documents clearly lay out what types of behavior are acceptable and unacceptable in your community. For example, if your neighbors decide to throw a wild party at 2:00 a.m., your HOA will mediate the dispute for you.

Items To Consider Before Being Under A Covenant

Living in a covenant-controlled community isn’t for everyone. We’ll look at some of the drawbacks you need to consider before you buy a home in a community with restrictions.

• You have limited control over your property. Most homeowners don’t like people telling them what they can and can’t do on their own property. However, when you move into a covenant-controlled community, you must follow the rules or face penalties.

• A CC&R is a binding legal document. Think you’ll just press your luck and ignore the rules you don’t agree with? A CC&R is a legal contract that affords your HOA multiple avenues they can use to correct your violations. An HOA may come onto your property without permission to see if you’re violating a rule and issue you a fine for any discrepancies they find.

• You end up paying for rules enforcement. HOAs get their funding from monthly fees levied on everyone who lives in the community, and they often use those fees to enforce the covenants rather than using the money for neighborhood improvements or other more tangible benefits. Your HOA fees can range from a hundred dollars to several thousand dollars a month, depending on where you live.

Whether you’re looking at a property that has restrictive covenants or not, you’ll want to be ready to make an offer as soon as you find a home you’re interested in. This way, you can move forward and potentially beat out other offers faster.

The concept of restrictive covenants can be confusing at best. Here are 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. Check your CC&R for details about the enforcement of your HOA’s covenants.

You may need to navigate a list of restrictive covenants if you buy a home in a development with a homeowners association (HOA). These covenants are limitations on how you can use your property and can influence your homeownership experience if you move into a community with covenants you disagree with.

Be sure to ask about 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 want one out in the country where no one can dictate how you can use your property, you’ll need a mortgage to finance the purchase. Apply online with Rocket Mortgage^® today.