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A deed restricted community is a development where a homeowners association (HOA) has restrictions in place that prohibit certain actions. These rules are established and enforced by a private entity (the community HOA), not a local government. The goal of these bylaws is to maintain a neighborhood’s aesthetic and support property values. Potential restrictions could prevent you from:
Most of the restrictions you’ll encounter will regulate how your home appears. Failing to abide by your community’s rules usually first results in a warning of non-compliance and then a daily fine until the matter is resolved.
You may be shocked at how strict and varied some of the above examples are. Anyone would agree that there is a big difference between prohibiting junk on a front lawn and prohibiting an outdoor barbecue grill in someone’s backyard. This is an example of how community deed restrictions cannot be categorically ruled as beneficial or oppressive; it largely depends on how strict the rules are and what the enforcement of those rules is like.
It’s important to review any community deed restrictions prior to buying your home, as these restrictions dictate what you cannot do with your home. It will also be rather difficult to remove any of these rules; even extremely strict deed restrictions are typically upheld by the courts. However, there are certain deed restrictions that have been deemed unenforceable and illegal, such as those prohibiting residents of a certain race or religion. Only communities specifically approved for those aged 55+ can legally discriminate based upon age. Lastly, your real estate agent should be able to assist you in determining what restrictions are in place within the community.
Part of the monthly fees that are paid to your HOA go towards the enforcement of their deed restrictions. The rules operate much like a “social contract” amongst residents, where each homeowner sacrifices certain uses of their land in order to guarantee the beauty of the neighborhood as a whole.
You may already be in a deed restricted community without knowing it. Any deed restrictions will be specified within a home’s deed. If you are unable to locate your own deed, you can request a new copy from the recorder’s office where it was initially filed. The regulations can often be over 100 pages long and filled with complex legal jargon. Be on the lookout for any language that includes the terms “deed restrictions", "covenants" or "agreements”. You may find it worthwhile to have a real estate attorney review the document.
If you’re considering moving into a deed restricted community, consider speaking with residents ahead of time about what their experiences were like with the homeowners association. Do they find enforcement of the restrictions to be fair? Does the HOA have a reputation as overbearing? These are important questions that could yield valuable information.
Deed restricted communities tend to work best when the rules are fair and enforcement is proactive. Nobody wants to drive through their neighborhood and see overgrown grass and garbage strewn across lawns. Likewise, home buyers won’t pay top dollar to live in a blighted community. Deed restrictions can ensure that your neighborhood stays beautiful and prevent property values from plummeting.
Living in a deed restricted community means that you can enjoy certain community amenities. Such amenities could include a golf course, swimming pool, or community clubhouse. These amenities work in combination with the aforementioned regulations to enhance property values and add value to residents.
An HOA will also help you deter any nuisance activity. Imagine you have an inconsiderate neighbor who decides to run a dog kennel out of his home. Without an HOA, you would have to engage with your local government to try to resolve the issue, potentially dealing with bureaucracy and inaction. This contrasts an HOA, which is usually more responsive because it's comprised of homeowners within your community whose properties are also hurt by such nuisances.
The most obvious risk of buying a home in a deed restricted community is that the rules could be more oppressive than they are beneficial. This can occur within older communities where the rules were established a long time ago, recently constructed communities tend to have few strict rules. Deed restrictions are not easily changed, so it’s quite likely any strict rules will stay in effect for future owners as well.
Since a homeowners association is considered a private entity and not a government agency, they can override certain Constitutional protections. Take for an example a woman out of Tampa, Florida who wanted to show support for her deployed husband by placing a “Support Our Troops” sign in her front yard. She had believed this was her First Amendment right, but her HOA argued that the sign violated its bylaws. In this case, the HOA had a right to fine her until the sign was removed.
Another potential risk is that HOA membership fees may significantly increase. This would lower the desirability of your neighborhood since it would be more expensive to reside within. In rare cases, high HOA fees could price potential buyers entirely out of the neighborhood. However, you can review a community’s Declaration of Covenants, Conditions, Restrictions, and Easements (CC&Rs) prior to purchasing to determine what annual increases in HOA are permitted.
You’re also obligated to pay community HOA fees and can face fairly serious consequences if you don’t. The HOA can place a lien against your home that could lead to a foreclosure. Yes, your HOA could potentially take your home! They could also garnish your wages if you fall behind on your payments. These potential actions underscore the importance of making sure that you can afford the fees not just now but in the future.
Purchasing a home in a deed restricted community may or may not be the best decision for you. If you’re someone whose absolute liberty is extremely important, certain rules and regulations may prove to be too cumbersome. Others don’t mind abiding by reasonable rules if it could help them when they’re selling their home down the road. Ultimately, it’s prudent to find out what the specific deed restrictions exist prior to purchasing a home and ensure that you can abide by them.