When buying a house in a Homeowners Association, or HOA, the association has certain rules that owners must follow. These rules are known as restrictive agreements and can make a difference in what you can do with your property. Before buying a home with a restrictive arrangement, make sure you understand what you are consenting to and how they work.
What is a restrictive covenant?
Restrictive federal definition
A restrictive covenant is a binding legal agreement that restricts what you can do with your property. Generally, these covenants are part of the title deed. So, when you buy a home from a homeowners association (HOA), you’re consenting to them.
Generally, HOAs use restrictive agreements to preserve property values. The idea is that if everyone follows the rules, the neighborhood will retain its appeal and everyone who lives in the neighborhood can expect their home values to be protected.
In most cases, the HOA rules are voted on by the residents of the community so the restrictive arrangements can change over time. These rules must be enforced for everyone, and they must also comply with state and federal laws.
Depending on the HOA, a restrictive covenant arrangement can be tough on a homeowner or be relatively straightforward. Before closing your home, it is important to read the restrictive agreements to determine what action you as an owner may not be able to take within the association.
In some cases, it is even possible for the HOA to enforce a penalty, such as a fine, for failing to adhere to neighborhood covenants. In some areas, an HOA can even sue or enforce you foreclosure if you violate the restrictive covenants.
Examples of restrictive covenants
In general there are two main types of restrictive agreements, though HOA rules are different in different areas.
Restrictions on the use of the property
A property use restriction is a type of restrictive agreement that restricts how you can change your property. The aim is to keep the apartments in the association relatively uniform and in some situations to protect the owners.
There may be restrictions on the use of property on the types of designs you can use when modifying your home or specifications that you must meet when remodeling or expanding your home. Depending on the HOA, you may even have to meet certain requirements for the colors and materials you use on your property, or limit changes to the interior of your home.
There are also often restrictions on the types of pets that are acceptable, and some restrictive agreements lay down rules for specific breeds. Before you move in, make sure your pets are complying with the rules.
Land use restrictions can also limit whether you can post signs on your property, the height of a flagpole, or whether you can perform certain business tasks. Depending on the HOA, you may not be able to rent your home to someone else.
Some HOAs also have restrictive agreements that deal with home maintenance. The idea behind the maintenance requirements is to prevent property values from being negatively impacted if, for example, a neighbor doesn’t mow their lawn or doesn’t cut their trees. You may need to keep your lawn a certain length or be limited in the types of bushes and flowers you can have in your garden.
Christmas lights when you take out your trash (and get your cans back) and even the fence you use may also be subject to your HOA regulations.
If you live in an area with winter snowfall, there may be restrictive agreements in place on how quickly you must clear your driveway and walk. However, many HOAs enter into contracts with service providers so you may instead pay a maintenance fee to have your yard tended and snow removed.
Additionally, you may have to keep up with the color of your home or there may be restrictions on the number of items you can keep on your porch. All of these restrictive agreements are designed to keep the neighborhood’s attractiveness intact.
Should I buy in a community with restrictive covenants?
Whether you want to shop in a community with a restrictive covenant agreement depends on your goals and preferences. While some restrictive agreements can seem a nuisance, there are some advantages of living in an HOA:
- While there is no way to fully protect the value of your home, living in a community with restrictive arrangements can provide some protection as your property value is less likely to be negatively impacted by others’ neglect of their home. Even if you are concerned about the maintenance of the neighborhood, living in a club can offer some level of peace of mind.
- Most restrictive contractual arrangements have a method of resolving disputes. For example, you don’t have to confront your neighbor when it comes to their endless late night parties – the HOA takes care of that. With clear rules, it’s pretty easy for community members to know what is expected of them.
However, you will have less freedom to control what you do with your property. Yes, it is your home, but by moving into an HOA you agree to be bound by community regulations. In addition, depending on the area, you may have to pay a monthly maintenance and rule enforcement fee.
When deciding whether living in a community with an HOA is right for you, consider carefully whether the benefits of living with a restrictive contractual arrangement outweigh the restrictions placed on you on what you can do with your own property, and consider HOA fees.
This is how you can find out if your ward has restrictive alliances
Before submitting an offer for a home, ask if the municipality has a homeowners association and ask for the “Obligations, Conditions and Restrictions” document. This document, also called CC&R, is usually easily accessible in some way. If there is a clubhouse or office associated with the community, the CC&R is usually there.
In addition, many HOAs have websites where you can view restrictive covenant information.
Remember, when you buy a home in a community with an HOA and CC & Rs, you are legally bound by the rules – it’s part of the home’s bill of sale. Read the restrictive covenant information carefully before proceeding to avoid surprises later.
Featured image by Grandriver from Getty Images.