A restrictive covenant in real estate is a legal agreement that limits how you can use your home. Restrictive covenants are most common when your property is part of a homeowners association, condominium association, or planned community.
Typical limits include restrictions on how many people can occupy the home and the colors you are allowed to paint the exterior. Covenants can also include maintenance you are required to perform.
Restrictive covenants are usually enforced by the association’s board. These agreements are also called Declarations of Covenants, Conditions, and Restrictions (CC&Rs).
What are property usage restrictive covenants?
These restrictions typically define what you can’t do with your property. In addition to limiting the number of people who can occupy the home, restrictive covenants can limit your ability to rent your house to long-term or short-term tenants.
Generally speaking, covenants don’t restrict your ability to have a home office for a remote job. They may limit your ability to run a business where clients regularly visit your house or where large quantities of goods are shipped in or out of it, however.
Other restrictions can include limits on exterior paint colors and decorations, sheds and fences, and pets. There are often limits on how many vehicles you can park and where you can park them.
What are property maintenance restrictive covenants?
These covenants often set standards for how you are required to maintain your lawn and landscaping. There may be standards for maintaining your roof, gutters, and exterior trim. The kinds of exterior holiday decorations and when you are allowed to display them may be defined. Association rules may cover trash and recycling as well.
What are the pros of restrictive covenants?
A primary goal of restrictive covenants is to protect the value of the homes in the association. Requiring maintenance and setting standards for the exterior appearance can support property values and help owners sell their homes.
Declarations of Covenants, Conditions, and Restrictions can also prevent your neighbors from using their homes in ways you find a nuisance. For example, if you own a townhome, you may not want the home right next door to be used as a short-term rental where new occupants are always coming and going.
What are the cons of restrictive covenants?
One con of restrictive covenants is that they can prevent you from using your home in ways you like. For example, a limit on pets can affect people who love dogs. A restriction on building a fence may give you less privacy than you want.
A second con is that virtually all homeowners and condo associations charge HOA fees that are used to maintain common spaces and buildings, landscaping, roads, and sidewalks. These fees will increase the cost of owning the home.
As a result, make sure you read and understand the Declaration of Covenants, Conditions and Restrictions before you buy a condominium or townhouse that belongs to an association. Single-family homes in planned communities may also have CC&Rs you’ll want to read and understand.
What happens when you violate restrictive covenants?
The CC&R should define how its covenants will be enforced and what the penalties are if you don’t comply. Penalties might include written warnings, revoking the privilege to use common facilities, a fine, or being charged for the cost of the HOA addressing the problem itself. Serious violations might result in a lawsuit.
How do you know a home is affected by a restrictive covenant?
Homeowners are usually required to reveal the existence of restrictive covenants to buyers in their real estate disclosures. Title searches will often discover the existence of restrictive covenants. You can also ask your real estate agent and the seller of the house.
Last reviewed and updated January 2023 by Freedom Mortgage Corporation.