What Is a Deed Restricted Community?

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If your community has a homeowners association and regulations pertaining to the use of your home and the neighborhood, then the community is "deed restricted." Live here, and you likely will have to follow some additional rules regarding fence heights, lawn maintenance and how often you can rent out your home. These rules raise the standard for the subdivision, keeping up property values as a whole.

TL;DR (Too Long; Didn't Read)

A deed-restricted community has its own set of rules for the neighborhood. These rules govern what you can and cannot do with respect to your home.

Deed-Restricted Community Explained

When you buy into a deed-restricted community, you're agreeing to abide by a set of rules. Each community has different rules. Some common ones include restrictions on paint colors for the exterior of the home, parking restrictions, rules regarding lawn maintenance, landscaping and fence heights, laws restricting pets and rentals, and restrictions on where you can place a satellite dish, clothesline and garbage can. The general thrust of these restrictions is to keep the community looking smart and well-maintained. This helps to maintain the value of homes within the subdivision and makes them more desirable to potential buyers.

Are Covenants Legally Binding?

The deed restrictions are set out in a document called the Declaration of Covenants, Conditions and Restrictions or CC&Rs. These covenants are legally binding. When you purchase a home in a deed-restricted community, you'll sign some paperwork in which you agree to play by the rules. Violate the CC&Rs, and the homeowners association can impose sanctions on you. Penalties range from small fines to much larger fines, to forced compliance. For example, the HOA might cut your lawn and send you the bill or tow an unlawfully parked car. In the worst case, you may end up with a lien filed against your home.

What Happens if You Don't Pay HOA Dues?

Many deed-restricted communities have amenities that homeowners can use. These can be anything from a parking garage and security gates to tennis courts and swimming pools. All homeowners make a monthly or annual contribution to the upkeep of these amenities, known as HOA fees or dues. HOA fees often range from $200 to $400 per month but can be much higher in upscale communities.

If you fall behind with dues, the HOA can get a lien on your home for the unpaid amount. It can also force a foreclosure in certain circumstances – in California, for example, an HOA can foreclose if you've owed $1,800 for at least 12 months. It's serious stuff. Always familiarize yourself with the CC&Rs before you make an offer on a deed-restricted property. You can get a copy from the seller or the homeowners association, and CC&Rs are recorded in the county records in the county where the property is located.

Can You Remove a Deed Restriction?

You can't remove a deed restriction unilaterally, but the HOA board usually has the power to remove or amend a provision in the CC&R that no one wants anymore. It's a fairly convoluted process. A homeowner will have to propose an amendment to the CC&R, and another homeowner will second the motion. The board will follow up with meetings to discuss the proposed changes and a secret ballot of the homeowners in the community. The CC&R document will specify the percentage of homeowners needed to approve the amendment – you may need a "yes" vote as high as 80 percent in some cases. If approved, the board will create a new version of the CC&Rs and file this at the County Recorder's office.

Is an Encumbrance a Deed Restriction?

The short answer is, it depends. If a restriction appears in the CC&Rs and nowhere else, then it isn't technically an encumbrance because the homeowners association can change or remove the restriction by popular vote. If the restriction is written into the home's title, then it's an encumbrance – something that limits the unrestricted control over your own property. Encumbrances stick to the home forever and can affect the value of the home. They're much trickier to get rid of than CC&R restrictions and you'll likely need some specialist legal advice if an encumbrance is getting in the way of a proposed home sale.

How Do You Get Rid of a Homeowner's Association?

Sometimes, it's not enough to get rid of an overbearing deed restriction – you want to get rid of the entire HOA. The first step here is to check the CC&Rs and see if they contain a dissolution process. You'll need to follow the dissolution rules to the letter and typically will need agreement from around 80 percent of homeowners to carry the vote. Your state may also have laws about dissolving homeowners associations. Florida, for example, automatically extinguishes the CC&Rs if an HOA does not file the proper paperwork to renew itself every 30 years. With no CC&R document, there's nothing for the HOA to enforce.

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