What Is a Deed-Restricted Community?

If you've found your dream home and discovered it's in a deed-restricted community, should you purchase it? It's important to understand the implications of deed restrictions. A deed-restricted community is a community where the property has conditions placed on it regarding usage or upkeep. These covenants, often enforced by a homeowners association (HOA), may limit what homeowners can do on their property based on the official property record. 

In some cases, the restrictions, such as not parking a motorhome in the street, may not affect you. In other cases, it could mean you cannot build a fence or plant tall trees. Read on to understand the pros and cons of buying in a deed-restricted community. 

Understanding Deed-Restricted Communities

A deed-restricted community is a residential neighborhood or development where certain rules and regulations, known as deed restrictions or covenants, are imposed on the property owners. These restrictions are typically outlined in the property deeds and can cover many aspects, such as architectural style, landscaping and use of common areas. 

Common deed restrictions include:

• Backyard development restrictions
• Prohibitions on additions like sheds or fences
• Specifications of animals you can keep
• Types of fencing allowed
• Allowed colors for home exteriors
• Restrictions on businesses run from home
• Limitations on property you can keep in your yard or driveway
• Tree removal prohibitions
• Limitations on mailbox customizations

As it's clear from the list above, the idea behind deed-restricted communities is to create an orderly and cohesive appearance in the neighborhood. Some strict HOAs won't allow you to change the exterior home color. Likewise, some restrictions, such as limitations on backyard structures, are designed to protect everyone's view from their homes. Others, like preventing residents from storing boats or RVs in their driveways, are designed to create an orderly appearance in the neighborhood. 

On the other hand, some deed-restricted communities, especially in warm destinations like Florida or Arizona, are only for residents 55 years or older. In that case, the deed restriction protects the intention that the community is for retirees. 

What Are Common Neighborhood Deed Covenants?

Common deed restrictions covenants include:

Backyard Development

You may be unable to put up a shed or fence or plant large trees or bushes that block neighbors' views. 

Fencing

You may be limited to a specific fencing designated for the community. If you decide you want another type, it's not allowed. 

Animals

While many communities limit farm animals you can keep, including chickens, hogs, horses and cows, some communities even restrict other pets like dogs or cats. Some communities, for example, only allow dogs below a certain weight or that don't bark excessively.

Home Colors

You may choose a few colors of siding or paint, or you may be required to maintain the home in the same color as you purchased it. 

Home Businesses

Many HOAs don't allow you to run a business from home that requires frequent pickups or deliveries or otherwise disturbs the traffic in the neighborhood. 

Driveways

RVs, boats and cars over a certain age may be limited. Some HOAs restrict keeping vehicles in the driveway, while others don't allow you to park vehicles on the street. 

Tree Removal

If the neighborhood includes landscaping, you may be restricted in removing trees or bushes from your property. In addition, many areas have limitations on removal after a tree reaches a certain size. 

Mailbox Customizations

Whether you want to put up a mailbox in a new style or with different lettering or are planning something more creative, many HOAs limit what changes you can make to the mailbox, if any. If you need to replace the mailbox, you may be required to use the same type and style so it fits other mailboxes in the neighborhood. 

Front Yards

HOAs may require mowing the lawn or performing other basic yard upkeep. You might also be restricted from what you can develop or plant in your front yard. For example, if you want to put container vegetable gardens, a wild grass butterfly garden or a swimming pool in your front yard, it won't likely be allowed in a deed-restricted community. 

Pros and Cons of Living in a Deed Restricted Community

Living in a deed-restricted community has numerous advantages. Before deciding whether these communities fit your family, here are a few pros and cons. 

Pros

• Upkeep: As people are required to meet maintenance requirements, the neighborhoods are generally visually appealing and orderly. 
• Amenities: Many deed-restricted communities offer community features like sports or recreation facilities, swimming pools, tennis courts, a clubhouse or a community center. 
• Shared costs: If you want your own swimming pool, tennis court or gym without the full burden of paying for it or the responsibility of upkeep, deed-restricted communities offer access to amenities at a fraction of the cost of private ownership. 
• Preserved property value: Living in a deed-restricted community means you don't need to worry about declining property values resulting from negligence or poor upkeep. Likewise, you're part of a community committed to building the amenities and lifestyle that should preserve property value for everyone. 

Cons

• Added costs: In some HOAs, shared amenities could cost $500 to $1,000 per month. 
• Limitations on funding: Certain deed restrictions will make a property ineligible for funding from a mortgage lender. Homes with title transfer limits, restrictions on religion or Section 8 classification might not qualify for funding. 
• Challenges selling the property: If you can finance and purchase a deed-restricted property, you might still be limited in selling it later. For example, if the home is in a 55-plus retirement community, you could only sell to someone who meets that criteria plus any other criteria for the community. 

What Happens if You Violate a Deed Restriction?

You may receive a warning from the homeowners association or the community's governing body if you violate a deed restriction. Depending on the severity of the violation, you may face fines, penalties or legal action if the violation continues. 

If you live in a deed-restricted community without an HOA, the builder could file a lawsuit against you for not following a deed restriction. In addition, you'll face the discomfort of living with neighbors or a community who are upset with your actions. 

How to Find Out About the Specific Deed Restrictions in a Community

You can learn about the specific deed restrictions in a community by reviewing the governing documents, usually provided by the homeowners association or the property developer. These documents typically include the covenants, conditions and restrictions (CC&Rs) that outline the rules and regulations for the community.

If an HOA governs the community, you can speak with the head of the HOA about deed restrictions and their implications for the community. You can also check the deed restrictions with a title company during a title search before completing a home purchase. 

What Happens to Your Home-Buying Process When You Purchase a House in a Deed-Restricted Community?

While the home-buying process for purchasing a property in a deed-restricted community is similar to any other community, you could face delays in the title search, especially if you find restrictions you weren't aware of before. Likewise, strict covenants can make a home less attractive or a poor choice for your family, even if you would otherwise love the property. 

Finally, getting mortgage approval for a deed-restricted property can be more challenging. Lenders usually won't approve a deed-restricted property if it's:

• Located in a Hawaiian Home Lands development
• Requires that you belong to a specific religion
• Has a title provision
• Has title transfer limits
• Designated Section 8 housing

Should You Buy a Deed-Restricted Property?

Deed-restricted communities have significant strengths and can be desirable if the restrictions align with your needs and values. They offer beauty, convenience, a like-minded community, and, in many cases, excellent amenities. However, getting a mortgage to fund a deed-restricted property can be more difficult, and selling the property in the future can also be more challenging. 

Should you buy a deed-restricted property? That depends on the nature of the community and your preferences. To get started, learn more about common easements and encroachments you might find on a property, and consider locating property owners to get a sense of living in a particular neighborhood. 

Frequently Asked Questions