Covenants, Conditions & Restrictions: Definition, Purpose & Limitations

Instructor: Shawn Grimsley
If you own a condominium, a townhouse or even a single-family home in a modern residential real estate development, there's a good chance you're subject to covenants, conditions and restrictions, which you can read about in this lesson.

What are Covenants, Conditions and Restrictions?

Meet Lindsey and Martin. They're house hunting, and they've just found the perfect home in a new residential subdivision in their city. The couple's real estate agent, Andy, advises them that the property will be subject to CC&Rs. Both Lindsey and Martin give Andy a dazed look and wait for him to explain what he's talking about.

Andy explains that covenants, conditions and restrictions, commonly referred to as CC&Rs, are limitations imposed on a parcel of land that restrict the manner in which a property can be used. CC&Rs may restrict use of a property in many different ways, including, but certainly not limited to:

  • The color of a house or other structure on a lot
  • The type, quality and nature of any building on a lot, including houses, decks, patios, sheds and fences
  • Structures placed in the yard, such as lawn ornaments and signs (e.g., political campaign signs)
  • The nature of the property (e.g. commercial or residential)
  • Parking on streets and storing of vehicles in driveways (e.g., vehicles may have to be stored in garages, and parking on streets may be prohibited)
  • Standards regarding the maintenance of buildings, structures and yards
  • Type, size and number of pets

Andy further explains that CC&Rs are included in the deed, or legal document, used to convey a property and are a common component of modern real estate developments. These include new subdivisions, condominiums, cooperatives and plan unit developments.

Purpose

According to Andy, there are some valid justifications for imposing CC&Rs. Overall, they're used to make sure properties continue to fall within a certain price range, which not only helps developers make sales but also helps property owners maintain and increase the market value of their properties. For example, CC&Rs can be used to control the nature and quality of structures and other improvements made on lots in a development.

Although a cliché, Andy points out that a few bad apples can spoil the barrel, and CC&Rs try to prevent bad apples. For instance, a yard full of junk, wackily painted home or dead lawn all fall into the category of bad apples. Homeowners who use their properties as auto body repair shops also tend to hurt the market value of other lots in a neighborhood.

Enforcement and Limitations

Lindsey and Martin ask Andy how the CC&Rs are enforced. Andy explains that homeowners associations (HOAs) enforce CC&Rs. For example, HOAs monitor properties for compliance and require that any violations be remedied. Enforcement powers include the ability to fine violators, file lawsuits in court, or force non-compliant owners to sell their properties and move. Andy advises Lindsey and Martin to carefully review the CC&Rs and HOA documents in their dream subdivision to make sure they're willing to live with the restrictions.

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