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Deed Restrictions: Definition & Limitations

Instructor: Shawn Grimsley
Deed restrictions can be a surprise to an unwary purchaser of real estate. In this lesson, you'll learn about these restrictions and the limit the law imposes upon them. A short quiz follows the lesson.

Deed Restrictions Defined

Quentin has just purchased a home in a brand new subdivision. Shortly after the purchase, he decides to paint the drab beige house a more vibrant color but is stopped in mid brush stroke by his neighbor who tells Quentin he can't do it. Quentin asks why, and his neighbor tells him to look at his deed. Quentin does and finds a series of restrictions on his deed.

As you probably know, a deed is a legal instrument used to convey (i.e., transfer) real estate. It is signed by the grantor (the person transferring the property) and delivered to the grantee (the person receiving the property). A deed restriction is a provision in a deed that imposes a limitation, condition or other restriction upon how the grantee may use the property being conveyed by the deed. Deed restrictions can be specific to one parcel of property or can be common to all lots in a subdivision, such as in Quentin's case.

Deeds Granting Defeasible Fees

One type of deed restriction is a deed that conveys a defeasible fee rather than a fee simple absolute. A fee simple absolute is the least restrictive of all estates (i.e., legal interest) in land. In a nutshell, if you hold a piece of property in fee simple absolute, you can possess the property, use it, control it, transfer it and your heirs can inherit it. On the other hand, if your deed grants you a defeasible fee, you get the property with specific conditions attached and can lose the property if the conditions are not met.

You can think of it as a fee simple with strings attached. Fee simple defeasible estates are considered conditional estates because the estates are subject to conditions that must be met or they can be lost. Let's look at an example.

Let's say you deed a piece of property to your city, but you want the property used as a park. In your deed, you convey a type of defeasible fee called a fee simple determinable. The deed provides that the city will hold the property in fee as long as the property is used as a park. However, if the city stops using the property as a park, ownership of the property will automatically revert back to you as the grantor.

Another type of defeasible fee is a fee simple subject to a condition subsequent. Unlike a fee simple determinable, it requires that the grantor take affirmative action to reclaim possession of the land if the grantee violates a condition. In other words you don't automatically get the property back if the condition is broken.

Restrictive Covenants

Defeasible fees are quite rare today, but that's certainly not the case with restrictive covenants. A covenant is simply a promise, and a restrictive covenant in the context of real estate is a promise that restricts the manner in which the real estate can be used.

If a covenant is part of a deed that is accepted by the grantee, the law holds that the grantee is legally bound to comply with the restrictions imposed in the deed. You can think of a restrictive covenant as a legally enforceable contract that is written into the deed. In our example above, Quentin's property is subject to a restrictive covenant concerning the color he can paint his house.

Importantly, if certain requirements are met, a restrictive covenant 'runs with the land,' which means not only will Quentin be bound by the restriction on painting but all subsequent owners of Quentin's property will also be bound. Restrictive covenants like Quentin's are very common in newer planned communities and can restrict not only house color but also many other things, such as the type and nature of things can be placed in your yard (e.g., fences, sheds, yard ornaments, political campaign signs and even boats and RVs in a driveway).

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