HOA restrictive covenants
Congratulations! After weeks of searching, you’ve found your ideal home. Before making an offer, it’s a good idea to check whether the property is subject to any HOA restrictive covenants or deed restrictions to confirm this is the right neighborhood for you.
What’s a covenant in real estate?
Chances are, if you buy a home or condominium in a planned community, you’ll automatically become a member of the homeowners association or HOA. As a member, you’ll be subject to the restrictive covenants for the community. Restrictive covenants are legal agreements you make with an HOA that outline what you can and cannot do with your home and property. A covenant in real estate is sometimes called a deed restriction. The restrictive covenant rules of an HOA are included in the Declaration of Covenants, Conditions and Restrictions, also known as CC&Rs.
What’s a restrictive covenant agreement?
When you sign a restrictive covenant agreement, you’re entering into a legal contract governing the use and improvement of your home. Some HOAs impose penalties for breaking HOA rules and require members to either reverse the violation or pay a fine. They may foreclose on your property for nonpayment of fines resulting from not following restrictive covenants.
Note that covenants may also apply to a home without an HOA. If so, it’s a good idea to ask the seller to provide a copy of the agreement for review before making an offer.
Why use restrictive covenants?
The purpose of most restrictive covenants is to preserve a consistent community appearance to help maintain property values. They’re a helpful tool for keeping a neighborhood clean and orderly.
Examples of restrictive covenants
- Exterior design changes such as limits to home paint colors or types of windows help keep a community’s uniform look
- Landscaping requirements such as how often you cut your grass to ensure that lawns are tidy and weed-free
- Fencing standards for building materials and height
- Restrictions on the number, breed and size of pets
- Parking regulations such as a prohibition on street parking or times when certain vehicles can park on the property
- Noise rules, including hours when quiet hours are enforced
- Minimum square footage for dwellings
Understanding HOAs with restrictive covenants
There are many benefits of living in a community with an HOA, such as access to amenities and potentially higher property values. However, if you’re looking for more flexibility and control over updating and maintaining your home’s exterior, an HOA community may not be the best fit. Learn more about homeowners associations.
From pre-approval to closing, Guild Mortgage advisors are here to guide you through your homebuying journey. Let’s talk about your options.
The above information is for educational purposes only. Guild Mortgage offers home financing only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.