Goodspeed: Know the limits of restrictive covenants
QUESTION:What is a restrictive covenant? I am thinking about buying a home in a subdivision outside Boston that has a covenant attached to the deed which restricts the type and size of any secondary structures that can be built on the property. I’m wondering if this is legal, and even if it is, whether purchasing a home with this type of restriction attached to it would be a good idea. What do you think?
ANSWER: A “restrictive covenant” is indeed legal (in most cases). It is part of a property’s deed and is a restriction that limits the use of the property.
Restrictive covenants may either “run with the land,” which means that the covenant is binding to all subsequent purchasers of the land, or they may be “personal,” which means they are binding only between the original seller and buyer.
Whether or not the restrictive covenant attached to the deed of the property you are interested in runs with the land or is personal would be determined by the language of the covenant, the intent of the parties who established the covenant and the laws of the state where the land is located. You should have an attorney review the language of the covenant carefully.
Whether or not you should purchase a property with a restrictive covenant is totally up to you and how you plan to use the property. You may not have any plans to construct a secondary structure right at the moment, but what about down the road?
Also, what about future owners? Restrictive covenants that run with the land are encumbrances and may negatively affect the value and marketability of the property.
On the other hand, depending on the restrictions, they may also increase the value of the property, for example by limiting the density of buildings per acre, the type of dwelling or building that can be constructed, the size of buildings, style of buildings, even the price of dwellings. These types of restrictions can serve the purpose of preserving the integrity and character of a subdivision or area or neighborhood, and thus preserving and even increasing the value of real estate located there.
One note: Restrictive covenants that restrict minority groups or other protected classes from owning or occupying homes in a given area are discriminatory and have been ruled unconstitutional by the U.S. Supreme Court.
In summary: A restrictive covenant can add value to a property or detract from its value. It is important to review the language of any covenant carefully and make sure you understand it and its implications for you – and subsequent owners.
Linda Goodspeed is a longtime real estate writer and author of “In and out of Darkness.” Email her at: email@example.com.