Neighborhood Covenants

Sections within this essay:

Background

Technically (and within the context of residential neighborhoods), a covenant is a rule governing the use of real property. However, in common usage, it may also refer to a promise or agreement (as formalized in a deed ) concerning the use of the land, as where a purchaser of land "covenants" to abide by certain restrictions associated with the use of the land. Essentially, such covenants are promises made by a prospective purchaser as a condition of purchasing the land in question.

When properly recorded on a deed conveying land, a covenant ("restrictive deed covenant") has the legal effect of a binding contract term, and may be so enforced. When covenants are instead signed privately among neighbors, as in a mutual compact or agreement, they are still binding upon the signatories and may be litigated if breached.

Most planned developments (subdivisions of homes built by a particular builder), including closed or gated residential areas, as well as condominium associations and housing cooperatives, make use of covenants for the benefit of all residential owners and their neighbors. Neighborhoods with properly drafted and enforced covenants or architectural standards have been shown to retain property value better than those with poorly enforced covenants or no standards at all. Neighborhoods that follow their covenants and standards tend to be safer, look better, maintain better relationships with local governments, and better retain or increase the investments that homeowners have made in their properties.

Covenants differ from zoning ordinances in that they are between private parties rather than between a governmental entity and a private party. Thus, a neighborhood association or single homeowner may enforce a covenant as against another homeowner, rather than a city or county enforcing a zoning ordi-nance as against a private citizen. Another difference is that zoning ordinances are regulations recorded as local laws "on the books," whereas covenants are recorded in private deeds, either as deed restrictions or as neighborhood compacts between private parties. Because covenants are voluntary, they may be more restrictive that zoning ordinances.

General Purpose

Property owners agree to stringent covenants and conditions that restrict the use and enjoyment of their own property for two main reasons. First, and most importantly, homeowners want to maintain or enhance the property's value. Second, homeowners want to use and enjoy their property without annoyance, distraction, or offensive use by their neighbors that falls short of being an actual violation of any existing law. Zoning ordinances are limited in what they can control; they cannot control what type of person moves into a neighborhood and/or how he will maintain his property. Although it is true that most counties and local governments do have laws protecting residents from unsafe or unhealthy conditions on neighboring property, there is little they can do to prevent clutter, poor appearance, or just "bad taste." These indiscretions can cost a neighboring property thousands of dollars in appraised value, and can also impair home buyers' interest in it, should the owners attempt to move away from the offending property.

Covenants regulate what property owners in a particular area can or cannot do with their property. When a geographically-restricted group of homeowners are bound by neighborhood covenants, individual homeowners are better insulated from the possibility that one errant homeowner will bring down the value of surrounding properties because of the appearance of his or her house. Covenants ostensibly ensure that a residential area will remain a desirable one to live in; that the properties contained therein will retain their value; and that, in return for some minor sacrifices, homeowners will be able to better enjoy their own properties. Zoning laws can change, leaving residents unprotected from the possibility that a strip club or deer-processing plant might move in.

Covenants can range in subject matter from the prohibition of flagpoles in the front yard to restrictions in outdoor music during certain hours. They may limit the colors a homeowner may paint a house or the type of shrubs and trees used to landscape around it. They may control pets, vehicle parking, security lights and alarms, mailboxes, or remote-control toys. While many people are accustomed to such restrictions when renting or leasing residential properties, they do not realize that such limitations also can be placed on properties they own. "It's my property and I can do what I want with it" is a common retort that provides little defense for a home-owner who has breached a covenant attaching to his or her property.

In order for covenants to be binding, they must be legal. For example, in the early 1900s, racially restrictive covenants were used to exclude minorities from white neighborhoods. Since civil rights laws (prohibiting discrimination) did not come into being until many years later, state courts reviewed challenges to these covenants under the Due Process Clause and the Rule Against Restraints on Alienation. In some courts, neither of these grounds proved sufficient to strike down such racially restrictive covenants, and many continued for years (although restrictions on alienation of property are generally void). The practice was finally outlawed by the U.S. Supreme Court in Shelley v. Kraemer, 334 U.S.1 (1948). Other covenants that attempt to restrict otherwise legal rights can always be challenged, but, buyer beware, a homeowners' association is a private one in which buyers voluntarily agree to the covenants.

Covenants, Conditions, and Restrictions (CC&Rs)

Covenants are often lumped together under the collective term of "covenants, conditions, and restrictions" or CC&Rs, a term commonly found in real estate documents. Since most covenants involve some kind of condition or restriction placed upon the buyer, the collective term "CC&Rs" has been more widely used in recent years to indicate the existence or future existence of limitations associated with the use of the purchased land.

Many home buyers are so charmed by the appearance of a house for sale that they fail to take the time to read the CC&Rs that come with the property. They are so pleased with a nice kitchen or a fenced-in back yard that they sign a purchase agreement without realizing that existing CC&Rs may prevent them from keeping their boat or truck on the property, or erecting a basketball hoop in the driveway. Often, title companies will not have copies of the CC&Rs affecting the property until the day of closing, and they are often overlooked at that point. However, CC&Rs are binding upon the purchaser, and the purchaser will become subject to them, whether or not they have been reviewed, read, or understood. The general rule of "constructive notice" applies in these cases. No real estate contract should be signed until a purchaser has reviewed all the CC&Rs (and zoning laws) affecting the property.

Builders' Restrictions

Real estate developers generally purchase large parcels of land, which they then subdivide into individual lots for home construction. Most developers will build homes in a subdivision that are fairly similar in appearance, so as to convey an attractive incentive for would-be purchasers that they will be living in a community of fine homes. Developers have a vested interest in ensuring that the character of the neighborhood and the appearance of the subdivision remains attractive, at least until their construction project loans have been repaid and they have turned a profit.

To that end, developers will often file, generally at the same time that the land plat is being approved for subdivision and development, a declaration of covenants that will be applicable to all parcels of land (lots) sold within the development. Once the zoning authority approves of the development as presented, the covenants (conditions and restrictions) will become binding on any purchaser of land in the subdivision. In other words, these covenants generally "run with the land" (see below).

The important thing to remember is that the builder's covenants are binding on all persons purchasing property within the builder's subdivision. Such covenants are made "of record" in the county or city where the land is located, and will be referred to in any deed transferring land to a purchaser. Language in a deed most often refers to the conveyance of land "subject to any existing CC&Rs and easements of record" or similar wording.

Specific restrictions and covenants are generally not enumerated in the deed itself, but will be contained in a separate document referred to in the deed. It is important that a prospective purchaser inquire about and review any such separate documents containing these covenants prior to purchasing the land in question.

Homeowners or Condominium Associations

Most homes in a subdivision or development, as well as most condominiums existing today, are subject to CC&Rs. If the legal description of property contained in a deed refers to a certain "lot," especially if followed by a number, e.g., "Lot No. 24," that lot is most likely part of a subdivided plot that is subject to CC&Rs.

The declaration of covenants filed by a developer for a particular subdivision project will generally contain language that delegates control and enforcement authority to a newly-formed homeowners' association or an architectural control board. Until all the homes in the subdivision are sold, the builder may retain control and enforcement of the CC&Rs, or may delegate it to the association. In any event, once the developer has sold all the homes and no longer has a vested interest in the subdivision or project, overseeing the CC&Rs will transfer directly to the homeowners. The newly authorized association will continue the existing covenants but may eventually create new ones, depending on the specifics contained in its bylaws.

Importantly, purchasing a lot or existing home may require that the purchaser pay dues or fees for membership in a homeowners' or condominium owners' association. Bylaws for these associations generally provide for the election of officers and outline voting rights of the property owners affected by the adopted covenants. Voting rights of homeowners or condominium owners may be delegated to an appointed or elected board or panel of fellow homeowners or condominium owners. As with all delegated authority, their decisions regarding CC&Rs will be binding, whether or not individual property owners agree with them. The only recourse may be to wait until the next general election of officers or panel members.

Voluntary Neighborhood Covenants

Often, homeowners whose individual homes are not part of any organized association and/or are not subject to any CC&Rs, will voluntarily form an association to promote the maintenance or enhancement of their property values. By forming a group united by concerns that other homeowners may share, the homeowners will draft covenants binding on all homeowners within a geographically defined area. This form of voluntary covenant can be more difficult to create or enforce, for two specific reasons. First, a single homeowner who holds back consent or refuses to join the association can prevent the formation of binding covenants. Secondly, because the covenants were formed after the fact of purchase, they are not "deed restrictions" and will not run with the land. Since they are voluntary commitments among current owners, the sale of a single property to a subsequent purchaser can end the covenants for all properties.

Notwithstanding, a group of residents may voluntarily agree to adopt permanent covenants and choose to have them subsequently added to their property descriptions and deeds. This often occurs when they are concerned that, if one of them sells his or her home, the remaining residents will be adversely affected by what a subsequent purchaser will do with/to the property.

Creation and Termination of Covenants

Binding neighborhood covenants are created by written documents (e.g., a declaration of covenants). In most cases, they will already be in existence at the time a purchaser takes interest in a parcel of land or house. If they are simple and brief, they may appear in a deed transferring property, but in most cases, a deed will only refer to covenants and incorporate them by reference, e.g., the deed will convey the land from grantor to grantee "subject to all existing CC&Rs or easements of record," (or similar language).

Covenants Running With the Land

Most neighborhood covenants "run with the land." This means that they subject the property itself, and not its current owners, to the conditions or restrictions contained in them. Thus, the liability to perform a covenant, refrain from doing something, and/or take advantage of a covenant passes with the land itself to any subsequent owners.

In order for covenants to run with the land, they must be included in a deed transferring property, and they become part and parcel of the "chain of titles." The covenants remain binding on each successive owner of the property, whether or not the new owner has been advised of them.

In order for a benefit or burden to run with the land, requirements under the Statute of Frauds must be met. However, if any covenants are contained in the deed itself, acceptance of the deed constitutes satisfaction of the Statute of Frauds, as though the purchaser had signed the covenants himself.

Expiration or Termination

Neighborhood covenants may be permanent, expire naturally, or have a declared term of existence. For example, a builder will often initiate covenants running with each lot in a subdivision, that address such restrictions as type of dwelling that can be constructed on a lot (e.g. single family structure only) or setback from street (e.g. minimum of 100 feet). Once the houses have been built upon the lots, the covenants regarding setback and type of dwelling naturally expire as between the builder and the purchasers of the lots. However, more likely than not, a homeowners' association will adopt the prior covenants to prevent subsequent homeowners from either converting their homes to multiple-family dwellings or building additions to the home that are closer than 100 feet to the street. In such an example, the builder is no longer a party to the covenants, but they nonetheless will be binding among subsequent homeowners represented by the association.

Such a transfer of covenants is most often provided for by the developer in the initial covenants filed with the city or county at the time the subdivision development is approved. An example contained in a declaration of covenants might read something like, "After 50 percent of the total lots in the Subdivision have been sold by the undersigned developer, or after ten (10) years, whichever occurs first, the "Triple Crown Homeowners Association" shall be established as a not-for-profit corporation. The owners of each lot shall collectively own one share in the Homeowners Association. It shall be the duty of The Homeowners Association to enforce these covenants and restrictions, majority rule shall prevail except as otherwise stated herein_"

Commonly, CC&Rs have a declared term of existence, after which they expire naturally. The positive side of having covenants with fixed terms of life is that subsequent property owners are not burdened with restrictions that have become arcane, dated, or no longer desirable. For example, in 1950, a homeowners association wanted to preserve the charm of a residential area and created covenants restricting the sale of any properties for use only as single-family homes. But as the area grew, commercial properties surrounded the residential area, making it unattractive to prospective homebuyers. A well-written covenant with a term life would have contemplated this scenario and limited the restriction to 25 or 30 years, for example. At that time, new owners could voluntarily agree to extend the life of the covenants or adopt new ones. Or, with expired covenants, they could petition local zoning boards to rezone their neighborhood as commercial or multiple-family resi-dential properties, to maximize the return on their investments.

It is also possible that some expired covenants are converted into new zoning laws affecting the residential area, and will therefore be binding on subsequent property owners as well.

Types of Covenants

Appearance and Maintenance

Probably the single most controlling covenant found in those adopted by homeowners' associations is that which addresses the appearance and maintenance of private properties.

It is important to note that, even in the absence of CC&Rs, many of these same issues are regulated by local zoning or blight ordinances. However, because covenants are voluntary in nature (a purchaser agrees to abide by the covenants as a condition of purchasing the property), they can impose more strict obligations upon homeowners than those required under zoning ordinances.

View

Covenants addressing views are often found in both CC&Rs and (less commonly) local zoning laws. Homeowners pay top dollar for property "with a view," and the privilege of gazing at an appealing scene from the comfort and privacy of one's own home is a highly prized commodity. This, in turn, manifests in enhanced dollar value of the real estate.

Importantly, there is no natural or common law right to light, fresh air, or a view. (There are exceptions for the deliberate and malicious blocking of an-other's view with a structure that has no reasonable use or benefit to the one who constructed it.)

Such a right must therefore be granted in writing by a special law or CC&Rs. Generally speaking, the view that becomes protected by a CC&Rs is the view that existed at the time that the property was purchased (taking into account any pending impairments to view in existence at that time, such as the construction of additional homes in the area).

There are three common view obstructions that become the subject of CC&Rs: fences, trees, and freestanding outbuildings/sheds. Since each of these is normally associated with a homeowner's right to use and enjoy his property, CC&Rs seldom prohibit these improvements, but rather try to restrict them.

Noise

A common covenant is one controlling noises, particularly during certain hours of the day, e.g., between 10:00 p.m. and 7:00 a.m. Violation of such a covenant often parallels local ordinances, so neighbors may simply contact police to immediately address the problem, then later file a complaint with the association for covenant violation.

Fences

Fence heights are generally controlled by local ordinance but may also be a subject covered in neighborhood covenants. Commonly, they restrict fence heights to six feet in back yards, and three to four feet in front yards.

Natural fences are more burdensome. Bushes or trees used as natural borders or fences (or deemed to constitute same) become overgrown and tend to encroach on neighbors' properties. In addition to the encroachment (which may constitute a trespass), overgrown natural fences also tend to obstruct views, thereby possibly violating another covenant.

Pets

Clearly, covenants may address the number and type of pets that residents may keep on their property. It is imperative that prospective residents seek out the nature of any such covenants prior to purchasing the property or bringing animals or pets onto the property. Property associations do have the right to compel removal of pets in violation of covenants. However, this generally can only be done after proper notice and hearing, followed by judgment in a court of law to enforce the covenant. Members of homeowners' associations do not have authority to enter the property of another and remove pets.

Home Businesses

Neighbors often complain about the noise and traffic of home-based businesses. They may also resent the presence of outsiders constantly coming into the residential area, which may enhance burglaries, robberies, and other crime. They may fear the consequences that home businesses have on property values or zoning regulations.

In truth, most home businesses are discreet and unobtrusive. They may involve computer work, arts and crafts, writers, or consultants, so the negative effect on neighboring properties is minimal or nonexistent. Covenants attempting to restrict them may fail as unjustified restrictions on private rights to be gainfully employed. For this reason, most covenants involving home-based business address corollary issues, such as noise, traffic, pollution, etc.

Personal Conduct

Covenants may address personal conduct, particularly concerning dress codes when entering common areas, such as swimming pools, tennis courts, etc. Drunk or disorderly conduct, entering another's property unannounced, or disturbing the peace may also be prohibited in particular covenants.

Miscellaneous covenants may address or prohibit other activities or issues that tangentially touch on personal conduct. These topics may also be addressed under appearance and maintenance covenants. Storing or working on disabled or older, broken-down vehicles in one's yard, or keeping a backdoor floodlight (or front door light) may be prohibited, even though they impinge on a resident's right to his own use and enjoyment of his property. The legal concept relied upon to enforce such covenants is the argument that the proscribed activities also impinge upon neighboring properties and the use and enjoyment of them as well. Since residents voluntarily agree to covenants, their conduct can be thus restricted.

Common Areas

Covenants addressing common areas generally deal with maintenance, repairs, conduct, and use. Restrictions may be placed on the number of visitors or guests a resident may bring into a common area. Parking spaces are frequently addressed in covenants, including restrictions on parking in front of others' property.

Enforcement and Remedy

All neighborhood covenants include procedures for handling violations of CC&Rs, or requests for relief thereof. Since covenants are created by homeowners' or neighbor associations, internal notice and hearing requirements will be spelled out in the covenants themselves. It is important to remember that homeowners' associations cannot evict residents, remove personal property belonging to residents, or violate residents' personal rights in attempting to enforce covenants or control alleged violations.

Variances

The most common and easiest form of attempted compliance with a CC&Rs is to request a variance. A request for variance is a request for permission to depart from the literal requirements of a covenant. Variances are usually granted where enforcement would cause undue or unfair hardship on the requesting individual or resident. Examples include outdoor lighting at night for vision-impaired residents, pets that exceed the size, weight, breed, or limit on number as contained in a covenant, or keeping extra vehicles on the property or street.

Association Hearings

Almost all requests for variances are handled by hearings before the association. Notice generally goes to all other residents, or at a minimum, to residents whose properties may be affected by a committee or board decision.

Alleged violations of existing covenants are generally first handled by progressive action. After verbal and written warnings, as outlined in the covenants, associations will generally hold hearings on the matter. Alleged violators will have this forum to present their defenses or objections to the allegations. Some hearings are more formal in nature, in which residents may present witnesses or "cross-examine" those who allege violations. Decision and resolution is generally controlled by vote.

Court Action

For alleged violations that are not resolved, associations may decide to bring legal action against a resident for enforcement of a covenant. A court of law which has jurisdiction over the parties and the subject matter may render a formal judgment for or against the resident. Importantly, courts cannot enforce covenants for which they cannot determine a binding contract between the parties. The petitioning party must be able to show that the resident, in agreeing to the covenant(s), received some form of consideration in return for the promise. This may be inferred from circumstances evidencing increased property value, etc., but may also be a stumbling block for the association if its cause of action is not properly articulated. To overcome this possibility, associations tend to back up their lawsuits with citations of common law that parallel the covenants, e.g., public and private nuisance, interference with the use and enjoyment of property, disturbance of the peace, etc.

Courts of law may award monetary damages, impose injunctions, impound vehicles, or compel removal of personal property such as pets, in upholding CC&Rs. They may empower the association itself to take action, or compel relief through other resources, such as local police.

Additional Resources

Jordan, Cora. Neighbor Law. 4th Edition, 2001. Berkeley: Nolo Press

Warda, Mark. Neighbor v. Neighbor. 2nd Edition, 1999. Clearwater, FL: Sphinx Publishing.