DEED RESTRICTED COMMUNITY: Complete Investing Guide In Florida

deed restricted community

When you own a real estate investment, you have complete freedom to do whatever you want with it, correct? No, it isn’t always the case. If the community has deed restrictions, what you can and cannot do on your land will be restricted. Before purchasing property in a deed-restricted community, be sure to familiarize yourself with the restrictions. Although many Florida neighborhoods are controlled by an HOA, each deed-restricted HOA community has its own set of rules and regulations.

What Does Living in a Deed-Restricted Community Mean?

To put it simply, a deed-restricted community is a complex or property where homeowners are prohibited from performing specific activities. In most cases, such communities are controlled by a private corporation known as a homeowners association. These organizations adhere to a collection of governing documents, including the Declaration of Covenants, Conditions, and Restrictions (CC&Rs).

What exactly is a deed restriction? These agreements, often known as restrictive covenants in HOAs, limit or prohibit specific actions typically concerning property usage, upkeep, and appearance. So, what does it imply when a property is restricted by deed? Simply expressed, it implies that you must follow specific rules and covenants that limit how you utilize the property.

Typically, deed restrictions run with the land. That is, they are attached to the earth itself rather than the house built on top of it. Homeowners associations are also responsible for any deed restrictions.

HOAs Common Deed Restrictions In Florida

What is an illustration of a deed restriction? Although deed restrictions are typical in HOA areas, not all associations have the same exact set. However, some of the most typical restrictive covenants you may encounter include, but are not limited to:

  • The outside appearance of your property, such as the paint colors and finishes available, the doors that can be installed, and so on.
  • Structure additions or changes to your property, such as sheds, greenhouses, balconies, pools, and so on.
  • Fencing requirements and constraints
  • Vehicle parking, for example, where you can park, what types of cars you can park in your driveway or on the street, and so on.
  • Landscaping necessities and constraints
  • Leaving your laundry to dry*
  • Installation of a satellite dish, antenna, or solar panel*
  • Designs for personalized mailboxes
  • Prohibiting or restricting the use of your land for commercial purposes
  • Pet policies such as how many pets you can have, what types of pets you can have, and what breeds you can have
  • Age restrictions, such as enabling inhabitants to be 55 or older, are common.
  • Trash can placement

*In some states, homeowners’ associations cannot restrict solar drying or the installation of satellites, antennae, and solar panels. They may, however, be able to control them.

The Advantages of Living in a Deed-Restricted Community In Florida

Restrictions can be restrictive, but they can also provide benefits common to HOAs. Here are a few examples:

  • Prioritized maintenance: Specific maintenance rules can mean that people prioritize having those jobs done. This could help to protect property values by lowering the possibility of blight.
  • Community amenities: An HOA may give access to specific communal amenities such as pools, clubhouses, or tennis courts to community members. They might even be as simple as community snow removal or grass care.
  • Sharing expenses: In HOAs that provide these services, residents are not required to pay for their own pool, shuffleboard courts, snow removal, or grass maintenance. Those who want these products may benefit from the fact that such expenses are shared across the organization.

The Risks and Disadvantages of a Deed Restricted Community

The disadvantages of residing in a community with deed restrictions may exceed the benefits for some people. If you’re the type of homeowner who gets annoyed when someone tells you that you can’t paint your house magenta or put up a blowup decoration of Homer Simpson dressed as Santa during the holidays (or, conversely, that you must decorate throughout the season), HOA restrictions may not be for you.

In other situations, it can also limit your freedom to sell the house to anyone you want, in addition to limiting your individual liberties. This is due to the fact that deed restrictions are considered an encumbrance. An encumbrance is a claim to your property held by another person or business.

Most deed restrictions enforced by an HOA require new owners to agree to the rules established by the neighborhood or condo organization. This may limit the number of persons interested in purchasing your house.

In other circumstances, even if they agree to the other rules, there may be restrictions on who can move in. The most typical example would be 55+ retirement communities, but ownership is restricted in other places due to other factors.

How Buying a Home in a Deed Restricted Community Affects Your Home Buying Process

Buying a property in a deed-restricted community can have a few consequences for your home buying process. Let’s go over them.

The most obvious constraint is that you may not be able to do what you want with your land. If you don’t find out about a deed restriction until the title search, any surprises could prevent you from acquiring the property that you would have loved if it weren’t for a specific HOA restriction on the height of hedges, for example.

The second impediment is financial. If the deed restrictions limit who you can sell the property to, you may have difficulty obtaining a mortgage. The logic behind this is that if you are unable to make payments, a deed limitation may cause problems. If you default on your mortgage, the lender is required to sell your home. They will not want any restrictions on who can live there.

Read Also: OPEN-END MORTGAGE: Definition & Guide To The Mortgage Option

Some mortgage lenders, for example, will not fund residences subject to the following deed restrictions:

  • Anything concerning title transfer limits may have an impact on a mortgage lender’s choice.
  • A decision could be influenced by title requirements providing a first right of refusal. A title provision means that nothing will be funded if the association or another organization has the first chance to purchase the land.
  • Lenders may refuse to fund properties located on a Hawaiian Homeland development.
  • Properties that require you to be a member of a specific religious order may be ineligible.
  • Lenders may not want or be able to fund homes in locations designated exclusively for low-to-moderate-income people. These homes may be subject to affordable housing restrictions, Section 8 housing, or inclusionary zoning.
  • Financing is available for properties designed for those aged 55 and up, but they must comply with both the Fair Housing Act and the Housing for Older Persons Act.

Is It Possible for a Deed-Restricted Community to Expire?

They most certainly can. In fact, some deed-restricted developments in Brevard County have already expired. According to the 1956 Marketable Record Title Act, all deed-restricted communities expire 30 years after they are established.

There is little an association can do to enforce rules or even collect monthly dues if the deed reaches its 30-year expiration date. Some communities continue to pay dues and follow traditional business practices, but there is no way to guarantee that future inhabitants would do the same.

Some neighborhood associations have statutes in place that specify that if the majority of homeowners vote in favor of it, the old policies will be reinstated at the end of the expiration term for X number of years. All of these topics should be considered and inquired about before choosing an HOA community.

How Do You Alter a Deed Restriction?

Deed restrictions with a written expiration date are no longer enforceable when that date has passed. However, if the HOA deems it necessary, they may opt to extend the expiration date.

There are, however, exceptions. Discriminatory or unreasonable deed restrictions are unconstitutional and so unenforceable. The Fair Housing Act, for example, protects some groups against discrimination. A deed restriction that prohibits you from selling the property to people of color is discriminatory, and hence cannot be enforced.

If you want to circumvent the deed restrictions, you must follow the procedure outlined in your HOA’s governing documents. Here’s what you’ll have to do:

  • Read the restriction’s terms and conditions: Request a copy of the covenant from your property management firm. Check to see whether it has an expiration date. It may also specify the procedures required to remove the limitation.
  • Check with the governing body: The governing body should be explicitly identified in the covenant. Typically, it is the homeowners’ association. Inform them that you seek to lift the restriction on the deed.
  • Consult with the local community: A clause in the deed restrictions can stipulate that any alterations must be approved by the community. You’ll profit from employing a property management company if you’re not a people person. If they agree, you must get a Restriction Release form.
  • Consult with the court: You can file a petition in court if neither the governing body nor the neighbors agree to modify the deed limitation. The decision of the court will take precedence over that of the community.
  • It is critical to recognize that modifying deed restrictions is not simple: It may be preferable to purchase property elsewhere rather than try to persuade the group or court. Before purchasing a house in a deed-restricted community, speak with a real estate expert.

The Popularity of Deed Restricted Communities

More and more people are opting to buy houses in a deed-restricted community. Given the benefits of such characteristics, it is not surprising that their popularity is growing. Although some HOA fees can be rather high, there is no disputing that they come with a slew of benefits in return. If you consider deed restrictions as guidelines to help increase property value, they are well worth it.

Conclusion

You can decide whether a property with deed restrictions is ideal for you now that you understand the rules for purchasing or refinancing one. Talk to your real estate agent, a representative from the community’s HOA, or an agent at the county clerk’s office to find out if your potential new house has a deed restriction.

Buying a house in a deed-restricted community may or may not be the best choice for you. Certain rules and regulations may be excessively burdensome if your full liberty is vitally important to you. Others don’t mind following acceptable rules if it means they’ll be able to sell their home sooner. Finally, before acquiring a home, it’s a good idea to find out what exact deed restrictions exist and make sure you can comply with them.

Deed Restricted Community FAQs

How long do deed restrictions last in Florida?

According to the 1956 Marketable Record Title Act, all deed-restricted communities expire 30 years after they are established. There is little an association can do to enforce rules or even collect monthly dues if the deed reaches its 30-year expiration date.

Who enforces deed restrictions in Florida?

An HOA is often in charge of enforcing deed restrictions. In most cases, the restriction can only be enforced by the person or entity who imposed it. To get a complete understanding of the property, conduct research to be aware of any restrictions and who put them in place.

What does a restriction on a title deed mean?

A Restriction on Title is an entry made on a property’s title deeds. It inhibits the registration of a sale, transfer, gift, or new mortgage (disposition) of the property unless specific requirements are met.

What does no deed restrictions mean in Florida?

Non-deed-restricted land is simply land that has no deed restrictions. That means the land you wish to acquire has restrictions on what you can build on it or how you can use it.

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