DEED RESTRICTED COMMUNITY: Benefits And Risks

Deed Restricted Community
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If you’re in the real estate market to purchase a home, it’s essential to understand whether there are deed restrictions in place to support restrictive covenants, which hinder your property ownership and impose additional limits on ownership. Well, this article exposes you to what a deed-restricted community is all about in Florida.

Deed Restricted Community

A deed-restricted community is a subdivision in which every property is subject to conditions (usually related to maintenance and usage), which are established and enforced by a homeowners organization (HOA). Deed limitations specify or limit, how homeowners may use their property following the home’s official property records.

The Common Deed Restrictions

However, a restrictive covenant is a legal agreement that forms the basis for the creation of a deed limited community. In terms of covenants supported by deed limitations, the following are some of the most frequently useful:

#1. Fencing 

Approved fencing may be required to be within a specified height range or to be constructed from a specified list of materials.

#2. Tree Removal 

The HOA reserves the authority to ban the removal of specific trees to comply with aesthetic guidelines.

#3. Vehicle Parking 

The most prevalent restriction in this region is that vehicles must be in a park overnight in the driveway, garage, or carport space. Certain neighborhoods may have laws prohibiting you from parking your automobile on blocks or in a non-operational state. Ascertain that you are familiar with the rules.

#4. Customized Mailboxes 

If you want to customize your mailbox with a different color or a stylized number or name, this may be forbidden.

#5. Exterior Paint 

In areas without a homeowners association, you often have the freedom to let your imagination run wild and paint the exterior of your home in an Andy Warhol-inspired pop-art color scheme if you so desire. something like this cannot be in the permit in a deed-restricted neighborhood.

#6. Rules On Pools And Property Structures 

Depending on your community’s restrictions, you may be in demand to avoid having a pool or that it must be inground. Similarly, you may be in denial about erecting a shed or building an auxiliary living unit on your land.

#7. Age Restrictions 

Certain communities catering to an older population may impose an age restriction on residents. These are typically 55+ communities. They must adhere to federal housing law to obtain mortgage funding. We’ll discuss this in further detail later.

The majority of the constraints you’ll encounter will pertain to the appearance of your home. Failure to follow your community’s rules typically results in an initial warning and then a daily fine until the issue is remedied.

Furthermore, a deed-restricted community is a subdivision in which a homeowners association (HOA) imposes limitations on specific activities. These rules are in development and implementation by a private group (the HOA), not by the local government.

Before purchasing a home, it is critical to review any community deed limitations, as these limits dictate what you can and cannot do with your property. Additionally, it will be incredibly difficult to repeal any of these limitations; even the most stringent deed restrictions are frequently in support by the courts. Certain deed limitations, on the other hand, have been declared unenforceable and unconstitutional, such as those that ban residents of a particular race or religion. Only communities exclusively designated for persons aged 55+ are legally permitted to discriminate based on age. Finally, your real estate agent should be able to inform you of any restrictions that may exist within the community.

Do Deed-Restricted Communities Have An Expiration Date?

Yes, they very certainly can. Indeed, in recent years, some deed-restricted developments in Brevard County have expired. According to the 1956 Marketable Record Title Act, all deed-restricted communities expire 30 years after they are established.

Once the deed reaches the 30-year mark, the group is powerless to enforce laws or even collect monthly dues. While some communities continue to pay dues and adhere to traditional business practices, there is no way to guarantee that future inhabitants would do the same.

Certain neighborhood associations contain bylaws that say that if a majority of homeowners vote in favor; the former policies will be reinstated after the expiration date for X number of years. All of these factors should be in consideration and enquired about prior to selecting an HOA community.

What Is Deed Restricted Community 

A deed-restricted community is a neighborhood governed by a homeowner association (HOA) that enacts rules and regulations limiting the neighborhood’s appearance and usage of the property. The purpose of this type of community is to provide a consistent aesthetic throughout a neighborhood, which helps sustain home values.

Deed-restricted communities charge homeowners a fee to join the community, sometimes monthly, sometimes annually. Each area is unique, and your realtor can assist you in obtaining the facts necessary to make an informed decision regarding your new home. 

However, there are benefits and risks you will face in getting a deed-restricted community, we will be looking at them briefly. 

Benefits Of Deed Restricted Community

Below are some of the benefits that are common to Home Owners Associations. They are as follows: 

#1. Prioritized Maintenance 

When rules are fair and enforcement is aggressive, deed-restricted communities work best. Nobody likes driving through their neighborhood and seeing overgrown grass and trash scattered across lawns. Similarly, property buyers will not pay a top premium to reside in a decaying neighborhood. Deed limitations can help maintain the beauty of your area and prevent property values from dropping.

#2. Community Amenities

Being a resident of a deed-restricted neighborhood entitles you to certain community benefits. Among these attractions are a golf course, a swimming pool, and a community clubhouse. These features, when combined with the aforementioned rules, serve to increase property values and provide additional value for inhabitants.

#3. Cost-Sharing

Additionally, an HOA will assist you in deterring any nuisance activities. Consider an impolite neighbor who decides to operate a dog kennel out of his home. Without an HOA, they will force you to engage your local government in an attempt to remedy the issue; which could involve dealing with bureaucracy and inaction. In comparison, an HOA is typically more responsive because it is made of homeowners in your neighborhood whose homes are also harmed by such nuisances.

The Risks And Consequences Of Living In A Deed-Restricted Community

  1. The most obvious risk associated with purchasing a house in a deed-restricted community is that the restrictions may be more restrictive than useful. This can occur in older communities where the regulations were in existence long ago; newer communities, on the other hand, tend to have fewer severe laws. Due to the nature of deed restrictions, any harsh rules will likely be in effect for future owners as well.
  2. Since a homeowners association is a private group and not a government body, it has the authority to waive some constitutional protections.
  3. Another possibility is that HOA membership dues will increase dramatically. This reduces the neighborhood’s popularity by making it more expensive to live in. In rare instances, hefty HOA dues may effectively price potential buyers out of the neighborhood. Before purchasing, you can check a community’s Declaration of Covenants, Conditions, Restrictions, and Easements (CC&Rs) to discover what annual HOA increases are authorized.
  4. Additionally, you are required to pay community HOA dues and may suffer pretty severe consequences if you do not. The HOA may file a lien on your property, which may result in foreclosure. Yes, your HOA has the potential to seize your property! Additionally, if you become behind on your payments, they may garnish your salary. These possible outcomes emphasize the critical nature of ensuring that you can afford the fees not only now, but in the future.

How Purchasing In A Deed-Restricted Community Affects Your Home Purchasing Process

Purchasing a property in a deed-restricted community might affect your home purchasing process in several ways. Let us go over them.

The clearest restriction is on your ability to do whatever you want with your property. Ideally, you will be aware of those limits well in advance, but if you learn about a deed restriction during the title search, any surprises may prevent you from purchasing the home you would have loved if not for a specific HOA restriction on hedge height, for example.

The second impediment is financial. If deed limitations restrict who you can sell the property to, you may have difficulty obtaining a mortgage. This is because if you are unable to make payments, a deed limitation could pose complications. If you do default, the mortgage lender is in needs to sell the home. They will vehemently oppose any restrictions on who may move in.

For instance, certain mortgage lenders will not finance residences that contain the following deed restrictions:

  1. Anything relating to title transfer restrictions may influence the decision of a mortgage lender.
  2. Provisions in the title granting the first right of refusal may affect a decision. A title provision means that nothing will be in a fund where the association or another organization has the first choice to purchase the property.
  3. Lenders may reject properties located on a Hawaiian Homeland development.
  4. Properties that require you to be a member of a certain religious order may be ineligible.
  5. Lenders may be unwilling or unable to finance homes in locations designated exclusively for low-to-moderate-income individuals. These homes may be classified as affordable housing, Section 8 housing, or inclusionary zoning.

Deed Restricted Community In Florida

A deed-restricted neighborhood is one in which restrictions are defined and enforced by a homeowners’ association. These guidelines may govern the appearance of a neighborhood or community as well as the use of its properties. In an ideal world, the HOA’s role is to keep the area in good condition, which helps keep house values where they should be. Each deed-restricted HOA community has its own set of rules and restrictions, though many areas in Florida are administered by an HOA.

What Types Of Deed Restrictions Are Available In Florida?

Each town has its own set of deed limitations. Deed limitations apply to a variety of assets, including vacant lots and homesites, neighborhoods containing for-sale homes, and prefabricated home communities. In Florida, common deed limitations include the following:

  1. Total number of pets that you are permitted to keep in your residence
  2. Colors of paint
  3. Lawn care
  4. The state of repair of the community’s housing stock
  5. What you can do with your property
  6. Whether or not you can rent your property
  7. Regulations governing the usage of communal places

Since the 1970s, the number of deed-restricted HOA communities in the United States has increased dramatically. Around 6,000 HOA communities existed throughout the United States in the 1970s. Today, the United States is home to nearly 157,000 HOA communities. California, Arizona, and our very own Florida are the states with the fastest increase in HOA communities.

Some individuals prefer the stability that an HOA provides, while others would rather deal with a neighbor who hoards rubbish in their front yard than deal with the hassle of painting their mailbox a specified color.

Is It Expensive To Live In A Deed-Restricted Community?

An HOA’s level of regulation comes at a cost; this cost is really mirroring in your monthly HOA fee. Monthly payments range from $100 to $300 or more. It’s critical to compile these prices upfront to avoid being overly excited about a house that may exceed your budget owing to these fees.

Are HOA Dues Justified?

You may find that the cost of an HOA is well worth it. For one thing, properties in HOA communities typically retain their value better over time, owing to the neighborhood’s overall upkeep. This appeals to buyers because people prefer a clean community over one that is not useful.

When it comes time to sell your home, the appearance of your neighbor’s house is significant. If they pack the house next door with rubbish, painted an odd color, or are just falling apart, there is nothing you can do about it; but it will affect the value of your property. On the other hand, if you reside in an HOA community, this type of neglect is against the rules and will not occur. If it does, you can address it immediately. This keeps you from becoming stranded between neighbors who neglect their homes, so lowering the value of your home.

Is A Deed-Restricted Community Right For You? 

Before closing on a house in a deed-restricted neighborhood in Florida, you should always get and thoroughly review a copy of the community restrictions. You might even want to go a step further and contact a real estate attorney before signing any dot lines.

Conclusions

If you’re considering relocating to a deed-restricted community, check with existing residents about their experiences with the homeowners association. Do they believe that enforcing the limitations is just? Do you know the HOA for being overbearing? These are critical inquiries that could provide useful information.

FAQ

How do I get around a deed restriction?

Before closing on a house in a deed-restricted neighborhood, you should always get and thoroughly review a copy of the community restrictions. You might even want to go a step further and contact a real estate attorney before signing any dot lines.

What does a deed-restricted community mean in Florida?

In an ideal world, the HOA’s role is to keep the area in good condition, which helps keep house values where they should be. Each deed-restricted HOA community has its own set of rules and restrictions, though many areas in Florida are administered by an HOA.

How long do deed restrictions last in Florida?

In Florida, once the deed reaches the 30-year mark, the group is powerless to enforce laws or even collect monthly dues. While some communities continue to pay dues and adhere to traditional business practices, there is no way to guarantee that future inhabitants would do the same.

Who enforces deed restrictions in Florida?

A deed-restricted community in Florida is a neighborhood governed by a homeowner association (HOA) that enacts rules and regulations limiting the neighborhood’s appearance and usage of the property. The purpose of this type of community is to provide a consistent aesthetic throughout a neighborhood, which helps sustain home values.

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