BROKERS OPINION ON PROTECTIVE COVENANTS ~ CCR’S

While we have no attorney on staff, and these are not an attorney’s opinion and are we are not giving legal advice… we do have opinions based on our experience. Here it is…

CCR’s aka… covenants, conditions and restrictions, protective covenants, deed restrictions, restrictions, use encumbrances, subdivision rules, lot restrictions,

As with title commitments, (click here) , CCR’s are a predetermined set of guidelines to live by if you purchase a property with them attached. They run with the land, meaning they transfer from owner to owner and are attached to the land and any subsequent sales. They do not need to be filed at the courthouse to be valid, filing does not make something legal, the preparation and endorsements or the document do. Filing is “constructive notice, or notice to public”. When documents are not filed it creates it’s own set of problems in the purchase and transfers of sale, so… if you have it, file it. Give notice.

What are CCR’s?

Covenants, Conditions and Restrictions is the common name, but can have many less “scary” terms. We refer to them as CCR’s, this usually incites a question and allows for explanation.

In brief,

Restrictive covenants are rules placed on a subdivision or on development that restrict or govern the people that live inside of that development. The purpose is to try and maintain property values as well as have a uniform appearance to the public. They can be very restrictive or very minimally restrictive. So, use this as a tool for evaluating the property for your use rather than an initial filter of criteria. They have a significant and substantial impact on the use and value of property; yet they are often ignored entirely or not considered until the end of the due diligence period before purchasing the property. Whether you are purchasing property for residential use or for commercial use, it is important to know, first, what restrictions and obligations are tied to the land you are about to purchase, and second, the consequences to you, if you don’t, or can’t, comply with those restrictions and obligations.

I have personal experience and professional experience with covenants, key points to consider and brief explanation of these keys:

1. Are you willing to comply with them.      Pretty self explanatory. Thinking you will just do what you want… then you should be ready to be not favored well by your neighbors and civil action may occur.

2. Have existing homes complied with them.      Indicates enforcement. Caution that you should consider are you ready for anything. If it is no manufactured, and there are manufactured, are you willing to accept lesser value in resale because someone moved a 1964 single wide in next to your 3000 sf log cabin? Are you prepared to have someone raise pigs because someone else has chickens?

3. What are you willing to do to enforce them.      Aside from your HOA, if established, your ability to “stop” someone from an action “against” the CCR’s, is civil. Meaning there is no agency or branch of government that you can call to stop someone from these actions, if you and your neighbors can not stop them. This of course does not apply to illegal actions.

4. How big is the “population” being governed.      Most rules are governed by HOA, by election of landowners. Rules are changed or modified by a majority of some percentage or majority. Some rules are never to be changed, such as further subdivision.

5. Is it inside a municipality or town.      CCR’s inside of small governing bodies, “in town” are not governed by the town. Some towns do not accept those CCR’s as consideration for ordinances. However, most towns have rules in place to protect the citizens inside of town. Example, the town our office is in, Hulett, they have rather comprehensive zoning regulations in place. They are equally or more strict than the few CCR’s I have seen on subdivisions inside town. This does not negate or render CCR’s worthless. HOA’s, if in place, can enforce the CCR’s, but the Town will enforce zoning regs. While it is a rural town, it is still high density, in specific, the agricultural life co-mingling with high density, should be enforced. If purchasing inside ANY town and you want to have livestock or farm animals, you should refer to the CCR’s and the town/city zoning. My own opinion… farm animals belong on the farm. Residential should be peaceful (to all senses) residential, commercial belongs along the main highway until saturation.

6. Does it have an active HOA. Home Owners Association.      This is your “local” landowner first string enforcement of the CCR’s.

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