Restrictive Covenants
What You Should Know
- Restrictive Covenants are agreements or conditions that restrict, limit or prohibit certain actions on a property, or some uses of the property by the owner or tenant.
- A restrictive covenant can restrict anything from the height of the building to the colour of the roof. It can even limit the use of the property, for example, it may limit you from renting the property.
- A title search can reveal the applicable restrictive covenants on a property.
- Restrictive covenants are legally binding and not following them can incur penalties.
- Homeowners Associations (HOAs) often use restrictive covenants for the purpose of regulation of communities.
What is a Restrictive Covenant?
Restrictive covenants, often called negative covenants, are legally binding agreements that restrict what the owner of a property can do on the land. The purpose of these covenants is often to control and regulate development (by developers or municipalities), and to enforce standards and uniformity across a development (usually by HOAs). Restrictive covenants on your property can also protect the interests of your neighbours, for example, a covenant may not allow you to build structures that block the views from your neighbour’s property. Not following these restrictions can result in legal consequences, penalties or fines.
Restrictive covenants operate outside and are in addition to the municipal regulations but can be used by municipalities to ensure that new buildings comply with certain norms. A restrictive covenant ‘runs with the land’ which means that any future buyer of the property would have to comply with the restrictions in place. It is therefore important to know the applicable covenants before buying a property, so that the buyer is aware of all the restrictions that may restrict their future intended use, or custom building or modification plans.
Planned communities often use restrictive covenants as a means of setting rules and regulations for the community. The covenants are documented in a legal document called the CC&R (Covenants, conditions and restrictions).
Types of Restrictive Covenants
The common types of covenants one may encounter when buying a property are:
- Use Restrictions:
One of the most common restrictions is how a property can be used. There may be restrictions on the residential or commercial use of a property even when the land use rules permit the same. For example, a restrictive covenant may restrict you from running a business from your house and you may be fined if you are found to be doing so. - Lease Restrictions:
If a buyer intends to buy a particular home with the intention of renting or leasing all or part of it, they must first check if any restrictive covenants might prohibit them from doing so. Short-term renting restrictions are fairly common in some neighbourhoods where the residents want to prevent any nuisance because of the renters. - Maintenance Requirements:
Restrictive covenants may also require you to do certain things. For example, a restrictive covenant may require you to mow your lawn regularly, or repair and maintain the exterior of your property to conform to the neighbourhood standards. - Architectural Restrictions:
These kinds of covenants restrict the size or appearance of your building and the purpose is usually to maintain a uniform look across a neighbourhood. These could include restrictions on the colour of the buildings and roofs, restrictions of the type and height of fencing, or even restrictions regarding the general design. Proposed renovations may have to pass a review by an authority.
History of Restrictive Covenants
Historically, restrictive covenants were often used to control the demographics of a region. There has been a long-standing history of racially driven covenants that would restrict people of certain races from buying property in a particular neighbourhood.
An example of such a restrictive covenant in Ontario is Westdale. It is one of the first planned communities in Canada, located just outside Hamilton, which was envisioned and developed to be an upscale white protestant community by the Westdale Properties Limited in the 1920s. After years of legal battle to remove this covenant, it was finally removed by passing of a law in 1950.
How Can Restrictive Covenants be Found?
Restrictive covenants can be found using a title search as they are attached to the title of a property and are registered at the local land titles office. A property survey would also divulge such information.
Restrictive covenants applicable to all properties that are a part of an HOA can be found in the CC&R document as well.
Not Complying with Restrictive Covenants
If you fail to comply with or violate the terms of a restrictive covenant, the covenantee (the person who registered the covenant) or a member of the community who is either following the same applicable covenant or is affected by the non-compliance can take you to court in order to enforce the covenant. A court order may be issued in such a case that requires you to fix the problem and you may also be fined for not complying at first.
Pros and Cons of Restrictive Covenants
Restrictive covenants are commonly used by HOAs (Homeowners’ Associations) to ensure that a certain standard and character is maintained throughout a neighbourhood. For example, a covenant may prohibit you from raising livestock on your property or may restrict you from changing the colour of your roof. Having these restrictions can have many benefits, and also some drawbacks.
| PROS | CONS |
|---|---|
| Upholding property value | Restricted Control Over Property |
| Preserving neighbourhood look | HOA fees |
| Fewer disputes | Repercussions of non-compliance |
Pros -
- Upholding property value:
Restrictive covenants often help retain the value of your property by ensuring proper maintenance. This also means that owners are less likely to have trouble with selling their property due to poorly maintained properties of the neighbours while also easing the worries of potential buyers. - Preserving neighbourhood look:
Restrictive covenants implied by HOAs usually help maintain the properties in a neighbourhood up to a certain standard. This ensures a uniformity and a well-maintained look across the community. - Fewer disputes:
With the community members having to follow the restrictions laid out, there are fewer disputes in the community. In situations where two or more community members have a dispute or conflict, the HOA can mediate to resolve the dispute on the basis of the guidelines laid out in the CC&R.
Cons -
- Restricted control over property:
The homeowners have a limited authority over what they can do on their own property and to use it as per their wish, which can be particularly frustrating for a lot of people. - HOA fees:
HOAs are non-profit organizations that get their funding from monthly fees collected from the homeowners in the community. This fee can vary depending on your location and the services provided by the HOA. - Repercussions of non-compliance:
As the covenants are legally binding, a legal action can be taken against you (the covenanter) by the covenantee, if you violate the restrictions. As a result, you may have to pay heavy fines till the problem is fixed.
Examples of Restrictive Covenants
Some common restrictive covenant examples are:
- Limitations on renting or leasing your property. Some covenants may restrict a certain type of rental such as a short term rental, while some covenants may restrict leasing or renting altogether.
- Limitations on size, height and placement of buildings on a property. This is often aimed at protecting the views of the neighbours.
- Limitations on having pets or certain types of pets. Some covenants may prohibit growing livestock on a property.
- Limitations on building and roof colour.
- Limitations on exterior construction
- Limitations on commercial or business use of a property.
- Limitations on putting up signages, flags and other such elements on your property.
- Requirements to maintain the landscape and exterior, for example fixing broken fences, trimming the trees on the property and mowing the lawn.
- Architectural limitations such as restriction on construction material and look of the building.
- Limitations on building setbacks such as setbacks from a lake.
- Limitations on number and types of vehicles on a property.
- Limitations on having outbuildings, garages, swimming pools or other amenities and facilities on the property.
Removing a Restrictive Covenant
Once a restrictive covenant is applied to a land, it is very difficult to remove it. They are legally binding and thus can incur legal controversies when they conflict with landowners and developers trying to introduce land uses which are otherwise permissible on the property under the land-use regulations.
In some cases, the restrictive covenants in place can be outdated and no longer useful. A landowner or developer can apply to the courts for a restrictive covenant to be removed or amended. It may be possible to remove such covenants if a court order to discharge the covenant is obtained. Another way a covenant can be removed is if all the owners of every affected lot agree to do so, in writing. A lawyer who specializes in such matters can be consulted for the same.