Forgotten real estate deed restrictions,a powerful tool for those with the foresight and ability to impose them. Deed restrictions are not limited to the CC&R's on a subdivision or HOA. If your selling a property you can impose them on all future owners, provided they do not discriminate against a protected group. Even individuals with in a protected group can be excluded for cause which normally means by name or tightly defined dessication.
Until the late 60's the most common deed restrictions were discriminatory and were negated by law. Deed restrictions remain a powerful tool today. Knowledgeable sellers with an on going interest in the area or even just a mean streak can and do use them when selling.
Deed restrictions are most often added when dividing a property. I'll sell you a part of my land, but you and all future buyers may do nothing to impede or object to my, farming operation, object to noise or odors from my business, block my view, you may never sell to (see above), you may never use it for...
I once negotiated the purchase of a heavily treed commercial site, after three weeks of negotiating the deed restrictions included witch trees could be cut during the seller's life time. I got the property at my price the very old lady who lived directly across the street keep her view. Every one won!
There's a house in a small village west of Paw Paw, Michigan painted barn red for decades now because of deed restrictions imposed by a man the wanted the village to see red.
My partner and I added restrictions on river lots to increase their value.
When developing apartments and commercial buildings I've bought more land than need just to restrict it's use.
My students were nudist,they wanted a private back yard for a pool. A tall fence was no problem, but they were building a two story house if the lots close to them did the same they'd have no privacy. The solution? They bought their lot the optioned the lots adjoining theirs two deep then released them back to the builder including restrictions to single story homes on the adjoining lots and no windows or balconies facing their back yard on the next lots out. Their REALTOR® keep objecting, but came to closing to pick up his check.
Just because you've forgotten real estate deed restrictions doesn't mean they can't be used. I've seen them used to keep homes from being converted to offices or apartments.
Today banks accepting short sales are using to keep the main benefactor of the sale from profiting further from the banks loss! There restrictions are taking two forms, resting the defaulter from ever owing the property again and restricting the new buyer from reselling the property for a stated period of time.
Such restrictions have to be negotiate before the time of sale. A seller can record such restrictions at any time and they would be binding on all future sales by that seller. Of course the current mortgage would not be restricted if the property was foreclosed upon. Banks being asked to settle for less than their full balance can as a condition of settling require all parties to agree to such restrictions as a condition of selling! The parties to such a transaction can not be required to acquiesce! But, the bank is under no oblation to lose money. It's a simple theory if you want the bank's money negotiate with them until everyone's in agreement, pay them off or walk away!
Sincere agents are often so blinded by a sense of entitlement that they're bitterly babbling over a non-problem. IE: NAR's Success With Keeping Banks Out Of Real Estate.......Really?
Such restrictions are a non-problem for most. Sellers involved in a less than arm's link transaction to retain the property but owe less at the banks expense have a problem, no one else does. Investors who along with the sellers and both agents claim to the lien holder they are paying market value, yet have a higher buyer waiting in the wings will no longer have the ability to quickly flip the property. Such restrictions are seen by the banks as forcing you to be honest, and limiting their loss by fraud. If you're honest what is the problem?
Banks are also restricting buyers from renting to the current defaulters. This is again to keep a straw buyer from representing the defaulter.
Forgotten real estate deed restrictions a powerful tool for sellers and the banks. Ever had a problem neighbor? I've had students buy or more often option properties to add deed restrictions against renting the property, resisting garage bands, even tree houses.
There is nothing new in placing restrictions on a sale! Have you ever bought computer soft ware? Have you ever rented a house or apartment. Leased a car?
There is nothing new about placing conditions on a gift! Have you or your kids ever got a scholarship? Have you ever sold a house where Aunt Nell was giving the kids the down payment, not only will she want to approve, but the house must have a guest room! If the bank settles even if it just releases the lien it's a gift to the defaulter no sane person should be surprised about conditions on their generosity.
Comments(8)