Frequently Asked Questions

Covenants, Conditions and Restrictions (CC&Rs) are rules and property limitations of a planned community neighborhood or subdivision. Typically imposed by builders, developers, property owners, neighborhood associations or HOAs, they’re designed to protect property values in the community and tell you what you can and can’t do while living in your home or condominium complex.

CC&Rs are occasionally referred to as “bylaws.”

CC&R: Covenants, Conditions And Restrictions Explained

If you’re considering buying a house that’s part of a planned community, there are things you need to be aware of beyond just the homeowners association (HOA) fees. These include the declaration of Covenants, Conditions and Restrictions (CC&R).

 

CC&Rs are legal terms that refer to rules of a certain planned community that you must live by to reside in that community. It’s important to know what CC&Rs are and how they can impact your day-to-day life before you move into a place that has them. Not knowing the requirements and limitations could negatively impact your lifestyle and also your wallet.

 

Read on to learn whether living in a place with CC&Rs is right for you.

 

What Are CC&Rs In Real Estate?

Covenants, Conditions and Restrictions (CC&Rs) are rules and property limitations of a planned community neighborhood. Typically imposed by builders, developers, property owners, neighborhood associations or HOAs, they’re designed to protect property values in the community and tell you what you can and can’t do while living in your home or condominium complex.

 

CC&Rs are occasionally referred to as “bylaws.”

 

What Is A Declaration Of Covenants, Conditions And Restrictions?

A Declaration of CC&R is the legal document that lists all rules and guidelines for the community that you must agree to live by in exchange for living there. It’s critical to find out if the real property you’re considering buying has a Declaration of CC&R and that you understand all the provisions you’ll be required to uphold before moving in.

 

When you close on your home, you’ll sign a document stating you read the CC&Rs and agree to uphold them.

 

When Is A Declaration Of CC&R Used?

Planned, covenanted communities, especially if they have a homeowners association (HOA), often have a Declaration of CC&R in place. In addition to helping to maintain the property value in the community, they are also imposed to help protect against annoyances that would impede the quality of life for other residents in the community.

 

Examples Of Common CC&R Provisions

Not to be confused with zoning ordinances, which are dictated by government entities, CC&R provisions are agreements between private parties and are entered into voluntarily. Because of this, they can be more restrictive.

 

Here are a few common examples you may come across in your community’s Covenants, Conditions and Restrictions – and yes, some may seem a tad controversial.

 

Exterior aesthetics. You may be required to use certain shingles, paint colors and trim on the exterior of your house. This may be to keep the overall aesthetic of the neighborhood cohesive and consistent.

 

Interior aesthetics. You may need to get approval on interior decorations before installing them. That could be a bigger design change, like new tile or hardwood flooring to something as seemingly trivial as a new paint color, wallpaper or window treatment.

 

Landscaping. You may be required to keep your lawn well-manicured, weed-free and at a certain height. You might not be permitted to plant certain bushes or trees because of their height or type.

 

Fencing. You may not be allowed to fence in your yard or may be required to use a certain type of fencing at a certain height.

 

Vehicle parking. The community may have designated parking for residents and guests. Residents may be required to park their cars in their garages or only allowed a certain number of cars.

 

Pets. The community may have breed, size or weight restrictions on dogs and cats and may not allow certain types of animals in general.

 

Business. You may not be allowed to conduct certain business in your home if it is seen as a disruption to your neighborhood or nuisance to your neighbors.

 

Parties. The community may have restrictions on parties, including where and when you can have them.

 

Remember, too, that your neighbors have also agreed to abide by these rules. So if you’re particularly concerned about noise levels or parking or even the look of your neighborhood, living in a planned community with CC&Rs may work out well for you.

 

Penalties For Violating CC&Rs

CC&Rs are legal, binding documents – providing that all covenants are legal. There can be restrictions that are against the law (for example, ones that violate the Fair Housing Act) that may exist that are typically invalidated by state or federal laws.

 

In most cases, the CC&R is legal and binding. As stated before, upon closing on your home, you’ll be asked to sign a document stating that you’ve read the CC&R and you agree to it. Once you sign that document, you’re bound to the contract and can face penalties for violating the agreement.

 

Who Enforces CC&Rs?

How CC&Rs are enforced and who can enforce them will be spelled out in the Declaration of CC&R. This governing document typically allows the homeowners association or neighborhood association to enforce CC&Rs and dole out the penalties.

 

What Are Some Examples Of CC&R Penalties?

There are a few ways someone could be penalized for not abiding by their community’s CC&Rs. Here are some examples:

 

Verbal or written notices. One of the first steps is usually a verbal or written notice from the association stating you have violated a CC&R and requesting you fix the problem immediately.

 

Fines. You could be subject to a fine for not abiding by the CC&R. This could be a one-time fine, a charge for each day the issue is not resolved or a charge for the cost of labor and materials for the association to come and fix the problem itself.

 

Loss of community privileges. Many associations have common areas and amenities that all residents may use, such as pools, gyms and clubhouses. If you do not comply with the association’s CC&Rs, it could punish you by suspending your privileges to use such facilities for a certain amount of time or until the issue is resolved.

 

Lawsuits. If you refuse to act, the association could file a lawsuit and request the court to require you to take the necessary steps to resolve the issue. If this happens, you could be on the hook for any legal fees incurred by the HOA.

 

Liens or foreclosure. If the issue is unpaid dues or fines, the association could put a lien on your property. This could eventually give the association the ability to foreclose on the home.

 

The Bottom Line: Know What You’re Signing Up For

Buying a home is a big decision, and buying a home in a planned or deed restricted community may require a bit more due diligence. Before closing on your loan, you should request a copy of the Declaration of CC&R (you’ll be signing a document saying you read it, after all).

 

You may be able to get this from your real estate agent or REALTOR®, title company or from the association directly. Every potential home buyer should review each rule to make sure they can live under it.

 

For example, if the association doesn’t allow you to rent out a room in your home and you were planning on making extra money by doing so, that home may not be the best choice for you. You may want to review the declaration with a real estate attorney and make sure you get your questions answered.

Anyone considering property ownership will come across the term "real property" in the legalese. But what is real property? Real property defines which rights you possess in relation to your property, and which ones you don't.

 

Let's take a closer look at what you need to know about real property.

 

Real Property, Defined

Breaking down what “real property” means … Property signifies a legal possession, right and use of an object, whether it be tangible or intangible. The Cornell Legal Information Institute defines real property as “not only the face of the earth, but everything of a permanent nature over or under it.

 

Conceptually, it’s easy to think of it as everything you would inherit rights to at the transfer of ownership of a property. For example, house hunters ought to know that the playground set, if freestanding, likely isn’t explicitly bundled with the real property you’re seeking to purchase.

 

Every property deed, lease or other transfer of ownership document will include a property description that explicitly identifies the perimeter of ownership, whether it be marked by a glimmering lakeshore or a fence.

 

Real Estate Vs. Real Property: What’s The Difference?

You may be more familiar with the concept of real estate than the concept of real property and for good reason. Real estate describes the plot of land and the man-made and natural resources attached to it, whereas real property describes an individual’s legal limits and liberties on how to use said real estate.

 

Think of it this way: real estate is tangible land, buildings and garden beds. But real property is a legal concept that attaches a ‘bundle of rights’ to the property. The bundle of rights is nearly universally recognized as:

 

• The right of possession: The title holder owns dominion over the property.
• The right of control: The title holder can make any legal changes to the property, provided they don’t break any covenant rules with a homeowner’s association.
• The right of exclusion: The title holder holds sole permission of entry to the property, excepting warrants to search the property.
• The right of enjoyment: The titleholder is allowed to enjoy their property in any (legal) manner they desire.
• The right of disposition: Once the titleholder maintains full equity in the property (no longer mortgaged), they may transfer ownership however they legally choose.

 

These real property rights are critical to property owners. After all, what’s the point of investing in real estate without the above legal rights?

 

Real Property Vs. Personal Property

If you’re not sure if something is real or personal property, ask yourself this: Is it moveable? If not, it’s likely real property.

 

Let’s say you purchased a lakefront property and decided to build a dock. You bought power tools, some nails, the wood to construct the dock and anything else you might need. As individual pieces, these supplies are your personal property. Once you’ve built the dock and affixed it to the land, it’s no longer moveable and has become real property. Although the dock is real property, any power tools or items not affixed to the land will remain your personal property.

 

Here’s another example. Suppose that you build a shed on the property. Within the shed, you store tools and other personal items. In this case, the shed would be considered real property. However, the items within the shed that can be easily moved, like power tools or boxes of decorations, are considered personal property.

 

The Different Types Of Estates In Real Property

Once you understand what encompasses your real property, it’s important to understand how that property is owned. There are two different major classifications of estates, separated by the duration of ownership: freehold and non-freehold ownership.

 

Here’s a closer look at each.

 

Freehold Estates

Freehold estates allow ownership for an indefinite period and include, but are not limited to, the following:

 

• Fee simple: Simply put, a fee simple ownership is indefinite. Fee simple estates, often confused with fee absolute estates, are the most common and most valuable property type. Owners of fee absolute properties have the right to make any legal changes to the property, to sell the property or transfer ownership to beneficiaries.
• Life estate: Life estate is a special ownership type that’s tied to the life expectancy of the grantee, called a “life tenant.” When the life tenant passes away, the ownership will be transferred to the person of their choosing. During the lifetime of the life tenant, the designated heir is enjoying a future interest ownership.

 

 

When you own a freehold estate, you and your beneficiaries can benefit from the bundles of rights associated with a real property.

 

Nonfreehold Estates

Nonfreehold estates, on the other hand, are property types limited by duration. The most common type is the leasehold. If you’ve ever rented an apartment or a house, you’ve entered into a leasehold agreement, which grants lessees the right to occupy land owned by the lessor.

 

As a lessee, you will have access to the bundle of rights associated with real property for a finite period. For example, let’s say that you rent an apartment. You’ll have legal access to that real property for the duration of your lease. But when the lease is up, those rights revert to the lessor.

 

Examples Of Real Property

Real property is anything affixed to the land in question. Examples of real property include, but are not limited to, the following:

 

• Pond
• Dam
• Shed
• House
• Private road
• Machinery
• Crops
• Basketball court
• Well
• Sewage system
• Dock
• Canals
• Fences
• Landscaping
• Minerals
• Buildings

Each of the real property examples above highlights the fact that real property must be affixed to the land. For example, the fence in your front yard would be considered real property. With that, you can't pack it up to take with you when you go.

 

In most cases, real property includes items that you wouldn’t even think to pack up when you sell the property. For example, let’s say you sell a property with a grove of pecan trees. The grove would be considered real property, which means you can’t take it with you. But how many of us would attempt to move entire trees when selling the property?

 

Keep in mind that real property laws vary from state to state. Some states may designate trees as personal property if their removal does not damage the land. State law also varies when it comes to defining ownership rights to the land under the property. If you plan to make significant changes to the land on a prospective home, it’s wise to consult with a local contractor who is familiar with local laws.

 

The Bottom Line

If considering buying or leasing a property, understanding real property is helpful. With a better understanding of what is considered real property, you’ll be better prepared when choosing a piece of property to purchase. And you’ll have a better grasp on which of the two main types of real property your agreement falls into. It’s either a freehold or nonfreehold estate.