Sunday, October 21, 2012

Can We Carve Up A Restrictive Covenant? | Bankrate.com

Steve McLindenDear Real Estate Adviser,
Our restrictive covenant states that our land may be subdivided once. Can we section off the middle to create three parcels and still honor the covenant?
-- G. Gundlach

Dear G.,
Possibly. Where there's ambiguity, there's opportunity. And it sounds as though you have a better chance than most to override this little dictum on your deed, which is more commonly referred to as a restrictive covenant.

A restrictive covenant typically imposes a binding set of rules that goes beyond zoning restrictions. The restrictive covenant applies to all homes in a specific neighborhood and to all subsequent owners. Many times, such covenants are placed on the deeds of properties by builders when a subdivision is developed, ostensibly to enhance property values by limiting development and preserving the neighborhood's character.

Aside from preventing properties from being divided, restrictive covenants can dictate the distance a home is set back from the street, outlaw any commercial uses or any additions to the property, limit the kinds of improvements you can make (such as a toolshed or tennis court), and restrict the types of animals you can keep there. They even go so far as to dictate color schemes and roofing materials -- kind of like a silent homeowners association lying in wait for a neighbor to complain (and sue!).

I am curious if the wording on this divide-only-once restriction implies that the property can only be halved or if it simply says it can be subdivided only once. I suspect the former is true. Also, is there a minimum lot size spelled out for post-divide parcels? That would provide some clarity.

Again, any vagueness therein could be your ticket to declaratory and injunctive relief if a judge determines such loose wording makes the covenant unenforceable. Judges have been known to invalidate covenants if other owners have violated them repeatedly or if they're of questionable legality. (Restrictive covenants were once used to keep minorities out of neighborhoods, and such covenants may no longer be enforced.) But don't parcel off the land first then seek relief later. Some judges frown on that.

Other options: Restrictive covenants often have expiration dates such as 25 or 30 years. Also, sometimes there's an "out" for certain barred activities as long as the owner gets the written permission of all other neighborhood residents. Check for these loopholes. Since your plan would increase the neighborhood's density, you might run into resistance.

In some cases, especially when there's some "common good" neighborhood issue involved, the city might file a restrictive covenant amendment to approve the usage change on your behalf. However, this is more prevalent when a residential property is about to be used for commercial or municipal purposes.

Before you go too far with any of these processes, be sure there are no overlying community zoning restrictions or land-preservation issues that would keep you from subdividing in the first place, regardless of what your covenant says. Contact your city or county planning or zoning department to determine what local zoning laws are in force and what the application process for subdividing entails.

Depending on how badly you want to turn one parcel into three and how much money is at stake, you might need legal representation should you need to straight-arm any neighborhood resistance. Good luck!

Source: http://www.bankrate.com/finance/real-estate/carve-up-restrictive-covenant.aspx

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