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Can a restrictive covenant affect your real estate deal?

| Mar 27, 2021 | Real Estate |

Florida real estate investors and developers should understand how restrictive covenants can impact the profitability of a potential purchase. Unlike an easement, which requires a landowner to allow the use of the property for a specific purpose, a restrictive covenant prevents a landowner from using his or her property for a specific purpose.

Review the facts about restrictive covenants in Florida before moving forward on a real estate deal in the state.

Examples of restrictive covenants

Condominium documents and homeowner’s association regulations are the most common types of restrictive covenants. These documents restrict the property owner’s ability to use his or her home and land in a certain way. For example, a restrictive covenant can prohibit the construction of sheds, pools, and other structures; limit fence height; or prevent commercial use of the property. Some HOA guidelines even detail the permitted paint colors for homes in the neighborhood.

Considerations with restrictive covenants

Generally, restrictive covenants apply to the property and remain in effect through changes in ownership. In some instances, the court may no longer honor a restrictive covenant, including cases in which:

  • The restrictions do not benefit any group or individual
  • Landowners have ignored the covenant without penalty
  • The covenant had an expiration date
  • The covenant consists of vague language that prevents valid enforcement
  • Restriction violations result in inconsistent or lax enforcement

In the presence of one of these circumstances, you may be able to successfully challenge a restrictive covenant in court. Before purchasing an investment property, read the deed and all subsidiary documents carefully to detect the presence of a restrictive covenant.