There are many aspects that you should consider when purchasing a new home. You can look for the neighborhood, amenities, and what renovations or outlook changes you will require to do later. If you choose one that comes under the Homeowners Association’s area, you must know and understand their rules and restrictions. In most cases, you can only buy that house with an HOA agreement.

So what are their limitations, and why covenant in real estate is a big thing? Let's find out as we discuss which real estate covenants are good for you and which can be deal breakers.

What is a Restrictive Covenant in Real Estate?

The restrictive covenant in real estate is a set of rules. You are limited to certain changes and renovations of your property by following these rules. So that it doesn’t disturb the uniformity of the neighborhood. So, if you were to follow the rules set in the covenant in real estate agreement, you have to abide by set colors, landscaping options, etc.

It isn’t just the HOA that implements these rules; it can also be another association. These rules can be from the association, or residents can agree with these rules. Homeowner association covenants aren’t legally binding, but authorities acknowledge them. So if there are any disputes may be challenged in court or legal hearings.

The set of the covenant in real estate is there for good, and you can amend or change it in the homeowners' combined meeting. A regular meeting is a much better option than to take things to court.

Some Examples of Real Estate Covenants

Here, we share a few examples of the covenants that you must adhere to.

• You are not allowed to keep pets or some sort of livestock.
• You cannot run a business without prior approval on a residential plot or earn from any commercial activity.
• Building above the predefined height isn’t allowed.
• You must make sure that your home preserves the scenic integrity of the neighborhood.
• You should not involve yourself in any activity that might endanger the area and property’s heritage.

What is the Purpose of Homeowner Association Covenants?

If a community can agree upon certain rules, it is easier to manage. So, it is not just the outlook of the neighborhood and area but helps protect the interests of the community. With the help of covenants HOA, these are now universal rules that everyone knows and can work together. This will help to make their area a better place to live.

The agreement also helps make sure that those who aren’t in agreement with these regulations will not purchase a property and move in. These individuals will then look somewhere else for a home.

Finally, tenants and homeowners will not be indulged in illegal or commercial activities as they are answerable to the HOA or the community.

What if You Don’t Abide By the Covenant in Real Estate?

As we explained above, these aren’t legally binding, but it is better that you read the CC&R or covenants, conditions, and restrictions so that it doesn’t lead to difficulty. So, if a tenant doesn't agree to these covenants and won't follow them, the HOA has limited authority to make you do it. They can, though, fine you for any such issue. If it still doesn’t improve the situation, the HOA has the right to sue you for your unacceptable behavior.

As the HOA agreement is part of purchasing a house in their area, you still should oblige when accepting the rules. So, in some extreme cases, HOA can put your agreement up for foreclosure if you make many violations and won't pay the fees.

Can You Challenge the Covenant in Real Estate?

Yes, you can because even if there are many beneficial rules are there in these covenants, they still fall under zonal laws and regulations. So, if something makes sense according to the zonal rules, you can challenge the HOA covenant.

You can take up any complaint or dispute if you so desire to the Lands Chamber of the Upper Tribunal. These issues you can then discuss under Section 84 of the Law of Property Act.

Following are a few examples due to which you can challenge the HOA covenant.

• If the covenant is irrelevant and has become obsolete.
• The HOA is stopping you from a reasonable renovation or development of your property.
• As a community member, you aren’t benefiting from some of the covenants and more.

The Pros and Cons of Covenants Hoa

Now that we understand that these covenants are for the betterment of the community and help them manage it, the following are some pros and cons.

Restrictive Covenants – Pros

• Maintain Aesthetics – The similar appearance of the neighborhood allows the outlook and appearance to remain the same and appealing, allowing for an increased desire to live there, thus increasing prices.
• Same Conduct – Every homeowner must follow the same covenant in real estate for the community. This adherence allows us to maintain the reputation of the area.
• Enforcing Agreement – You are bound by the HOA agreement to enforce agreements and can be fined if anyone doesn’t follow. This allows for a secure and safe living area.
• Uniformity – There is no confusion on what needs to be done by everyone, thus minimizing confusion, especially on performing tasks or renovations.
• Management of Disputes – If the CC&R document has clear rules, it makes it more accessible for the community to settle any dispute.

Restrictive Covenants – Cons

• Not Flexible – You have too many rules, including zonal laws restricting you to use your property the way you want to.
• Limited Income Options – As you cannot use your house or building for rental purposes, you cannot make extra income. You cannot also run a business.
• Selective Enforcement – If the stipulations aren’t clear, it can cause massive confusion, and some people can take unfair advantage of the situation.

Final Words

covenant in real estate allows the community to maintain a good standard of living without causing any issues. It also helps the community and area to look beautiful, which will ultimately increase the value of the housing.