Deed Restrictions Requiring Residency

Our neighborhood organization (not a HOA) has sold some property with a deed restriction requiring that the owner either maintain a business on the property or occupy it as a primary residence. I can't imagine why anyone would agree with this, but a few people did. Is there any court that would force an owner to occupy the property? The organization could claim damages but that would be almost impossible to prove.

There is also a requirement that a local historic review committee (created by the City Historic Review Commission -- it is a City historic district) review any exterior modifications. What if the committee refuses to get involved? How can a deed restriction require a non-related group to do something?

I am hoping that the board of the organization comes to their senses and just sells the remaining property without restrictions and return to its primary function of neighborhood advocacy and promoting development.

Editors' Reply: Requiring owner-occupancy, either by a business or resident, isn't entirely unheard of as a deed restriction.

Let's think for a moment about why a neighborhood association might want to do such a thing. Most likely they were trying to prevent absentee ownership, which sometimes results in less maintenance than on-site ownership.

Our opinion--and the four of us talked about it--is that we think the association is being reasonable.

Now your question also is whether it is enforceable, and if so, how. Enforcement of all deed restrictions belongs in the courts, which is why we don't think they are a great idea.

As to how a judge is going to go about forcing occupancy, you raise a very good point.

Depending on how the deed was constructed, there may be a reversion clause providing for how ownership goes back to the neighborhood association if the deed restriction is not followed.

Let's assume for a moment though that a new owner wants to cease to occupy the property. If the deed restriction causes that new owner to sell the property or to remain an on-site owner, the leaders of the neighborhood association may think that their purpose has been served.

They also may believe that the bluff is worth it. In other words, if they can get buyers to agree to this deed restriction, they may feel that this deed prohibition will fulfill the sound neighborhood purpose of keeping buildings occupied--and occupied by people who have an owner's interest in sound maintenance of the property.

As to the historic commission, again you raise a good point. A deed restriction shouldn't be used to require someone that is not a party to the real estate transaction, or a subsequent owner, to do something.

But your question also explained that the property already is in a historic district, which would imply that the historic commission already has jurisdiction over external modifications. At least an historic district designation usually means at least a review of proposed external changes.

So the deed restriction may well be a senseless duplication of what is already in place. Sometimes owners write deed restrictions to emphasize to new owners the review processes that are required in a particular location.

In the event that your local historic district designation does not require a commission review prior to approval of building permits on the exterior, you are perfectly right that the deed restriction can't really force a public body to do something.

Good luck with this situation. Since you seem annoyed, be sure to express those opinions in a civil and non-threatening manner to the leaders of the neighborhood association. Residents deserve to hold neighborhood leaders accountable for their actions.


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