Caution: Nerding out on deed stuff ahead.
So this may be getting a bit into the weeds for most people, but it’s one of those topics that I as a realtor like digging into. It’s a somewhat esoteric element of real estate that makes me nerd out.
On its face, deed restrictions are exactly what they sound like. They are restrictive elements placed into a property’s deed, creating particular limits on how the property can be used or developed in the future.
For example, I am currently helping a buyer purchase a townhouse in North Portland. The townhouse sits on land that was previously owned by a national grocery chain. When the grocery chain sold the land on, they included in the deed that the land could not be used to build a grocery store for a certain amount of years.
In many cases, these restrictions are placed on property buy the developer or a subdivision or community in order to maintain the homogeneity of construction in a neighborhood. These types of restrictions may govern the colors that houses may be painted, the size or style of homes, all the way to what types of landscaping are allowed. The reasoning behind these restrictions is to maintain home values in the community.
It should be noted that deed restrictions aren’t the same as HOA bylaws or rules. HOA bylaws and rules can be changed by a vote of the HOA, and frequently do change. Deed restrictions are much more deeply anchored into a property and may require a judicial ruling to remove.
Deed restrictions run with the land, meaning they persist, even when the property changes hands.
In the past, deed restrictions have contained discriminatory restrictions, barring people from ownership based on their race, religion, national origin, etc. When the Fair Housing Act of 1968 was passed, this served to negate those deed restrictions, and made it illegal to refuse to sell, rent, or negotiate housing on the basis of race, color, national origin, sex, and religion. Subsequently, this was expanded to include disability and familial status. There has been some recent developments in Portland regarding removing these discriminatory restrictions from historical documents. Check out the OregonLive article here for more on that story.
Deed restrictions are part of the recorded information about a property, so people typically only become aware of them when they get into a contract to purchase. As part of the purchase process, a title report is pulled, which contains the publicly recorded information pertaining to a certain property. It is important to review this information with your broker, to be sure that you are aware of any applicable restrictions that may affect your future use of the property.
For the most part, deed restrictions are minimal, as adding layers of developmental roadblock on a piece of property will detract from its future marketability. However, you should always take the time to review any and all restrictions, to be sure that you can accomplish your goals with a piece of property.
In your purchase contract, you should have a number of days for review of these documents, and an opportunity to terminate, if there is some unsatisfactory element.
If you have any questions about deed restrictions, or about purchasing a home in Portland, in general, we would love to hear from you!