Types of CC&Rs: Builders' Restrictions

While doing research for home shopping, you came across the term CC&R and wondered what it was. CC&Rs refer to covenants, conditions, and restrictions. CC&Rs are private rules and disclaimers with respect to a neighborhood or housing development. Like municipality zoning laws and building codes, they may limit how land and individual homes may be used or altered, but because they're private, CC&Rs can be more restrictive than local laws and ordinances.

CC&Rs often accompany a home purchase in a condo, townhouse, or co-op. They're less common in single-family dwellings. CC&Rs are enforced by a homeowners association (HOA) which monitors occupancy in the building. Property owners are subject to the deed restrictions in their homes. Common deed restrictions, or restrictive covenants, may prohibit residents from:

• Hanging laundry out to dry outside or in the garage
• Playing loud music past a certain time
• Using certain types of fencing or privacy fences
• Maintaining certain types of pets

This article covers CC&Rs implemented by builders or developers. See CC&R Basics and Creation and Termination of CC&Rs to learn more.

How Builders' Restrictions Are Created

In general, a builder or real estate developer will purchase large parcels of land that they then subdivide into individual lots for home construction. Most developers will build subdivision homes that are fairly similar in appearance. This is done to convey an attractive incentive for would-be purchasers that they will be living in a community of fine homes.

Developers have a vested interest in ensuring that both the character of the neighborhood and the appearance of the subdivision remain attractive. This maintains real property values and attracts homebuyers' real estate agents (realtors). The developers have an interest in doing this at least until:

• They have turned a profit
• Lender construction project loans have been repaid

Developers will often file a declaration of covenants that will be applicable to all parcels of land, or lots, sold within the development. This is often done at the same time that the land plat is being approved for:

• Subdivision
• Development as part of the building permit process

Once the zoning authority approves the development as presented, the covenants, conditions, and restrictions will become binding on any purchaser of land in the subdivision. In other words, these covenants "run with the land" and are recorded against the title. Accordingly, CC&Rs will turn up in property records when homebuyers conduct due diligence. If a title company performs a title search during the sale of a condominium, these land use restrictions will show up.

Builders' Restrictions and the Home Buyer

The important thing to remember is that the builder's covenants are binding on all persons purchasing property within the builder's subdivision. Such covenants are made of record in the county or city where the land is located. Because they're recorded, they will be referred to in any deed transferring land to a purchaser. Language in a deed most often refers to the conveyance of land "subject to any existing CC&Rs and easements of record." Other similar wording may be used.

Specific restrictions and covenants are sometimes not enumerated in the deed itself, but will be contained in a separate document referred to in the deed. It is important that a prospective purchaser inquire about and review any such separate documents containing these covenants prior to purchasing the land in question. 

Like local government laws, there are no expiration dates on CC&R rules unless they're voted out. Therefore, a homeowner is likely stuck with them unless they manage to shake up their HOA.

If you're struggling with a builder restriction or need assistance interpreting restrictive covenants, contact a real estate attorney. They may be able to help you fight an illegal CC&R or an unruly HOA attempting to enforce it.