Establishing Deed Restrictions as a Developer
If you're a developer, you're likely thinking about what you can do to make your development pleasing to your target market. Often times, particularly in areas with little zoning, deed restrictions can serve the purpose of dictating how your buyers will utilize their property, providing a uniform, pleasing aesthetic for your community. Here are some steps for establishing beneficial deed restrictions:
- Know your market: You should know who your target market is and what kinds of restrictions would make buying in your development more interesting to them. Consider the following:
- Building restrictions: If homeowner's will be building on their own, think of how close houses should sit from the road, what kinds of material are acceptable, and how close structures can sit from property lines.
- Aesthetics of the Lot: Think about what might cause an eyesore for other potential buyers. Consider limiting the number of structures placed on the property, if you will allow recreational vehicles such as campers or boats to be placed on the lot, and how lawns should be maintained. Again, knowing your target market will help in making these decisions
- Attract the Market: As you think about your target market you may want to put limits on structure size, such as the number of allowable bedrooms, or allowable yard activity. If you're aiming for seniors, you might want to make a two-bedroom restriction, while you don't want to restrict swing sets if you're aiming to attract families.
- Think About Infrastructure: Think about your roadways. Private roads and other shared resources such as pools or clubhouses will need to be maintained, and the fees needed to maintain them need to be written into the deed restrictions- either through a homeowner’s fee or association fee's. Don’t make an infrastructure so complex, it makes your development unreasonably priced for your market.
When you decide on the types of restrictions you want to enforce, you will write them into the deed that will be turned over to the owner. To maintain the deed restrictions, you will need to establish a homeowner's association whose authority is recognized in the deed. You may want to control the HOA until the development is complete, at which time you will turn over governance to the development's residents. The restrictions that you've already established will serve as the fundamental guidelines the HOA can use to govern from then on out.
As a developer, you must maintain a balance between protecting your investment and making your potential buyer's happy. Furthermore, you need to make sure that your restrictions fall within the confines of what is legally acceptable. You should always seek legal counsel from construction law attorney when you are considering deed restrictions. They can help you draft, review, and establish the restrictions.
