Topic 3: Private Restrictions on Ownership

Deed Restrictions and HOAs

Restrictions on real estate ownership are limitations on what you can and cannot do on private property. There are two types of limitations: public and private. Private encumbrances are non-govermental restrictions. Some examples of these are covenants, conditions, and restrictions. Probably the most common example of private encumbrances are deed restrictions by a neighborhood's HOA (homeowner association).

Below is a link from Yahoo that talks about some of the pros/cons of living in a neighborhood with an HOA and deed restrictions:

http://voices.yahoo.com/advantages-disadvantages-buying-house-an-5251557.html

To sum up the article in short, there are some certain benefits to living in a deed restricted community. The most important benefit is probably the fact that having an HOA helps protect your property value and keeps everything in your neighborhood looking nice and neat. But on the same hand, nothing comes without a price. There are usually HOA dues to be paid and you are limited on what you can do with your property.

Personally, I prefer to have an HOA. I grew up in a neighborhood with an HOA and our property values have never dropped, there's no one causing trouble, and they are not overbearing or strict. I know that when I look at buying my first home I'll definitely check out an HOA and probably seek out a community that does have deed restrictions.

HOA Issues

So I was interested in finding out about some horror stories of HOAs and they are plenty available on line. Below I've attached a link that talks about some of the major issues folks have had with their HOA.

http://gawker.com/5830257/the-horror-of-homeowners-associations

There are plenty of stories about HOAs fining folks, but now foreclosures are becoming much more common with HOAs which is something that was very uncommon in the past. This article talks about some of those stories.

The one story that outraged me was about a military servicemen from Frisco, TX who had his home foreclosed on his home and sold it while he was on his way to Iraq. Their reason? He was $800 behind in his HOA dues.

So as you can see, there are some definite drawbacks to outweigh some of the benefits of having an HOA.