Building on your land: top three gotchas in covenants and restrictions

two story home

Most neighborhoods have covenants and restrictions. In most cases, it's a way for the land developer to maintain some control over what's built until they've sold all of the lots. The rules keep someone from building something that devalues the neighborhood.

Unfortunately, sometimes they're written poorly and can backfire, or they can keep a land owner from building a perfectly lovely home just because it doesn't fit some short-sighted requirement. The top three gotchas we've seen in covenants and restrictions are minimum square footage requirements, architectural review committees, and mandated construction methods.

Minimum square footage

Most neighborhoods require a minimum heated and cooled area (living space) for the sake of trying to maintain a minimum comparable value among all the properties. That makes sense to an extent. The problem is when a developer takes it one step further and requires a minimum square footage on the ground floor of a two-story home.

The developer's intent in doing it is probably to make sure nobody builds a home that they think is too boxy, which happens if you stack two stories that are the same square footage. The developers want a little more character in the homes, so they add that restriction to the covenants. If you're planning a two-story home because you like the look or just like the efficiency of construction, watch out for first-story square footage requirements in the covenants before you buy the lot.

Architectural review committees

Sometimes when a developer writes and files the covenants regarding design guidelines, he'll simply refer to an architectural review committee and grant them the authority to write the specific guidelines rather than specifying everything.

Here's why:

Once the first person other than the developer owns a lot, the covenants can only be changed by unanimous consent. If the first person buys and builds a higher-end home and then the market crashes, the developer might decide to lower the minimum square footage in order to continue selling lots. If he has to get permission from the person, or people, who've already built, it's going to be more difficult.

If the covenants don't specify guidelines and instead give the authority to the ARC, the developer probably maintains a majority of ARC votes until most of the lots are sold. The problem is, once the developer has turned over the ARC to the homeowners, they can do whatever they want. If you want to buy the last lot and build your home, you'll be subject to whatever the ARC deems appropriate, and from what I've seen, the requirements get more and more onerous as more homes get built.

Mandated construction methods

I've seen covenants that required a conventional footing and stem wall foundation. The idea is to avoid any pier-and-grade-beam foundations, which typically reveal a foot or so of concrete at ground level before the brick starts. The brick in the conventional stem wall foundation starts at ground level, thus avoiding the ugly exposed concrete.

While a footing and stem wall foundation is an okay foundation, a post-tension slab foundation is far superior. It only costs a little bit more, and it can be fully covered by brick. If you wanted the superior foundation for your new home, which you deserve to choose, you'd be unable to do so in a neighborhood with covenants that require the more conventional foundation.

Before buying a lot, make sure that you read and understand everything in the covenants and restrictions. If there's an ARC, find out who serves on it and what rules they've put in place. You can even make the purchase contract of the lot contingent upon architectural approval of your house plans. Do your homework and get approval before you commit.

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Tim Turner

Written by Tim Turner

A home builder for 18 years, Tim is the "son" in Turner & Son Homes. He is the CEO of the company and partners with his dad, Ben, who has been building since 1964.

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