BIC TIP #1298: You Cannot Do That! Deed Restrictions vs. Restrictive Covenants

Your buyer found the perfect piece of land for their camper, their workshop, or their future manufactured home. Then someone says, “You cannot do that.” Stephen Long, your Notorious BIC, wants brokers to understand the two big reasons that sentence gets said: restrictive covenants and deed restrictions. Both limit how a property can be used, but they are not the same thing.

Restrictive Covenants: The Community Rulebook

Restrictive covenants are typically part of a community, often one with an HOA. Everyone in that community has to abide by them. They might address things like building materials, fences, parking, rentals, outbuildings, or how a lot can be used.

Restrictive covenants are not frozen in time. They can be amended over time by the HOA through whatever process the governing documents allow. So the rules a buyer reads today could look different down the road.

Deed Restrictions: One Owner’s Rule That Sticks

A deed restriction is different. It can be placed by any person who owns the property at the time they convey it. Stephen gives the example of someone who sells a piece of land and includes a restriction that no mobile homes or campers can be placed on it.

That deed restriction runs with the land, meaning it binds future owners too, and Stephen notes that only the person who placed it can remove it. If a buyer is hoping to get a deed restriction lifted, that is a conversation for a real estate attorney.

One, Both, or Neither

A property may have restrictive covenants. It may have deed restrictions. It may have both, or it may have neither. You do not know until you look, and assuming is how buyers end up owning land they cannot use the way they planned.

Encourage buyers to review covenants and the deed history during due diligence, and to have their attorney examine anything that affects their intended use.

The Practical Takeaway

As a prudent broker, ask your buyer early what they plan to do with the property, then make sure they investigate both restrictive covenants and deed restrictions before due diligence ends. Sellers should know what restrictions apply too. Everyone should know what they are getting into, so nobody hears “You cannot do that” after closing.

This BIC Tip is general real estate education for licensees and consumers, not legal, tax, or financial advice. Rules and forms change, so verify current NCREC rules, MLS rules, and standard forms, and consult a North Carolina attorney or qualified professional about your specific situation. See Disclaimers & Disclosures.