What is a Restrictive Covenant?
When a homeowner purchases a home controlled by an HOA, the homeowner (and the HOA) agrees to and are bound by certain restrictive covenants. These covenants are stated in the governing documents of the HOA⎯specifically, the HOA’s Covenants, Conditions, & Restrictions (“CC&Rs”). Typically (or rather, hopefully), all of the HOA’s governing documents are provided to the home buyer prior to or at closing. Unfortunately, although understandably, because these governing documents are filled with hundreds of pages of legal jargon, the vast majority of homeowners do not care to read these restrictive covenants prior to purchasing their home, nor do they even know where to look.
Here is what you need to know about restrictive covenants:
In essence, a restrictive covenant limits the permissible uses of land within the HOA. In other words, they provide the homeowner with a set of limitations as to what they can and cannot do with their property. These restrictions can be wide ranging; however, most homeowners encounter issues when attempting to modify or alter their property or landscape in some way. Restrictive covenants are treated as contracts between the homeowner and the HOA, and a breach of these covenants can result in one party seeking legal remedy against the other. A 2017 Texas Court of Appeals case described restrictive covenants as such:
“A declaration containing restrictive covenants in a subdivision defines the rights and obligations of property ownership, and the mutual and reciprocal obligation undertaken by all purchasers in a subdivision creates an inherent property interest possessed by each purchaser.”
It is important to note, however, that any restrictive covenant must not violate any Texas statute⎯most importantly, the Texas Property Code⎯or else it is a violation of Texas law. Texas Property Code §§ 202.003 & 202.004 lay the groundwork for the construction and enforcement of restrictive covenants:
Texas Property Code § 203.003
(a) A restrictive covenant shall be liberally construed to give effect to its purposes and intent.
(b) In this subsection, “family home” is a residential home that meets the definition of and requirements applicable to a family home under Chapter 123, Human Resources Code. A dedicatory instrument or restrictive covenant may not be construed to prevent the use of property as a family home. However, any restrictive covenant that applies to property used as a family home shall be liberally construed to give effect to its purposes and intent except to the extent that the construction would restrict the use as a family home.
Texas Property Code § 203.004
(a) An exercise of discretionary authority by a property owners’ association or other representative designated by an owner of real property concerning a restrictive covenant is presumed reasonable unless the court determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory.
(b) A property owners’ association or other representative designated by an owner of real property may initiate, defend, or intervene in litigation or an administrative proceeding affecting the enforcement of a restrictive covenant, or the protection, preservation, or operation of the property covered by the dedicatory instrument.
(c) A court may assess civil damages for the violation of a restrictive covenant in an amount not to exceed $200 for each day of the violation.
Courts tend to hold that the intent of any particular restrictive covenant shall be interpreted by a court if the covenant is disputed. However, courts will hold common law rules favoring the “free and unrestricted use of land” over all else. Furthermore, courts have held that any ambiguity in a covenant must be strictly construed against the party seeking to enforce the covenant.
While this blog is intended to be an overview of restrictive covenants, each situation and covenant is unique and deserves its own analysis as to whether it is binding on a homeowner and whether it complies with Texas law.
Julian Nacol
Nacol Law Firm P.C.
Dallas Texas HOA Attorney
(972) 690-3333
Airbnb / Vrbo : Amendments to Your HOA’s Governing Documents
For those who own property within an HOA, the idea that an HOA can frequently amend its restrictions on the use of property in the community can be disconcerting, especially for those property owners seeking to list their property on Airbnb, Vrbo, or other similar short-term rental sites. With the growth of Airbnb in recent years, there has been a corresponding growth in HOAs restricting the use of property within their communities for short-term rental purposes. This leaves many property owners and potential property owners wondering if an HOA can restrict the use of their property for short-term rental purposes AFTER they have already begun short-term renting them. In short, the answer is yes, and here is why:
As this specific area of law is relatively new, there is little case law to reference to specifically as it regards to Airbnbs, however the little that exists seems to be where courts will lean in the future because of its correspondence to basic legal principles. A great summary of how courts will likely view restrictions on short-term rental property use comes from a 2022 Texas Court of Appeals case—Adlong v. Twin Shores Property Owners Association:
When buyers purchase property subject to a declaration capable of amendment if certain procedures are followed, they are “on notice that the unique form of ownership they acquired when they purchased their property was subject to change through the amendment process, and that they would be bound by properly adopted amendments.” So, property owners that purchase property that is part of a valid existing HOA “know in advance that the rules might change and that they are often subjecting themselves to the will of the majority” in the HOA.
Essentially, the court stated that homeowners should know that buying a home within an HOA could mean that the restrictions governing their property use could change, and in effect they are consenting to those changes. This makes logical sense, too—if each homeowner was only subject to the restrictions that were in place when they moved into the HOA, it would be nearly impossible for an HOA to determine who is subject to which restrictions and would render future amendments virtually meaningless. If an HOA’s restrictions were treated as such, there could exist a theoretical community where half of a community can only paint their homes purple, and another half can paint their homes any color other than purple, simply because one half moved into the community after the other half. While this is a juvenile example, this appears to be Texas courts’ logic when it comes to this issue.
In conclusion, if you are looking to use your property for short-term rental purposes or are looking to buy a property for the same reason, it may be in your interest to look at homes not controlled by an HOA.
- Adlong v. Twin Shores Prop. Owners Ass’n, 2022 Tex. App. LEXIS 1970, *23
Julian Nacol
Nacol Law Firm P.C.
Dallas HOA Attorney
(972) 690-3333
NACOL LAW FIRM P.C.
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization