Covenants: Good or Bad for My Property’s Value?

With rural properties – restrictive covenants needn’t be a dealbreaker as covenants can help maintain a property’s value.

During the course of a property search, land buyers – particularly those looking at acreage that’s been subdivided – will almost certainly encounter the concept of restrictive covenants.

Covenants, Conditions and Restrictions

CCRs – for short, are usage requirements (and limitations) placed on a property by a subdivider or developer. Layered atop any municipal zoning regulations, these rules further govern what a property owner can and can’t do with the property. Created to protect property values and owners’ abilities to enjoy their properties, covenants might prohibit certain activities, or set standards for home construction or other improvements.

Understandably, many buyers bristle at the concept of being told how a property can or can’t be used after it’s purchased. Experiences with suburban CCRs might only add to a buyer’s hesitation. In some in-town locales, covenants can be both stringent and wide-ranging; they might require vehicles to be garaged at all times, or have strictly enforced rules regarding yard-maintenance standards, or even the color palette available to a homeowner when painting a house. For many buyers, the concept of purchasing land carries with it a sense of individualism; an overabundance of rules and regulations in the form of covenants can tend to erase a buyer’s enthusiasm.

Are Covenants Still Relevant if I Live in The Countryside?

When it comes to purchasing rural property, though, covenants needn’t be a dealbreaker. Specific provisions can vary greatly, of course, but, in general, covenants applied to rural properties don’t tend to be as restrictive as CCRs one might encounter in a suburban neighborhood. Developers subdividing rural acreage tend to write covenants with the realities of “country” life in mind; they know that rural landowners use their properties in a variety of ways – keeping horses or other livestock, growing crops, constructing various types of outbuildings – and that marketability of land will depend heavily on preserving a buyer’s rights and options.

As a result, covenants on a rural parcel might amount to little more than a short set of regulations that could easily align with a buyer’s intentions. It’s common to find prohibitions on manufactured homes, hog farms, and commercial marijuana cultivation (in locations where it’s otherwise legal at the state level). Often, rural covenants will specify that campers can be used only for short-term recreational purposes, and not as permanent residences. There might be minimum square footage requirements for homes, and home exteriors may need to fall within a broad color category, such as “earth tone.” Properties that are genuinely in ranch country – rather than in exurban locations – will generally have horse/livestock-friendly covenants, and accommodate numerous types of outbuildings.

Alpaca Farms can generate big income, but are they a Nuisance to neighbors?

Covenants will generally include language prohibiting “nuisances”, but might not specifically define what constitutes a nuisance. This leaves the premise open to interpretation, and brings common sense into play. If an activity – an afternoon of target shooting, a bonfire, fireworks – infringes on your neighbors’ enjoyment of their property, including their peace and quiet, it could be defined as a nuisance and become the subject of a complaint to an owners’ association. For many buyers, though, that open-ended “no nuisances” language is a positive, helping set expectations for community norms before property purchases are made.

Are Some Nuisance Neighbors Good for Our Ag Economy?

By contrast, properties without covenants – and bordering other properties without covenants – offer much more freedom to prospective buyers; usage limitations are largely limited to local zoning regulations. However, that freedom comes with obvious risks, particularly when it comes to neighbors’ potential behaviors and their standards for property maintenance. If a neighbor engages in “nuisance” behavior – collecting junked vehicles, erecting shoddy outbuildings, engaging in loud or even dangerous activities – even the most independently minded landowner may suddenly adopt an appreciation for the concept of covenants.