Deed Restrictions: How They Impact Homeowners and Communities

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Your home is your castle. But language in your deed just might keep you from installing a pool, constructing a basement apartment and renting it out, or using a non-neutral shade of paint on your exterior walls. Here is a brief explanation of deed restrictions and how they impact individual homeowners — and entire communities.

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You Have One Job: The Narrow Duty of a Trustee Under a Deed of Trust

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In states using deeds of trust, a trustee is a third party who holds legal title to a property until the homebuyer or commercial developer pays off a loan associated with the parcel—or until the borrower defaults.

When a state’s law allows for deeds of trust as instruments to hold legal title to a property:

  • A lender financing the sale or development can easily exercise the right to foreclose.
  • Foreclosure occurs not through the court, but under the power of sale clause in the deed of trust. (This allowance for non-judicial foreclosure differentiates deeds of trusts from mortgages and some land contracts.)

The main thrust is to lower risk for lenders. Perhaps it’s no wonder that deed of trust states rarely go to bat for a borrower fighting foreclosure.

In this analysis, we’ll look at the trustee’s narrow liability under the deed of trust (not to be confused with a living trust, in which a trustee must comport with exacting fiduciary duties.

We’ll also review a recent case in point, involving a commercial borrower in California.

Finally, we’ll look at the exception that proves the rule: North Carolina.

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How a Lien Affects the Real Estate Title

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Many people have liens on their real estate. Consider your mortgage—a lien that leverages the home as collateral for your mortgage loan. Other liens, too, can show up in a title search. Homeowners should know what kind of liens might attach to a home they already own, or a home they’d like to buy. Here, we review the basics of home liens: types of liens, how they impact the home’s title, how they can lead to foreclosure, and how to remove them.

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How’s Your Property Vested? It Matters as Much as Your Will or Trust

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In estate planning, wills and trusts aren’t everything.

Homeowners who want to be sure the home passes to the desired beneficiary must be sure the property is correctly vested.

Consider a common example. If you co-own property with a right of survivorship, your interest cannot be willed to any other party. The person who survives automatically acquires rights in your interest.

Here, we review this and other consequences of the vesting of real estate.   

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Gig Economy: The Impact on Mortgages and Real Estate Ownership

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Many people hope to buy homes, but struggle to qualify for loans. And this means millions of first-time buyers are deferring their dreams of homeownership until they are in a stronger position to qualify for a mortgage loan.

Today’s renters are renting longer—often not by choice. Half of renters now in their mid 50s and older don’t anticipate buying a home any time soon, according to a survey carried out by Freddie Mac, and 15% don’t think they’ll ever be able to afford one. About a third of renters aged 40-54 don’t anticipate buying soon, with 12% predicting they, too, will never have the financial resources to buy. 

Could at least part of the problem be that the mortgage industry has not adjusted to the way millions of renters work?

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How Real Estate Legal Descriptions and Surveys Work Together

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Real estate transactions involving home sales, deeds, mortgage loans, or deeds of trust all rely on a binding legal description. Mortgage companies, for example, need to be sure that the property is well described—and worth the money they lend to a buyer. 

A properly written legal description sets forth the county and state of the property. It allows a surveyor to identify precise dimensions and correct, historical borderlines.

Indeed, the existing legal description is based on the original survey. And a key task of the current survey is a verification of the accuracy of the property’s legal description. In short, real estate legal descriptions and surveys work together.

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The Land Trust Approach to Affordable Housing

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Rises in property values are great news for city homeowners. On the other side of the coin, they make the home buying journey that much steeper for buyers. Gentrification of near-downtown areas can make personal finances harder to handle, as property taxes go up. This is a constant challenge for U.S. cities.

Urban renewal shouldn’t mean pricing people out of the city. With that thought in mind, residents themselves are writing the next chapter in the story of affordable real estate: lasting affordability. In their quest to create permanently affordable housing, community members and leaders are teaming up to form land trust coalitions.

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The Real Estate Easement: A Guide and Glossary

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An easement is a right to use another’s land for a specific purpose not inconsistent with the landowner’s simultaneous right to hold the same property. The word is derived from the Old French term aisier: to assist. This legal right to use land that is not one’s own can be acquired in several ways: 

  • By grant (owner permission).
  • By prescription (longtime use).
  • By necessity. The law protects access; a property without street access would be practically useless. Thus, the landowner must allow necessary access.

A state’s Statute of Frauds typically requires that transferring any interest in real estate, even a grant of an easement, is only made binding through a signed, written agreement. Yet in some cases an easement is implied. Because the law protects access, a court may find access granted by implication, depending on the facts of a given situation.

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Is a Hurtful Deed Restriction Lurking in Your Deed?

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Restrictive covenants are binding obligations not to do something with your property. These restrictions on real property are normally contained in a deed.

Restrictive covenants originated to keep industry out of residential areas. To this day, homeowners’ associations use deed restrictions in order to make condo owners adhere to established aesthetics or the property’s historical character.

They have also been used as grotesque tools of discrimination.

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