Designing Around Restrictive Covenant Risk When Purchasing Land

[Bryan Hancock]

We have a purchase contract for a lot in Austin that we're planning to build a duplex on. We recently received a title commitment and Schedule B shows an exception for some restrictive covenants from 1948. These were recently amended in 2001 to include the following paragraph:

"All single family homes shall be constructed on site of materials similar to those of existing homes. (emphasis mine) No prefabricated or modular homes shall be moved in and set on the lots. All driveways should be of concrete."

I also read through a number of legal articles, paper, the Texas Property Code, etc. and I can't find anything specifically relating to how we gain an interpretation of this from someone empowered to do so. We are specifically interested in what "similar to those of existing homes" means and whether or not this even applies if we're building a condo and not a single family property.

There is a neighborhood representative named in the amendment that is authorized to represent the property owners. We contacted her this evening and she claims that she doesn't remember even signing this form and apparently she is no longer involved in any meetings they may have. She is elderly and sounded not of sound mind.

So here are the questions:

1. Is there any way to design around this risk with title insurance? I know it is listed as an exception now and the TDI site says this should be explicitly stated as a custom when the company intends to except this risk. Can I buy insurance somehow? Any ideas?

2. Assuming we can't do item 1 what would be the next best option? Get a legal opinion and try to pin the risk to an attorney? I'm not sure an attorney would want the risk

3. How do I find out who is empowered to interpret the clause above that was inserted as an amendment? Even if I approached all of the folks cited in the amendment or went door-to-door how would I know who is authorized to put something in writing if the lady that is the representative is not of sound mind?

Ideally I would like to either get insurance or a letter from the authorized neighborhood representative so that it can be recorded.

Any advice or words of wisdom? I'm calling our attorney tomorrow, but I wanted to see if anyone has experience with this or could think of things to try out.

[Joel Owens]

I don't know.

Couldn't the old covenant be deemed unenforceable as it is not descriptive enough to be applied??

I am definitely interested to see what your attorney says about this.

"similar to those of existing homes"

I would think maybe the covenant or parts of it would be voided because it wasn't set up correctly and is too vague to be enforceable.

I am no expert on it but I want to hear the outcome. Real estate - There is always more to learn.