I found a house that looks like a potentional investment oppurtunity, but it is said to have Deed Restrictions on it. What exactly does that mean?

Thank you John and Toney for helping out here. I've heard of deed restrictions in passing but never really know what they were. Nice job helping the others guys!

The way I define a deed restriction is that they are stips attached to the property deed (whether it's a SFR, multi family, subdivision, etc) that restrict what can be done to the property. The deed restrication may put limits on what use the property can be put to, how much the property can be sold for, etc. The best example of a deed restrication that I could give you is for current Fannie Mae foreclosures. These properties have a deed restrication that states that, for a period of one year from the date of close, you cannot sell the property for more than 120% of what you originally paid for it.

I'll quote a State of Texas Website to answer your question and tell you a bit more about Deed restrictions: Q: What are deed restrictions? Deed restrictions are written agreements that restrict or limit property use or activities in a subdivision. These restrictions appear in the deed records, and are private agreements or contracts between a property buyer and a property seller. Q: Who must abide by deed restrictions? A: In most cases, deed restrictions are binding upon every property owner in a defined neighborhood or subdivision, and all subsequent owners of property in a deed restricted neighborhood or subdivision must abide by the restrictions. Q: How are deed restrictions put in place? A: Deed restrictions are usually created and imposed on lots in a subdivision by the initial developer. At that time, the restrictions are filed in the Deed Records of the County Clerk before the developer sells any lots in the subdivision. Deed restrictions may also be created by residents of a subdivision. [b] Q: Why are deed restrictions important to my subdivision or neighborhood?[/b] A: One of the primary purposes of most deed restrictions is to preserve the residential character of a subdivision or neighborhood by preventing property use for commercial or industrial purposes. This makes deed-restricted neighborhoods desirable for people who wish to live in an area that is completely residential. Where property is not governed by deed restrictions, a property owner may be free to operate a commercial business in a neighborhood regardless of the impact on quality of life for other residents. For persons who wish to operate a business from their homes, deed restrictions may present a legal prohibition that would make that difficult or impossible. Deed restrictions can also help preserve a neighborhood’s appearance by setting standards for property maintenance, remodeling and add-on work to existing structures and other such areas. Make sure to consult your deed restrictions before undertaking any such work on your property to ensure that you are in compliance. Otherwise, you may be forced to remove new construction at your own expense.

Deed Restrictions???Deed Restrictions???

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Deed Restrictions???

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