Chapter 5: Privately-Imposed Land Use Controls

The city wants Julie's property to build a municipal park. An appraiser values her property at $150,000. She's willing to sell for $200,000. How much is Julie most likely to get for her property?

$150,000 - The city can exert its power of eminent domain and pay Julie just compensation for her property, which typically is its fair market value. She can take the case to court if she chooses, but only to determine just compensation, not whether the city has the right to take her property.

In the context of land use, a covenant is legally enforceable, and it defines ways that land may be used. Paint colors for doors and shutters are examples of items that may be included in a subdivision's CC&Rs. Other terms you may hear that have the same meaning are ___________

CC&Rs, restrictions, restrictive covenants, equitable servitude, and protective covenants.

Provisions in a deed or other document that make the parties' rights and obligations dependent on the occurrence or non-occurrence of some event.

Conditions

__________ buyers must agree to a declaration of ______________, ____________ and __________, known as ___________, to maintain a uniform character and value of the properties. May appear in the deed itself or in a separate document that is referenced by the deed; either way, they should be recorded in the public records.

Condominium /covenants, conditions, and restrictions / CC&Rs

Common-interest communities, most of which are residential, usually fall into two legal categories:

Condominium developments Planned communities

Promises or guarantees in a deed or other document.

Covenant

One reason a broker should encourage a buyer to have a title search performed is to discover any

Covenants

Which term is NOT related to private land-use restrictions?

Covenants, CC&Rs, restrictions, restrictive covenants, equitable servitude, and protective covenants are all terms that may relate to private land-use restrictions.

Ten years ago, Daniel bought a 20-acre farm and orchard. He put up a small building from which to sell produce. Now the area is zoned residential and many exclusive homes are built. Daniel's farm stop is very popular and brings a lot of traffic to the area. If the neighbors sue to have the farm stand removed, why might the court rule in Daniel's favor?

Daniel's farm stop is a nonconforming use and is grandfathered into the zoning.

The CC&Rs for a new subdivision are listed in a recorded __________________, which gives each owner the right to enforce the CC&Rs.

Declaration of Covenants, Conditions, and Restrictions (Declaration),

Limitations placed in a deed by a grantor that restrict the way in which the land may be used, improved, or maintained.

Deed Restriction

___________ or ________________, are limitations about how land can be used that are placed by a private grantor.The restrictions run with the land and are enforceable only if they have been recorded.Deed restrictions may not violate the law in any way and cannot be so restrictive as to prevent the free and reasonable transfer of the property.They may be terminated by setting a termination date, releasing the owner, abandoning the property, or changing the property and/or owner circumstances.

Deed restrictions, / restrictive covenants

While a real estate licensee is not expected to be an expert on the zoning ordinances in a particular community, there is a due diligence responsibility to be aware of potential red flags. For example:

Does a prospective buyer intend to use the property in a way that is different from its current use? If so, would that intended use conform with current zoning requirements? Are there pending or proposed changes to local zoning ordinances that might impact the use of the property and, therefore, affect its value?

do or don't?: Provide any representation about a property's zoning or permitted land use without verifying the property's zoning and, if appropriate, flood hazard area maps and any restrictive covenants affecting the property.

Don't

Types of restrictions often imposed by CC&Rs include:

Every owner in the subdivision is to pay annual dues that support insurance and maintenance of the common areas List of approved exterior colors for houses within the subdivision Prohibiting outdoor antennas or satellite dishes Maintenance standards for outdoor landscaping Prohibiting the parking of motor homes on the subdivision's streets or driveways or restricting how long (e.g., 72 hours) such vehicles can be parked Garage doors may not be left open for lengthy periods of time Prohibiting auto repairs on the subdivision's streets or driveways Requiring that backyards be surrounded by a six-foot solid fence

The ____________________ creates flood maps for every U.S. city and county with minimum construction requirements for local building codes.

Federal Emergency Management Agency (FEMA)

The loss of a right through undue delay or a failure to assert.

Laches

Lucy is getting ready to split the family farm up into 20 individual lots. Which would NOT be an acceptable deed restriction?

Owners may not sell the property to anyone from South America. Wrong answers: Owners may not install swimming pools./Houses must be at least 50 feet from the road./Houses must be painted white or grey.

A detailed survey map of a subdivision, recorded in the county where the land is located. Subdivided property is often called platted property. Also called a ______________.

Plat / Plat Map

A restriction imposed on property by a previous owner or the subdivision developer; a restrictive covenant or a condition in a deed.

Private Restriction

Joe dies intestate and leaves no heirs behind. This means that his property reverts to the state through

Property of someone who dies intestate (without a will) and leaves no heirs reverts to the state through the process of escheat, which protects the government's interest in collecting property tax. wrong answers: eminent domain. / condemnation. / appropriation.

Which is NOT a licensee's responsibility regarding verification of land use?

Providing an opinion about permitted land uses for a specific property. Wrong answers: Keeping buyers informed about land use restrictions. / Informing prospective buyers that zoning ordinances, deed restrictions, or restrictive covenants may exist. / Being aware of planned major highway or public transportation changes.

be extremely cautious not to make any misrepresentations. You must never give false information, whether it is intentional or through negligence. This is no less true regarding land-use restrictions. One of the risks is that legal disputes could arise. Another is that the broker could be subject to disciplinary action by the _________

Real Estate Commission

A restriction on real property use imposed by a former owner; promise to do or not do an act relating to real property; usually an owner's promise to not use property in a particular way. May or may not run with the land.

Restrictive Covenant

a broker does not need to conduct a search of public records for restrictive covenants, perform a title search, advise buyers on permitted or prohibited land use, or interpret covenants, since those are legal matters, he does have a duty to disclose material facts related to land use. Examples include:

Restrictive covenants Zoning ordinances Association dues and assessments

Restrictive covenants may be terminated in a number of ways,

Setting a termination date Releasing the owner from the covenant Abandoning the property Changing the circumstances of the property and/or the owner

Subdivision regulations are state and local laws regulating how land may be subdivided. They govern the following

Size of the lots in a subdivision Location and grading of streets and sidewalks Easements for sewer, water lines, and other utilities Amount of open space and recreational areas

___________ are state and local laws regulating how land may be subdivided.

Subdivision regulations

Robin is interested in purchasing a lot that has four acres of unimproved land. Her broker recommended that she have a perc test done. Which option is a possible result of this test?

Suitable - Based on the results of the perc (soil suitability) test, a property will be denoted as one of the following: Suitable, provisionally suitable, or unsuitable. wrong answers: Satisfactory / Adequate / Sufficient

A restraint on alienation is an attempt in a deed or will to prevent the sale or other transfer of real property. Give an example:

Therefore, a deed restriction prohibiting "For Sale" signs is illegal, but the signs may be limited to a reasonable size.

Which of the following statements regarding deed restrictions is FALSE?

They terminate upon the death of the grantor.

Which of these statements is NOT true regarding deed restrictions?

They terminate upon the death of the grantor. Wrong answers: They are frequently encountered in residential subdivisions. / They are also called restrictive covenants. / Once established they run with the land and are limitations on the use of future grantees.

Any deed restriction that is reasonable and lawful can generally be enforced by the grantor or other property owners under the same restriction by seeking a court injunction to stop or remove the violation.

True

Be able to recognize signs of flooding on a property or when a property's location may make it susceptible to flooding; assist the parties with locating and reviewing the flood hazard area maps (FEMA maps) or checking with the local planning office to determine if there is any potential flooding problem.

True

Be prepared to inform prospective buyers that zoning ordinances, deed restrictions, or restrictive covenants may exist and that they should investigate before making a purchase decision.

True

Brokers violate license law when they make incorrect statements about permitted land use under either zoning ordinances or restrictive covenants, whether those statements are made willfully or negligently.

True

CC&Rs restrict, or limit, the use or activities that may take place on a property in a subdivision and are binding upon every owner in the subdivision. All future owners must follow the rules and regulations when they purchase property in deed-restricted areas.

True

Deed restrictions and covenants are created in the deed at the time of sale or in the general plan of a subdivision by the developer. Deed restrictions are usually placed on property to assure that land use is consistent and uniform within a certain area.

True

Deed restrictions can go much farther in controlling land uses than government regulations. They are included in the deed to maintain standards in a subdivision and establish aesthetic requirements thought to enhance the neighborhood. Common restrictions include minimum house sizes, setback lines, type of fences (if allowed), pet restrictions, and approved exterior paint colors.

True

Example. An example of a deed restriction is the reservation of mineral rights by a previous owner. This type of restriction must be carefully reviewed because it can include the right of surface entry. The holder of the mineral rights can mine for those minerals at any time without regard to any improvements on the property. That situation would make building on the property extremely difficult.

True

Expressing an opinion about permitted land uses for a specific property is not acceptable because this constitutes the illegal practice of law with out a law license. Always recommend that your client seek expert legal advice if there is any ambiguity or question at all about the interpretation of an ordinance or covenant

True

For example, a subdivision has a covenant that forbids fences higher than four feet. However, over the years, residents have been quietly ignoring this restriction, and it's very common to see six-foot fences in the community. A homeowner would probably be safe in assuming that he too could put up a six-foot fence since no action was ever taken to prevent others from putting up a fence higher than allowed.

True

Large-scale subdivisions require approval by the city planning commission and submission of both a preliminary plat and final plat of the subdivision

True

Let's say that Tiffany Lakes is a subdivision in an area that falls under a municipal zoning ordinance that allows property owners to put up fences. The subdivision is also under restrictive or protective covenants, and these restrictive covenants dictate that property owners in the subdivision may not put up fences. Because the restrictive or protective covenants impose greater restrictions than the municipal zoning, the subdivision covenants control and the property owners are prohibited from putting up fences. Nevertheless, if a restrictive or protective covenant is contrary to laws and public policy, it is not enforceable.

True

Licensees' Responsibilities Regarding Land Use - For example, do you know whether local zoning ordinances will allow your buyer client to run a business out of that house she wants to purchase? Might that information be important to her? What if another buyer client intends to convert a single-family home into a duplex? Would that be allowable under the local zoning ordinances? And if so, would it be allowable in his particular subdivision?

True

Never interpret zoning, deed restrictions, or any other restrictive covenants.

True

Private restrictions placed by a present or past owner affect only a specific property or development. A person who buys a property that has private restrictions voluntarily accepts the restrictions, because, unlike governmental restrictions, the purchaser can choose to avoid them by buying something else.

True

Recognize red flag situations regarding land use issues; recognize and take appropriate action with regard to potential problems with restrictive covenants—this is particularly important.

True

Recommend that the interested parties verify the permitted land uses.

True

Remember that property use limitation is considered a material fact (part of a broker's duty of reasonable care).

True

Residential Property Disclosure Statement was amended in 2012 to include disclosures related to these associations. Although it is required that sellers provide this form to buyers in most cases, when selling one-to-four family dwellings, the owner is not required to disclose whether the property is under the regulation of a homeowners' association. An alternative form is available, however: Form 2A12-T, the Owners' Association Disclosure and Condominium Resale Statement Addendum

True

Restrictive covenants run with the land only if they touch and concern the land. They must relate to the use, maintenance, or improvement of the real property. A covenant that prohibits a property owner from smoking obviously cannot run with the land.

True

Restrictive covenants that become illegal after they were written automatically terminate.

True

Subdivision covenants, conditions, and restrictions virtually never require the grantee to forfeit the title to the property

True

The duties and powers of the association should be detailed in a homeowners association agreement, which must be signed by the property owners in the subdivision

True

These restrictions are appurtenant to the real property and thus "run with the land." They do not terminate upon the death of the grantor or grantee. A deed restriction may be terminated only if it is in violation of a discriminatory act or impinges upon the owner's bundle of rights. Otherwise, a deed restriction stays with the property for the life of the property.

True

They may be able to levy special assessments against the property owners to cover the expense of improvements to the shared common areas or even impose fines for noncompliance.

True

When covenants differ from zoning regulations on a particular matter, the more restrictive of the two will control.

True

You have probably heard of homeowner associations (HOAs) and possibly property owner associations (POAs). These refer to privately-created associations that manage common-interest communities. Members of these communities pay annual dues and, in some cases, special assessments

True

there can be conflicts between zoning regulations and restrictive or protective covenants. When covenants differ from zoning regulations on a particular matter, the more restrictive of the two will control.

True

It is crucial that brokers are diligent in their efforts to keep buyers informed about land-use restrictions that could affect their purchase decision.

True. For instance, let's say a buyer has indicated he would like to modify the property after they complete the purchase. The broker must ensure the buyer is informed about any zoning impact or the existence of protective covenants that might prevent or restrict the desired improvements.

CC&Rs are the rules and regulations established for a parcel of land.

True. The owners accept these rules and regulations when they purchase the property.

You are driving through a suburb of a city and notice that all of the fast-food signs are close to the ground. This is a result of

Zoning ordinances - set minimum standards such as lot sizes and building height limits, including sign heights. Building codes usually control how a building is actually constructed and includes what materials and methods are used. A variance is a type of zoning exception. Subdivision regulations determine how a subdivision is planned. it is NOT building codes

An important principle regarding restrictive covenants is that they are appurtenant, meaning

a restrictive covenant "runs with the land."

covenants that require a property owner to pay assessments or annual dues.

affirmative assessment covenants

Dan moves into a quiet residential neighborhood with several open acres across the street. A church buys the property and puts up a large building that attracts 3,000 people every Sunday. When Dan contacts the zoning authority, he is told that this was allowed because of a

conditional use. - A conditional use or special exception is made for land usage that doesn't conform to zoning rules for the benefit of the general public. Churches, schools, and hospitals often are allowed because of a conditional use.

(CC&Rs) stand for

declaration of covenants, conditions, and restrictions

a subdivision developer to detail permitted and prohibited uses for the subdivision lots, resulting in a document referred to as a _______________

declaration of covenants. As you might expect, these documents are recorded with the register of deeds office, where each are assigned a book and page number. These documents are often called a Declaration of Covenants, Conditions, and Restrictions (CC&Rs).

Which is an example of a private land restriction?

deed restriction - Deed restrictions are private land restrictions. Common public restrictions are zoning, building codes, subdivision regulations, and environmental laws.

What are the two primary private land use controls that owners can place on their real property?

deed restrictions and CC&Rs wrong answers: covenants and conditions / public land use controls and private land use controls / subdivision declarations and declarations of private restrictions

Today, most private restrictions, such as subdivision restrictive or protective covenants, are imposed by

developers in a subdivision or condominium community. Restrictions may appear in the deed itself or, more likely, in a separate document that is referenced by the deed called a declaration of covenants, conditions, and restrictions (CC&Rs).

Subdivision regulations control the way by which

developers may divide land into blocks and lots that can be sold to individual property owners, as well as the way by which streets, sidewalks, utility systems, and other infrastructure must be laid out to adequately serve the area and to be developed to connect with any existing systems.

subdivision

division of a lot, tract, or parcel of land into two or more lots, plats, sites, or otherwise for the purpose of establishing or creating a subdivision through sale, lease, or building development

Which is NOT a way in which zoning ordinances are typically enforced?

federal government intervention wrong answers: lawsuits / building permits / occupancy and use permits

The North Carolina Planned Community Act was passed because

homeowners associations in planned communities were frequently found to be at a disadvantage when faced with trying to enforce covenants against property owners who violated those covenants.

CC&Rs are not enforced by cities, rather they are privately enforced by a ____________ elected from among the property owners within the subdivision.

homeowners' association (HOA)

A restriction may be removed from a deed if

it is found to violate a landowner's bundle of rights.

The smallest type of subdivision is a

lot-split. which involves splitting one lot into two smaller lots.

A written document that identifies goals, objectives, principles, guidelines, policies, standards, and strategies for growth and development of a community is called a

master plan

Such restrictions often indicate the type of structures allowed, the setback from the street, the minimum or maximum home size, the materials used in construction, the allowable height of fences, the colors of paint allowed, etc.

most private restrictions, such as subdivision restrictive or protective covenants

You buy a two-year old house in a development and receive a copy of the declaration of covenants, conditions, and restrictions (CC&Rs). Five months after you move in, you start to paint your house bright purple. You receive a notice to stop. You

must comply with the CC&Rs, since it specifies what colors are appropriate for homes in the development. wrong answers: can ignore the notice, since you are the second owner of the house. / can ignore the notice, since the CC&Rs restrict your basic bundle of rights, specifically the right of control. / can get a variance from the zoning authority to allow you to paint your house purple.

Tony works as a barber in the shop his grandfather built 50 years ago on the street in front of the family home. If the area was zoned residential 25 years ago, the barbershop is best described as a/an

nonconforming use. wrong answers: conditional use. / eyesore. / nuisance.

Homeowners associations (HOAs) or property owner associations are generally formed

nonprofit corporations for the purpose of managing homes in a residential development.

In the early years of this country, when English common law was prevalent, there were no restrictions on a neighbor making use of his property in an offensive way, such as by building a factory, a slaughterhouse, or using it in a way that was dangerous to the well-being of others. In real estate law, this is referred to as a ___________

nuisance.

A plat is a

plan or a map, such as a detailed survey map, of a plot of land, especially used in construction site mapping. It may be a survey of a subdivision showing boundaries of lots, streets, easements, etc., which, upon approval, is recorded and becomes the basis for the transfer of title of the individual lots.

Most governmental regulation and restrictions are promulgated under which power of the government?

police power

North Carolina's Conservation and Historic Preservation Agreements Act is legislation with which goal?

preserving and protecting valuable resources such as historic buildings and natural areas

Covenants are

promises or guarantees in a deed or other document.

Covenants are

promises or guarantees in a deed or other document. CC&Rs, restrictions, restrictive covenants, equitable servitude, and protective covenants. Regardless of whether you are the second or the 200th owner, as long as the CC&Rs are in place for the development, anyone who buys a house there needs to follow the established rules of the community.

To make a restriction enforceable against third parties, it must be __________. Once a covenant is in the chain of title in the public records, future buyers take title subject to the restriction, even if it is not stated in the _________.

recorded / deed

The Conner Act states that

restrictive and protective covenants are not binding unless they are recorded, which must be done in the county of the property's location.

Deed restrictions also known as ______, are:

restrictive covenants / limitations placed in a deed by a private grantor that restrict the way the land may be used, improved, or maintained. Such restrictions can affect specific deeds or an entire neighborhood and are frequently encountered in residential subdivisions.

current covenants often have a time limit. This time limit is frequently _____________, although the covenant may state that a certain percentage of the property owners can vote to retain the covenants.

several decades

In North Carolina, special uses of a property are permitted following approval of what type of permit application?

special-use

developmen

the design work of lot layout, the construction of drainage structures, the construction of buildings or public use areas, the planning and construction of public streets and public roads, and the placement of public utilities.

laches

the loss of a right through undue delay or a failure to assert.

Duplexes have been built in a neighborhood of single-family homes over the last ten years. One homeowner finally realized that duplexes violated a deed restriction and took the matter to court as a developer prepared to build another duplex. The judge cited the doctrine of laches to allow the new construction. This means the neighbors lost their right to complain because

they had neglected to act over the years. wrong answers: the statute of limitations had run out. / the restriction was discriminatory. / the developers had been issued a certificate of occupancy.

A covenant may become __________ if there has been a significant change in the circumstances of the subdivision.

unenforceable

Deed restrictions are void if they are

unlawful, impossible to perform, or in restraint of alienation.

Under the NC Real Estate License Law, for instance, a licensee has the following responsibilities regarding verification of land use and recognition of potential land-use problems:

A duty to avoid any misrepresentation regarding permitted land use. A duty to recognize potential land-use problems. An affirmative duty to discover and disclose any such problems.