HOAs vs Deed Restrictions - What’s the Difference?
The Land Up Learning Series
Whatever, I Do What I Want!
“The American dream; buying land in Texas to have all to myself. A place where I can do whatever I want without anyone hassling me! Wait, what? I can’t do whatever I want? Says who??”
The answer is usually your homeowners association (HOA) or the deed restrictions. But what are these, what’s the difference between the two, and why can’t you just do whatever you want?
Whether you’re buying land or selling land, having a good understanding of the answers to these questions will help in the process. If you’re a first timer to the real estate world, you’ll especially want to arm yourself with all the knowledge you can get - and finding a good realtor who can help walk you through everything is one of the biggest keys. This is doubly true when buying or selling land in Texas, where lots of folks are looking to do things like build a second home, start a short-term rental, have animals like cows or horses, or place their manufactured home.
Let’s saddle up and dig into these two things that can keep you from doing whatever you want on your land - and why that’s not always a bad thing.
You should’ve seen their donation pile.
What You Should Know About Deed Restrictions
What are “restrictions”?
Deed restrictions - also known as “restrictive covenants” or just “restrictions” - are rules built into the property’s deed regulating how the land can be used. When you buy land in Texas, you are buying it with those restrictions already attached to it.
Restrictions can regulate things like:
The way your property is zoned
How many, and the type of, houses that can be on the land
How many, and the type of, animals that can be on the land
For example, a restriction might state that your piece of Central Texas land can’t be used for heavy commercial use. This is pretty common when buying in areas that are typically residential in nature because the locals would like to keep it that way.
Another common example is a restriction limiting the amount of animals on the land by stating the owner can only have X amount of cows per acre. These types of rules can be put in place for environment purposes or even to just protect nearby residents from negative effects of farm animals, like the smell.
Housing restrictions are another very common situation with land for sale in Texas. Oftentimes, there is a limit to the number of houses that can be put on the property. This is especially important to know if you had plans to build a house for yourself and then another on the same property, such as to rent out or have a family member live in.
Sometimes the restrictions also limit the types of houses that can be built or placed on the land. The property may only permit new manufactured homes vs older models, or only double-wides vs single-wides. The restrictions can even include more details, such as manufactured homes needing to have skirts to conceal the space between the floor of the home and the ground.
Restriction enforcement
The enforcement of restrictions can be carried out by HOAs or local governments, but usually it falls to the land’s developer. Many times these restrictions are created by the developers to keep local governments happy about how the land in their area is used.
Let’s say there is a company called Texas Land Builders who buys raw, undeveloped land and adds some driveways, some fencing, and runs electricity lines to the property and then turns around and sells it to an individual; but crucially, there is no HOA. Let’s also say Texas Land Builders put a deed restriction on the land saying the buyer can only have one cow per acre. If the buyer violates this cow policy, Texas Land Builders is actually the entity that enforces the cow restriction in this example. This is the most common situation we see when selling Texas land.
Finally, an important thing to note is that restrictions don’t just “go away” if you sell the land - they pass along to each new buyer. In fact, some older properties have restrictions that are so old they now violate newer laws. While this is an extreme case, it shows that restrictions continue to get passed along. They can be changed or updated, but the process can be complex, so it’s important to know the restrictions before purchasing land.
What You Should Know About Homeowners Associations (HOAs)
What’s an HOA?
HOAs are organizations established within residential communities, made of the residents themselves. Their purpose is to:
Manage and maintain common areas, like landscaping on shared space
Keep up facilities, like a community gym or pool
Enforce certain rules and regulations for the entire community
The goal of HOA rules is to ensure the area stays clean, looks nice, and all the people in the community are getting a fair shake. An HOA will regulate things like: how tall your grass can be, what color you can paint your house, or how many dogs you can have.
Now here’s where things get tricky. Some of these rules might just be community rules made by the HOA, like a rule against loud music at the community pool after a certain time. But some of the rules might actually be deed restrictions that, as mentioned above, were made by the property developer and are part of your deed; like restrictions against adding additions to a home. HOAs can enforce both, depending on the power given to each specific HOA.
While this might seem like having your parents tell you to make your bed or brush your teeth, HOAs also provide benefits to a shared community. In condos, for example, they provide maintenance and repairs to shared buildings that you would otherwise have to do yourself.
Let’s say there is a bad storm that tears up the roof of the condo complex. In this case, the HOA might repair the damage since it is a shared feature. But of course, each HOA is different. If you’re buying a property with an HOA, it’s important to read over a copy of the bylaws. This is something a realtor can easily help you do.
H.O.A. is an acronym, but “hoa” is a fun thig to shout when karate chopping the air.
HOA rule enforcement
When you violate HOA rules, you will be asked to make a change or face fines and possibly legal action. Though typically a violation of HOA rules will result in a letter telling you to mow your yard, or something similarly mundane, they can also fine residents. If those fines never get paid, they can actually have the power to put a lien on your house until things are rectified.
HOA fees
What’s the biggest downside of a HOA? You pay for it every month, for the entire time you live in the community. Even when your property is paid off, you still pay for the HOA.
In some places that’s not a significant amount, maybe $250-$350 a month, but in other places (especially older communities that require more upkeep) the monthly fee could be quite significant. In fact, we’ve seen properties where the HOA monthly fee is higher than the owner’s mortgage! This is why it’s very important to always ask about the HOA fee, if applicable. Many times a list price in HOA communities can be super enticing, but you’ll need to dig deeper to figure out how much you’ll really be paying.
Buyer (and Seller) Beware
What to Look for as Buyers and as Sellers
It may seem that both HOAs and deed restrictions would only really matter to those buying land in Texas. But, even those selling land in Texas need to be aware of the way rules are set up.
Reminders for Buyers
If you’re buying a Central Texas property, make sure to ask A) if there is a HOA, B) to see the HOA bylaws, and C) to see a copy of the deed restrictions. Any good realtor will help you get a copy, and the best ones will already have the info handy.
If there is an HOA, factor in the monthly fees into your budget. Also consider that fees can be increased. If you are already at the edge of your price limit with the current fees, you might want to consider a different property.
When you get a copy of the deed restrictions, look them over and think about how you want to use the property. For example, if your goal is to have land that also includes an income-producing rental house along with the one you live in, make sure that is allowed and look for the rules around the size, type, etc. You don’t want to buy something that ultimately doesn’t fit your needs.
Reminders for Sellers
As someone selling Texas land, there are also points surrounding HOAs and deed restrictions to consider. Firstly, dig up a copy of the HOA rules and/or restrictions and provide them to your realtor so have them on hand for potential buyers. We’ve seen sellers not have these readily available, slowing down the selling process and even turning away potential buyers.
Secondly, know the rules yourself. Many times restrictions will state that owners can’t subdivide a property and sell off just a chunk. We’ve seen owners with ranches for sale in Texas who try to do this in violation of the restrictions, only to have a deal squashed during closing when it’s found that the sale is actually forbidden.
Final Thoughts on HOAs and Deed Restrictions
Having rules that limit you from doing exactly what you want with your Texas land can be a double edged sword. On one hand, you want to do whatever you want with the land you worked hard to purchase. On the other hand, possibly so do your neighbors - who want to erect a 20’ squirrel statue 10 yards from your bedroom window.
I think I’ll name him Jeffrey.
These rules are typically set in good faith to try and keep some order and protect the natural beauty of the great state of Texas. But no matter what your feelings are on these types of rules, it always pays to understand them before buying or selling land in Texas.
At Land Up, we sell land with light restrictions, and many times we have unrestricted land for sale too. We include restriction information in the listings on our website, but our agents are more than willing to get those to potential buyers and help people navigate them. This is part of the reason we’ve earned a perfect, 5.0 rating on Google. The other reasons? Our customer service is second to none and 33% of our listings sell in under 30 days. We don’t mess with Texas, we get it sold.