Protective Covenants Buying A Home
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
Understanding Protective Covenants When Buying a Home
Summary
When purchasing a property, it's crucial to be aware of protective covenants, which can significantly impact your plans. These covenants, often recorded at the courthouse, accompany the land regardless of ownership changes.What Are Protective Covenants?
Protective covenants are restrictions that remain in place as a property changes hands. They are designed to preserve the area's character or designate specific uses for the land. For instance, a covenant might enforce a particular architectural style or limit types of development.
In scenic areas, covenants can prevent certain developments that don't align with the area's ambiance. Unlike zoning laws, these restrictions may not be immediately visible, so thorough research is essential before buying.
A Cautionary Tale
Imagine purchasing a large piece of land with plans to subdivide it. Zoning laws might allow you to cut the land into small lots, leading you to anticipate significant profits. However, if a protective covenant restricts subdivisions to lots of at least ten acres, your plans could be derailed.
Consider if a covenant entirely forbids subdividing. The enticing deal you thought you had may not be as appealing once these restrictions come to light.
How to Handle Protective Covenants
1. Inquire with the Seller: Always ask if there are any protective covenants associated with the property.
2. Obtain Title Insurance: Title companies will investigate and reveal any existing covenants before issuing a policy, offering you additional protection.
By following these steps, you can ensure that protective covenants do not become an unexpected obstacle in your property investment journey.
You can find the original non-AI version of this article here: Protective Covenants Buying A Home.
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