Deed Restrictions and Setbacks (long)

ronellisDecember 4, 2009

My wife and I are under contract on a riverfront lot where we plan to build a vacation home. It's a corner lot in an old neighborhood with no HOA. The financing for our land and construction has been approved, and we're very close to hiring a builder.

Today, the title company issued their title commitment, which included a set of deed restrictions that had not been previously disclosed, and had apparently been unknown to the seller or his agent. One of the restrictions has been interpreted by the title company to require a 30' setback on each street, and since the lot is only 55' wide would make the lot unusable for a home.

The restriction states:

"No improvement shall be constructed on said property within easement lines or nearer than 30 feet to the front property line, nor nearer than 10 feet to side property lines, except that in the case of corner lots no improvements shall be constructed within 10 feet of side property lines adjacent to streets 30 ft. setback."

I don't know exactly what that means. The title company believes that in means that there is a 30' setback on each side of the lot that is bordered by a street. They have put an exception from coverage (they will not cover losses resulting from...) in their title commitment that states:

"30 foot front setback line; a 10 foot side building setback line, except corner lots on streets which shall have 30 foot building setback lines, as recited in Volume 124, Page 387-388, Comal County, Texas Deed Records."

Like I said above, I don't know what the restriction means, and I'm not sure it means what they think it means.

The selling agent, who lives in the neighborhood, has told our agent that 75% of the homes in the neighborhood violate the deed restrictions and so no one could ever complain or sue. She also believes, I think incorrectly, that the restrictions have expired. The restrictions state that they automatically renew every 10 years, unless amended or canceled in writing by a majority of homeowners and filed with the county. This has not happened. She has also told my agent that since no one follows the restrictions and they have never been enforced, then they can no longer be enforced.

The title company told me that they have interpreted the deed restriction correctly, but they also told me that they think it's expired. They could not tell me why it's included as an exception if it's expired.

The lot is being surveyed. The fieldwork is done, and the survey is supposed to be done Monday. The surveyor told my agent that he believes there is NO setback.

I left a message for an attorney late today, but I don't expect to hear from him until Monday.

I don't expect anyone on this board to be able to solve this problem, but I hope you can help me figure out what form a solution might take.

What value does the survey have? If it is signed and sealed with no setbacks, does that somehow protect me?

Is there anything to the argument that deed restrictions that are not followed or enforced are no longer enforceable?

What kind of documentation or assurances should I require to be satisfied that I can build without future potential repercussions?

Lastly, what do you think that deed restriction means?

These are all questions that Ill ask the attorney I have called. In the mean time, I appreciate any advice you all might have.

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I'm sorry. I meant to post this in the "Building A Home" forum and not here. I'm going to post it over there now. I would delete it here to prevent a cross-post, but I don't see a delete option.

    Bookmark   December 5, 2009 at 1:13AM
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Deed Restrictions are the responsibility of the Buyer... not the Seller nor the agent. Most contracts state that the buyer has or will, w/in a certain timeframe, read the restrictions.
If you can get the HOA to sign off on a varience, you still have to get it in writing, in your policy, from the title insurance company.
I would say, but do not know, that just because the restrictions have not ben enforced, does, not mean that no one could enforce them upon you. Especially the Title Insurance company.
Your attorney should know. Let us know.

    Bookmark   December 5, 2009 at 7:37AM
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The local municipality/township's building department would/should be able to answer your question about the setbacks..Your proposed home plan would have to be approved by them,so i'd call them on monday to better understand your issue...I seriously doubt that 75% of exisiting homes have been constructed within setback lines..

    Bookmark   December 5, 2009 at 3:15PM
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Deed restriction setbacks are different than and in addition to those required by the local authorities. They will come into play only if they are more restrictive than those of the authorities and are still valid.

    Bookmark   December 5, 2009 at 5:09PM
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"unless amended by a majority of homeowners on file with the county."

What homeowners? Those are your angels.

Personally, I think the deed restriction was written that way (badly, though) to clarify that any corner lot would be considered to have only one "front" street side subject to the 30-foot setback and that another boundary on the adjacent (corner) street would be considered a side, subject only to the 10-foot setback.

I am surprised the title company is interpreting it in exactly the opposite way. It seems clear to me that the intent is to only impose a 10-foot setback on the adjacent street side. I think your attorney will agree.

Regardless, this is something you might be able to take to the specific homeowners cited and get them to amend the rule to be more clear and require 30-foot setback on only one street side of a corner lot.

If these deed restrictions are open to amendment by a group, it also stands to reason that there is a group, whether or not the current members are aware of it. I suspect that there are more documents on file with the county that specify how and when this group can amend or withdraw the restrictions.

    Bookmark   December 5, 2009 at 6:59PM
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I agree with hadly on the interpretation.

The county should have more definitive info on file with regard to the restrictions. Deed restrictions run with the land, so I find it unusual that they would have then there would be little point in having a restriction in the first place.

Please post back with what you find.

    Bookmark   December 7, 2009 at 12:00AM
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Deed restrictions often expire, in my experience. I have examined the restrictions on numerous pieces of property that we were considering for purchase. Most expired around twenty to twenty five years after they were initially placed on the property. Most also had provisions for renewal. A few remained in force unless they were voted out by a HOA or the like.

When we sold property and placed deed restrictions on it, the attorney who drew up the sales agreement automatically inserted an expiration date. He seemed surprised when I told him to remove it. The buyer had some heartburn over them not expiring, but he had to either accept them or move on. He chose to accept them.

The only thing the county should have on file is whatever was recorded with the deed. Deed restrictions are a private matter, unless they contravene law. If the restrictions are poorly worded, it will be up to a court to interpret them, which will require that someone file a lawsuit. I am informed that ambiguous restrictions tend to be thrown out by the court.

    Bookmark   December 7, 2009 at 8:32AM
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"Personally, I think the deed restriction was written that way (badly, though) to clarify that any corner lot would be considered to have only one "front" street side subject to the 30-foot setback and that another boundary on the adjacent (corner) street would be considered a side, subject only to the 10-foot setback."

I think exactly the opposite.

The restriction states:

'No improvement shall be constructed on said property within easement lines or nearer than 30 feet to the front property line, nor nearer than 10 feet to side property lines, except that in the case of corner lots no improvements shall be constructed within 10 feet of side property lines adjacent to streets 30 ft. setback.'"

They wanted to make corner lots have a 30 foot set back from both streets since the single 'front' definition for a regular lot would not have covered a corner clearly.

They also made sure that the 10 foot 'side' setback applied to the other lines bounding a corner lot.

There is a reason "It's a corner lot in an old neighborhood with no HOA." and apparently no house.

While the OP said the lot is 55 feet wide, that os only one dimension.
What is the other?

A house 15 feet wide might be possible if the second lot dimension is adequate.

If the lot is 55 feet by 55 feet, it is unbuildable with the existing restrictions.

    Bookmark   December 7, 2009 at 8:49AM
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Thanks for your responses.

I talked to the RE attorney this morning. His initial reaction is that the restriction is valid and makes the lot unbuildable. He also believes we have an out from our contract. He's reviewing our contract an the deed restrictions, and will advise us tomorrow.

My RE agent told me tonight that the survey will be finished tomorrow, and that it will show a setback of only 10' on each side. I'll also send that to my attorney, but I'm not sure it's the silver bullet my RE agent thinks it is.

    Bookmark   December 7, 2009 at 7:13PM
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So, we got the survey today, and the surveyor indicated 10-foot setbacks on both sides of the lot. As a result, the title company has changed the title commitment. The exception now states that the side setbacks are 10 feet and references the survey.

My lawyer will look at the new title commitment tomorrow and give me the pros and cons of proceeding. I've also asked my banker to weigh in on it, since she had previously told me she would be "uncomfortable" lending if we were violating the deed restrictions.

Any thoughts on this development?

    Bookmark   December 9, 2009 at 10:53PM
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What prompted the surveyor to make the decision he did? Not to say he is incorrect,but if the deed stated what you had mentioned above, his interpetation "might" not hold in a lawsuit..Your title company simply placed the "responsibility" on the surveyor..Does the surveyor had "errors and ommission" insurance?

I would have a real estate attorney verify this, as you wouldn't want to proceed only to find out you violated the deed restrictions..

Good Luck!!

    Bookmark   December 10, 2009 at 8:38AM
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& the survey usually had "hold harmless" language that they submit to the title co.

so they're not liable, title co isn't liable...

There's a reason that lot hasn't sold.

I once had a similar experience.

There was a nice little lot in an area with little-bitty (800-1100 square feet) frame houses that had been built in the 1960's, when the subdivision was in an unincorporated area.

The subdivision had been annexed in the intervening years, & the city codes called for minimum 1500 square feet, brick, 2 car garage, & building setbacks such as you described.

I had a builder who wanted this lot (what a good price!) for a rental house.

We couldn't get the lot;
the city refused to grant a waiver on any requirements.

If the city waited long enough, the owner would give up on it & stop paying the taxes, or he'd die, or something, & voila, the city would be the proud owners of a nice little lot.

where they could park their vehicles, or store gravel...
or waive the requirements & sell it to someone for a little bitty house.

    Bookmark   December 10, 2009 at 12:01PM
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This surely looks like a sticky wicket. And deals like this sometimes slip past numerous sales transactions where they should have been caught by the system, and someone.....somewhere down the line has the grief of fighting it in court.

I had a similar (but not exactly identical) situation years ago when I contracted to buy a house on some acreage within the city limits. It was a very old home, so had been bought and sold numerous times and evidently got past some title searches. I eyeballed it one day and it seemed to me that there had to have been more land in that parcel than the description included, and it looked to me like the house sat outside of the defined property.

I rattled cages with the seller's realty company who said they'd go the expense of a survey. Guess what???? LOL. I was right. I talked to various people on that road who'd lived there for decades and got the story. It was disputed land, and nobody had ever pushed the issue to the point a judgement was made on it. So the selling realtor implies it was a safe bet, and he 'thought' that it would be an easy issue to clear up and just take posession of the land. Hah.

I also had a transaction on another house where I paid for the title search from an attorny, and I was hit by a bank for a lien on the property after a clear deed was supposed to have been issued. The bank who had that lien ate it because they failed to pursue that lien when it went up for a sheriff's sale and my attorney just out and out missed it. Long story, but what I am getting at, is that don't ever assume if a property has passed hands that what should have been caught at each transaction has been caught.

Caveat emptor.

I beat tracks to my attorney as fast as I could and guess who ended up paying the attorney fees and the survey? I did, of course and was happy to not throw any more good money after bad.

    Bookmark   December 11, 2009 at 9:36AM
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Is there treasure buried on this land or something? If not, I don't see why you are even considering moving forward. Even if you get all your current advisers to agree, it is ultimately your money/house/land on the line. If you get sued, you will be defending yourself against 1 lawsuit AND then may have to recoup from these 3rd parties in separate lawsuits.

Also, is there a particular reason you are planning to build a vacation home? Why not buy an existing house? Right now, you'll likely be able to find a much better bargain that way. Besides, the thought of long distance build oversight is enough to give me nightmares. Even with a good GC, building a house somehow always becomes more "hands on" than anyone thinks going in.

    Bookmark   December 11, 2009 at 10:04AM
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I am guessing that the 30' setbacks are from the middle of the road and not where you think they are. In some areas, the land under the street is considered to be owned by the owner of record of the lot with a right-of-way dedicated. So, if this r-o-w is 40' then your half of the road would be 20', leaving you with a 10' setback.

    Bookmark   December 26, 2012 at 12:38PM
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3 year old thread.

    Bookmark   December 26, 2012 at 6:25PM
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Keep in mind that real estate law varies a great deal state by state, and the OP hasn't mentioned what state they're in. In Texas, most deed restrictions do run with the land.

An experienced real estate attorney is your best source for answers on this topic, especially if you need to request a variance, which is usually pretty chancy.

    Bookmark   December 27, 2012 at 9:08PM
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