Advanced residential real estate: Homeowners’ associations and covenants

There are almost as many types of covenants against residential subdivisions as there are subdivisions, as covenants are first and foremost a matter of “contract,” and not a function of statute.

That is not to say that there are no statutory constraints on residential subdivision covenants, as Ohio Revised Code Chapter 5312 “Ohio Planned Community Law” does set forth a framework of certain minimum requirements for subdivision documents and does require that bylaws of an association be recorded.  But beyond that framework, that statute does not precisely say what the declaration and bylaws must provide.

As such, the developer decides — in the declaration of covenants  against the subdivision and bylaws of the association — what terms that “contract” will contain.  And then each owner acquiring a lot in that subdivision, whether he knows it or not, becomes a party to that “contract” on the terms set forth in the declaration and bylaws of the association.

The first issue we explore in this article is “homeowners’ association or no homeowners’ association?” for there are subdivisions subject to a declaration and covenants as to the development (minimum square footages, setbacks, design standards, etc.) and use (parking of boats and R.V.s on lots, rental of houses, parking restrictions, etc.) of real estate, that do not have a homeowners’ association and the monthly or annual fees that accompany the same.  Some developers — typically of smaller subdivisions — choose not to create a homeowners’ association because there are no common areas (lakes or detention ponds, entrance monuments, etc.) to maintain.  As such, a there is no reason to assess a fee.  And without a fee being due and owing, there is no need for an association to manage that fund.  In this circumstance, without an association, enforcement of the covenants is then left to the individual lot owners.

Thus, not all subdivision covenants include an association or a fee that accompanies the same.

Then, onto the covenants themselves.  The covenants are a “contract” by and among the lot owners on the terms set forth therein.  Because parties are free to contract except as to those things prohibited by law (e.g., unlawful discrimination), the “contract” can contain such restrictions as the initial developer thinks appropriate.  As such, a buyer should carefully review and consider these restrictions before buying.  Are they too restrictive as to the lifestyle choices of the prospective homeowner?  Are they not sufficiently restrictive on the homeowners’ soon-to-be-neighbors?  These documents make good bedtime reading.

Finally, a note of caution as to covenants that do establish a homeowners association: Be cognizant of the powers vested in that association, as to setting fees, maintaining common areas, enforcing covenants and making new rules, as many times the exercise of those powers by the association can be the source of frustration for homeowners in the subdivision.

We caution clients to be mindful of all of the provisions of covenants for their subdivision, as it typically will the longest, most complicated “contract” they will ever enter into.  And part of that is understanding the powers given to the homeowners association in those documents.


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