Restrictions on Property Use

Episode 008-2
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People understand that if they own property, they have certain property rights, but there are restrictions on property use and this can impact property value.  You may think you have the right to do something on your property, but then comes a neighbor, and HOA, or a host of other entities that limit your property use.

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Is this podcast, I’m going to be talking about restrictions on property use. Now, that’s a pretty broad topic. Most people understand that if they own property, they have certain property rights. Those can include the right to sell the property, the right to fence off the property, the right to put up a building, a shop or a house on the property, and a bunch of other rights that people typically think of when they think about what it means to own property. But there are also restrictions on property use. People may be generally aware of things like the zoning code, or HOA rules, but they’re often surprised at just how many potential restrictions there are on the ways in which they can use their property.

Quite a bit of what I’ve seen in my years working in real property law in Idaho and Washington is that people get confronted with a situation where they want to do something on their property that they think they have every right to do as the property owner. And then someone else is telling them, surprisingly it seems, that you can’t do that. Whether it’s some county agency or an HOA board, or just some nosy neighbor that doesn’t want you to build a shop, or put up a fence that’s too high, or whatever the case may be. And they come into the office because they don’t necessarily know the full extent of all these potential restrictions that can control or govern people’s use of their own property. What I want to do in this podcast is provide sort of an overview to the extent I can about the different types of restrictions on property use that can come up, and then how people can go about learning what these restrictions might be and determining what their rights and responsibilities would be if they were to purchase a certain piece of land. Or, if they already own a certain piece of land, how they can discover what their property rights are, and what the restrictions on their property use are.

So property use restrictions can be broadly divided into two categories. You’ve got public restrictions on use. Those are things like zoning codes and building codes. And then you’ve got private restrictions on use. Those can be the HOA restrictive covenants, the rules and regulations, the road and water agreements that sometimes have restrictions on property use, and so on. Those are usually found in private documents entered into by a developer in the past, or between property owners in the past. They can carry on to property owners in the future. A lot of what we do at Macomber Law is geared toward issues that arise from those private documents. And so I’m going to talk about those later.

But first, I do want to talk a bit about the public restrictions on property use. As I mentioned, a couple of the big areas in which the government, through the legal system, establishing code, provisions, statutes, how they control what people can or can’t do with their property or zoning codes and the building code. So zoning code issues, you know, can come up quite a bit, and they can be pretty significant. You know, what the cities do, what the counties do, is they basically take all the property within a city or a county and divide it up into these zones. There are a lot more zones than people might imagine. I remember when I first was learning about different types of property and I thought, well, okay, you’ve got rural property, suburban property, and urban property. Okay, that’s basically three types. What else is there? Well, turns out there’s quite a bit more, just within rural property. Within an agricultural zone you might have, you know, agricultural five zone, minimum five acres, you might have agricultural 10 zone, minimum 10 acres, you might have timberland zone, you might have all sorts of different things. Two zones just within the rural umbrella. Likewise with suburban, you might have some that’s purely residential, you might have some that’s mixed use commercial and residential. Same applies for urban. And what you end up getting are just, you know, 10 to 30 different zones, depending on what area you’re looking at, city or county, depending on where property is, that property is going to be subject to the zoning code for whichever zone it happens to be in.

So how does that play out in in practice? Well, let’s say somebody’s looking for a property where they want to start a bed and breakfast. So what they’re going to want to do is find what zone that property is, and then what the code provisions say, for that zone. So generally, to find out what zone a property is located in is fairly easy. You know, the counties and the cities tend to have zoning maps that are multicolored maps, they actually look pretty cool, where somebody can find where the property is located and see what color that region of the map is. And then they can look at the legend to the side of the map and figure out okay, this is the zone, maybe I’m in the rural residential zone, or the restricted residential zone, or the industrial zone, or whatever zone it might be. It’s generally fairly easy to find out. But that’s the easy part. The harder part comes then when you have to take your knowledge of what zone the property’s in and figure out what rules now apply to this property. And so that’s where somebody can go to the county code or the city code, and look up the chapter that code that relates to the zone, and figure out what the zoning provisions are. At that point, if we take the example of the person who wants to build the bed and breakfast on the property, they can find the zone of that property, look up the code provisions, and then see within those code provisions, what they’d be allowed to do with that property under the zoning code and what they wouldn’t be allowed to do.

Generally, that can be pretty straightforward. For at least in Kootenai County, the code provisions tend to say these uses within this zone are prohibited. And it might be A through J or beyond. And then they’ll have a different list of uses that will say you can do this on the property within this zone, but only if you have a conditional use permit. So that’s an application process where somebody has to go convince the county or the city that they’re using the property for such-and-such purpose that would be beneficial to the community, wouldn’t be harmful to the neighborhood, and so on. And if they can meet that type of standard, then the local government could give them a conditional use permit to go ahead and say build the bed and breakfast. Or depending on what the zoning code says there might be no restriction at all on using the property for a certain purpose, like the bed and breakfast. In that case, there wouldn’t be anything in the code, the zoning code, at least, that would tell somebody looking at a particular property that they can’t do that. And there wouldn’t be any necessary procedure to go through with the city or the county to allow you to operate the business that you want to operate. And so that’d be good.

But again, the zoning codes might have more restrictive language in there that says that either this or that use is completely prohibited in the zone, in which case you might have to get a variance or rezone, which is a pretty cumbersome proces. That could probably be a podcast of its own. Or you might have to go and apply for a conditional use permit and have a hearing before the city council or the county commissioners and convince them why you should be able to have your bed and breakfast or whatever it is on the property. And oftentimes those application processes can cost a fairly significant amount of time and money, especially if you have to get engineers or attorneys or surveyors involved. And so there can be a bit of an investment required for somebody to try to get around a zoning code provision. And so it’s really smart for people to look that up beforehand and understand what they’re potentially getting into, before they buy a property, if they have a specific purpose they’d like to put that property to use for.

Building codes are another issue. And again, that could be a podcast of its own. We’re all aware that, depending on where a property is, there are going to be certain building code provisions that are going to require certain standards for whatever type of building it may be, whether residential or commercial. And so again, if somebody is purchasing a piece of land for a certain purpose in mind, like operating a business, then it’s going to be really bright if they know the right thing to do is going to figure out what my building code provisions look like. Can I do what I envision doing, and what might be the obstacles that the government or somebody else might try to put in my way, under either the zoning code or the building code. So that’s a really nutshell view of how the public restrictions on use can come into play.

Now I want to talk about the private restrictions on property use. As I mentioned, those are the ones that people tend to be a bit less aware of. They don’t make the news as much as when there’s a zoning code dispute or a building code dispute that goes before the city council and gets into the paper. So I want to expand a bit on what those look like and how people can go about figuring out what types of private restrictions might impact their potential property use.

So a big one that comes up, as I mentioned, is restrictive covenants. And those tend to come about in residential or commercial developments that are established where the developer usually at the outset of the development project, will draft up various restrictions on how properties in the development can be used. And the purpose is generally pretty straightforward. Developers have an interest in trying to maintain each property in the development to a certain standard, and avoid the kind of issues that can cause people to want to move out of other neighborhoods. Like you have a neighbor who won’t maintain their property, or who’s hoarding things in the backyard, or all types of issues that can come up with neighbors that can reduce property value, and just reduce someone’s enjoyment of their property. We want to avoid those things in general. And developers understand that. So they establish what we call restrictive covenants.

So what happens when a set of restrictive covenants is written up? Well, generally, the developer will sign it because the developer owns all the property at the time. Remember, this generally happens before the developer is selling off any of the lots to future owners, who become your neighbors, who become the people on the HOA board. And so the developer is usually the only person that has to sign a document with restrictive covenants. And then once the developer has signed that off, then they’ll usually take the document to the County Recorder’s office, where all the public record property documents are kept, and then have that document recorded. The effect of having that document recorded is that it becomes part of the title history for any property in that development that is subsequently sold to a new owner. So, if a developer starts, say Jackson Acres Development, and has 100 lots in that development, and writes up a set of restrictive covenants that are going to apply to lots of one through 100 of Jackson Acres, then if I buy lot 48 in Jackson Acres later on, I’m going to be bound by and subject to those restrictive covenants. And the reason for this is because, when the developer recorded those covenants in the public property record of the county, by operation of law that meant that I have legal notice of those covenants, and I am deemed to know what they say and how they apply to my property. And there’s nothing I can do about that. If they’re recorded, then I’m on notice of the documents, and I have to follow what they say.

This can become pretty cumbersome for ordinary people who aren’t attorneys who don’t have experience in the world of buying and selling real property. Because restrictive covenants are often not just one document. They can be amended and they often are. There are developments here in Kootenai County where the restrictive covenants have been amended 8 to 12 times, sometimes even more than 12 times. And that means that when somebody wants to buy property in a certain development, if there have been amendments to the documents, they are legally deemed to be on notice of and aware of potentially 12 or more sets of restrictive convenants that apply to the property.

The ordinary person when they’re buying a house — maybe they have a couple of young kids, a spouse, and a full-time job — they’re not sitting down and reading those documents. And yet the law says that, because they’re recorded, you’re aware of them. And so a lot of people don’t really know what it is that they’re getting into with these restrictive covenants. They just want to close on a property so that they can start living the American dream. But the issues can come up later. Specifically, if someone hasn’t reviewed their restrictive covenants or had an attorney review them before they buy their property, and then they want to do something with their property later on, they can run smack into a brick wall. Some of the stories I’ve heard are pretty dramatic of how that can play out. Recently, I was speaking with somebody who owned property that was within a homeowner’s association. And he wanted to subdivide the property. This was an HOA where the lots are a bit larger. So you know, under the zoning code of the county, he could subdivide the property. But what he wasn’t aware of was that the restrictive covenants of his HOA had language in there saying that nobody could do a subdivision of any lot within the HOA. And you know, the reason for that, in that case was that other people in the HOA wanted to maintain the more rural, less dense character of the neighborhood. And so this person, you know, ended up putting over $10,000 of investment into a site development project, getting information together documentation together for the County to present this application with complete survey work and geological analysis, and anything else that might be required for that type of application. And he had seen to it that he had his application ready to submit, and to be finalized, and decided upon by the county. And then he gets a cease and desist letter from one of the other attorneys in town representing some of the neighbors who said the CC&R’s, the covenants, say that you’re not allowed to do this and we hereby demand that you withdraw your application with the County for this lot subdivision. And it was obviously a tough situation for him having invested five figures into this project. But there was no way around it. The language of the covenants said what it said, it was clear, the courts are going to apply just the plain language of the covenants. They’re not going to look into how much someone spent on a project or anything like that.

And so this person, unfortunately, had to learn a pretty expensive lesson about the importance of reviewing the documents that apply to a property beforehand, before you’ve purchased the property, even if you don’t know whether you might want to subdivide or start a business on the property, or build some type of non-residential structure. It’s still going to be really smart to look into what the restrictions might be, if the property has any restrictive covenants recorded in the title history. Because you don’t always know what you might want to do with the property later. And then something comes up, you’ve put money into a project, and you end up realizing that that five figures you spent is no good. You know, that’s the nightmare scenario that we try to help people avoid by reviewing these documents upfront before someone closes a purchase. So that they can know what the landscape is of what they can do with the property and what they can’t. There are other cases we’ve dealt with where people built non-residential structures on their property. And the covenants have said that non-residential structures like shops, or what have you, have to meet pretty specifically defined standards. They call it aesthetic standards. And usually the board has pretty arbitrary power to determine whether a building is aesthetically in conformance with the community or whatever language they might use. And people have gotten into some fairly expensive legal disputes because they’ve built a structure that maybe doesn’t strictly comply with the language of the covenants. And again, that’s something where somebody reviews those documents upfront, or ideally has legal counsel to review them upfront, so they can understand what they’re getting into and avoid, potentially, a much more expensive issue down the road.

Similar issues can come up with shared well agreements or road easement agreements where somebody’s property might have, say, a well on it. And their surrounding properties in the neighborhood may have easements that they’ve previously been granted to use this well. And that’s going to impose certain obligations and responsibilities on the owner of the parcel with the well on it, as well as the other parcels. But that’s something that can be easily determined, usually by reviewing the title history for a property before it has closed. A lot of what we see, especially in North Idaho, is people who have disputes about a well that multiple neighbors are using and who should pay for maintenance, who should pay for repairs, how those costs should be divided between the owners? And there is often confusion about these issues. Because a lot of existing shared well agreements, frankly, aren’t that well written. And they’re ambiguous, they’re not clear about what the parties are supposed to do, and how they’re supposed to resolve disputes. And so those can become pretty expensive issues down the road, because, unfortunately, people don’t have much of a choice. If you can’t figure out who’s going to pay for well maintenance and well repair, then eventually, you’re not going to have an operational well, and then you’re not going to have water. So at some point, you’re going to have to spend the time and the resources to figure things out. And to have clear rights and responsibilities allocated between the different people who use the shared well or who use the shared road for access.

And the best time to do that is always going to be as early as possible. Before someone buys a property. Before people start hooking into the well, make sure that those documents in the title record are written as clearly as they can be, and that they, as clearly as possible, set forth what everyone is supposed to do, and what they’re not supposed to do. And by doing that, in general, people can save themselves a lot of heartache, and a lot financially down the road.

So those are just some of the big issues that can come up with public restrictions on property use, and private restrictions on property use. And it’s just going to be a really smart decision in general for anyone buying property to look into what the zoning code might say what the building code might say, and also what the private covenants, the private rules and regulations, and the documents like easement agreements or shared well agreements might have to say about the way in which they can use their property. The earlier someone can do that, the better. And so generally, that’s how I would advise people to look at it, and you can save yourself just a lot of trouble down the road.

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If you have questions or concerns about a real estate transaction or restrictions on property use issue in Idaho, Montana, or Washington, call today to schedule a no-charge consultation with a real estate lawyer, (208) 712-4700.