Discovering a restrictive covenant or easement on your property can derail your plans to sell. You might wonder whether these legal restrictions will scare off buyers or block your sale entirely.
The good news: selling is absolutely possible. Whether you decide to resolve the issue yourself or sell the property as-is, understanding your options will help you move forward confidently. This guide breaks down what covenants and easements are, how they impact sales, and the practical steps you can take to close the deal.
Step 1: Understand the Restriction You’re Dealing With
What Are Restrictive Covenants?
Restrictive covenants are legally binding rules recorded on a property’s title or deed. They limit how the property can be used or developed — often to maintain a certain standard in a neighborhood.
Common examples include:
- Requiring specific building materials or styles
- Prohibiting commercial businesses on residential lots
- Banning RVs or boats in driveways
- Setting minimum or maximum building sizes
Once recorded, these restrictions “run with the land,” meaning they apply to you and all future owners.
What Are Easements?
Easements give someone else legal rights to use part of your property for a specific purpose. They don’t transfer ownership, but they can affect how you use and market the land.
Two common types:
- Utility Easements: Allow utility companies to install or access power lines, water pipes, or sewer lines. These are usually permanent and can limit building locations.
- Conservation Easements: Permanently restrict how land can be developed, often to protect natural resources or farmland. These are legally binding and typically overseen by a land trust or government agency.
Example: If there’s a 30-foot utility easement running through the center of your lot, you may not be able to build a house there. A conservation easement might ban all future development except for limited agricultural use.
Have a different type of title problem? Check out our complete guide to selling land with title issues.
Step 2: Know the Legal Landscape
Enforceability
Not all covenants last forever. Some expire after a set period, while others can become unenforceable if ignored for many years. Outdated or discriminatory covenants can often be legally challenged. Easements, however — especially conservation easements — are usually much harder to remove.
Disclosure Obligations
When selling, you’re legally required to disclose all known covenants and easements to potential buyers. Failing to do so can lead to lawsuits or the sale being undone. Transparency early in the process builds trust and avoids legal trouble.
Consequences of Violations
Ignoring a covenant or easement can lead to:
- Legal action from neighbors, HOAs, or land trusts
- Fines or injunctions
- Required demolition of non-compliant structures
- Title defects that delay or block sales
Step 3: Understand How These Restrictions Impact Value and Financing
Covenants and easements can influence your property’s value, buyer pool, and financing options.
- Appraisals: Restrictions on use or development can lower appraised value. For example, a “no commercial use” covenant may reduce value for investors.
- Buyer Interest: Some buyers view restrictions positively (e.g., stable neighborhood character), while others see them as deal-breakers.
- Lender Requirements: Banks may require covenant indemnity insurance, surveys, or legal review before approving a loan. Some conservation easements make properties ineligible for conventional financing.
For this reason, marketing transparency is key. Present restrictions as part of the property’s story, not as hidden problems.
Step 4: Explore Your Options to Modify, Work Around, or Remove Restrictions
If a covenant is outdated, ambiguous, or no longer relevant, you may be able to challenge or modify it. Common strategies include:
- Negotiation: Talking with neighbors, HOAs, or easement holders to amend or release the restriction.
- Quiet Title Actions: A court proceeding to remove unclear or unenforceable claims from your title.
- Changed Circumstances Doctrine: Arguing in court that the original purpose of the covenant is no longer valid.
- Restrictive Covenant Indemnity Insurance: Protects buyers (and sometimes sellers) from future enforcement of old or uncertain covenants.
- Zoning vs. Covenants: When zoning laws and covenants conflict, the stricter rule applies — so check both carefully before making changes.
Easements, especially conservation easements, are more rigid. Utility easements are rarely removable, though minor relocations are sometimes possible. Conservation easements are typically permanent, but you can still sell the land subject to the easement.
Step 5: Decide — Fix the Issue Yourself or Sell As-Is
At some point, every seller facing covenants or easements reaches a fork in the road:
👉 Do you resolve the issue yourself to maximize value, or sell the property as-is to a buyer who can handle it?
Here’s how to think through that decision.
Option 1: Fix or Work Around the Issue Yourself
Best when:
- The restriction is minor or easily resolved.
- You have time and resources to work with attorneys, title companies, or agencies.
- Resolving it will significantly increase your property’s value or buyer pool.
Examples:
- A height restriction that can be amended through the HOA with a simple vote.
- An old, ambiguous covenant that can be cleared with a Quiet Title Action in a few months.
- A small utility easement that can be relocated with the utility company for a modest fee.
- A conservation easement with flexible terms that allow for agricultural leasing or limited development, making the property marketable to a targeted buyer group.
Option 2: Sell the Property As-Is to a Cash Buyer
Best when:
- The issue is complex, expensive, or time-consuming to resolve.
- The property has limited market appeal because of strict restrictions.
- You want a fast, hassle-free sale without taking on legal risk.
Examples:
- A property encumbered by a permanent conservation easement allowing no future development.
- Multiple overlapping covenants with unclear enforcement.
- A utility easement running through the buildable area, requiring costly relocation.
- A seller living out of state who doesn’t want to coordinate attorneys and surveys.
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Wrapping Up: Choose the Path That Fits Your Goals
Covenants and easements don’t have to derail your land sale. The key is to understand exactly what restrictions apply, how they affect value and marketability, and what tools you have to address them.
For some sellers, taking the time to clear or work around restrictions can unlock a stronger sale price and attract more buyers. For others, the fastest and most practical route is to sell the property as-is to a buyer experienced in handling complex title issues.
Frequently Asked Questions About Restrictive Covenants
Should I Worry About Restrictive Covenants?
You shouldn’t always worry, but you must understand them. Covenants can actually protect property value and neighborhood character. Ensure you comprehend their terms before buying or building.
Do Restrictive Covenants Ever Expire?
Yes, they can. Some covenants include a clear expiration date within the document. Other times, state laws impose limits on enforceability, often 20 or 30 years. A court may also terminate them if conditions have significantly changed.
Are Covenants Enforceable After 20 Years?
Enforceability after 20 years depends heavily on specific state laws. While many states have statutes of limitations capping enforceability around 20 years, some covenants can persist longer, especially if crucial to a community’s original plan. Always verify local regulations.
What Happens If I Ignore a Restrictive Covenant?
Ignoring a covenant can lead to serious consequences. You might face legal action from neighbors or your homeowners’ association (HOA), potentially resulting in significant fines, mandated corrective action, or even a lawsuit that “clouds” your property’s title, hindering future sale.
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Please consult your financial advisor, accountant, real estate attorney, or tax specialist. This article is for informational purposes and is not tax or legal advice.
