What About Housing Agreements?

You are here:

This week presents a relatively new topic we have not really discussed before or educated you on – but important in the real estate industry and property ownership – some legal measures of real estate.

Zoning by-laws are not the only source of regulations that impact what an owner can do with their property. This blog will discuss another word for housing agreements “restrictive covenants”, and their potential effect on property ownership. Before we go further, a zoning by-law is the way the government controls the physical development of land and the kinds of uses to which each individual property may be put.

Restrictive covenants operate in addition to municipal zoning by-laws in controlling the use and appearance of property, and were originally developed before the emergence of zoning by-laws. RCs are implemented by the developers of a given subdivision to maintain consistency among various properties in the neighborhood, and therefore they will affect every lot in a subdivision. This is done in order to preserve the value of all the land in the subdivision. Some examples of the limitations that restrictive covenants can place on property use range from such things as the colours that a garage door may not be painted, to what materials may not be used for fencing, restrictions on multi-unit dwellings, and what types of trees may not be planted.

In some situations, the regulations set out under a RC may be stricter than the regulations set out under the relevant municipal zoning by-laws. For example, the situation could arise in which an addition to a house or backyard pool, built in compliance with the existing municipal zoning by-laws, actually runs contrary to the RCs regulating the subdivision.

Legally, RCs are said to “run with the land”. This means that they and are binding on any future buyer of the property. If they are annexed to land, then they are registered on the title to that property. Removing or modifying an RC for a particular lot requires an application to court. However, RCs only remain in force for a given period of time.

Homeowners and potential buyers should be made aware of all RCs that may limit their use, or intended use, of the property. If a homeowner ignores a potential restriction when building a fence or repainting the garage for example, any other resident of the subdivision to which the restrictive covenant applies may seek a court order to enforce the restrictive covenant on the offending property.

In the case of a potential buyer, the standard OREA Agreement of Purchase and Sale includes a clause that provides that title will be free from all registered restrictions and encumbrances, except (among other things) any registered covenants that run with the land. If the registration of any RCs is not investigated prior to the buyer signing the agreement, it may turn out that their intended use or renovation of the property may not be allowed by a RC on title. This is another reason why it is always advisable for a buyer to review their purchase agreement in detail with a lawyer before entering a binding agreement.

We apologize if this information sounded more like a legal document than a blog! For those new into real estate and homebuying, it’s better to understand things this way first!