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2. The CC&Rs: MediEVIL LAW

The CC&Rs, or deed restrictions, are the foundations upon which all Common Interest Developments are built.

a past Imperfect
Deed restrictions were first conceived in medieval England; they were promises made by a landowner that he would not use his land in a way that could be harmful to his neighbors. Usually it meant that he promised not to build a slaughterhouse or a soap factory or anything equally unpleasant.

Deed restrictions often served as zoning ordinances, which would not come into common usage until the early 20th century. These agreements generally would “run with the land,” which means they would remain in effect indefinitely, and were to be honored by subsequent buyers of the land.

It wasn’t until the 19th century that real-estate developers would devise numerous other ways to employ deed restrictions. These early developers used deed restrictions to stipulate how property owned jointly by the homeowners would be used and required the homeowners to maintain this common area. In signing their deeds, homeowners also agreed to pay periodic taxes, or assessments, to provide for this upkeep.

This one, civic minded, example is the only benevolent application of residential deed restrictions I am aware of. From these early beginnings to the present, residential deed restrictions have been used by developers for all manner of manipulative, dishonest, and self-serving ends, while the government (and the public) just stood back and watched.

exclusive contracts
From the very beginning, deed restrictions were used to deny the right to own property in a development on the basis of race and religious affiliation. These restrictions were not implied but written and legal. Generally, all but the rich, the white, and the Protestant were banned from these exclusive communities. In the United States, this practice continued until 1948 when it was outlawed by the US Supreme Court. After that, developers wrote more subtle restrictions into their CC&Rs, which could produce almost the same result and are still in effect today.

do it yourself zoning
In the late 1800s, developers began using deed restrictions as a means of establishing their own, private zoning departments, which acted independently of the local municipality. They would simply write their own building codes into the deed restrictions, which trumps municipal codes and ordinances. This became the developers primary method of design.

corporate communities
By the early 20th century, builders developed a desire not only to control the design of their sub-divisions, but also to control the behavior of the people who lived within them. By incorporating these communities, developers were able to create legal, private governments and dictate lifestyles by writing deed restrictions limiting the constitutional and civil rights of the property owners. For the homeowner in America, life would never be the same again.

a present even worse
Not much has changed in 600 years. CC&Rs are written into the deeds of all homes in a CID. Just as in medieval times, they permit a seller of land to control how the land is used after it is sold. They are contractual limitations on a homeowner's property rights.

I signed a what!
Although you’ll probably never hear this term due to its decidedly ominous ring, CC&Rs are also referred to as adhesion contracts. These contracts do not allow for any of the usual negotiation - you either take it or leave it. The legal system has its own term for the CC&Rs; the courts call them, “reciprocal negative encasements.” So who wouldn’t want to have their largest financial investment tangled up in one of those?

signing is consenting
By purchasing a home in a planned development, you are assumed to have agreed to the contract whether or not the seller made full disclosure of its contents or its implications. Because of these negative implications, sellers of CID property will try to withhold as much information as they can possibly get away with. The fact is that just the act of filing deed restrictions at city hall legally constitutes full, public disclosure. Do you get the idea that someone is trying to hide something from you?

If you’re dead set on purchasing a home in a CID, you should get a copy of the CC&Rs early in the process and read every word; then cross your fingers and hope for the best.

corporate living without all those silly property rights
The CC&Rs limit the constitutional and civil rights of the homeowner. Remember, you are now living in, and being governed by, a corporation. In America, the corporate form of government is as close as you can get to a total monarchy. Some constitutional rights and protections under U.S. common law are not recognized in a private corporation. All decisions regarding the appearance of your property and how you maintain it (your property rights) will be dictated by a private government enforcing narrow rules created by a developer.

The whole idea behind these restrictions is the preservation of property values above all other considerations. The theory is, if the development never changes in appearance, it will never decline in value. So far, the theory hasn’t worked as planned.

power to the pompous people
The CC&Rs will grant a handful of your new neighbors, referred to collectively as the Board of Director's, powers beyond those enjoyed by local, state, and federal governments. It will also shield them from any personal liability, and thus eliminate any incentive to exercise that power in a reasonable and rational manner. And best of all, no experience is required, so every closet dictator in the neighborhood is going to be hustling for a seat on the board.

If it’s beginning to sound like owning a home in a CID is a potentially risky investment, you haven’t heard the half of it.

the chameleon of contracts
Most of the actual CC&R documents that are in use today were probably written 20 to 30 years ago and have never been updated. They are generic (one-size-fits-all) documents and purposely vague. However, there is always an “interpretation clause” included in the CC&Rs that gives the Board of Directors (a charming bunch of people you’ll meet in chapter 4) a great deal latitude in the interpretation of the CC&Rs. And most Boards, given this opportunity, will interpret with wild abandon. Here is the interpretation clause as it appeared in my copy of the CC&Rs form my old neighborhood of Shavano Ridge:

“The committee…shall have the power to construe and interpret any covenant herein that may be vague, indefinite, uncertain, or capable of more than one interpretation.”

Almost all the conflicts that developed between homeowners and the board of directors in Shavano Ridge were not the result of actual written clauses in the CC&Rs, but were new restrictions created by the board.

Although I still recommend that one read the CC&Rs, it is an act of absolute blind faith; the above clause renders the exercise purely academic. What you are really doing when you sign the CC&Rs is signing a blank document that can be rewritten at any time in the future by any person (or persons) who are, as of that moment, unknown to you. With this clause, the contract you agree to will be in a constant state of flux.

Homeowners never really know what they are getting themselves into when they sign the CC&Rs. A board member once gave me this simple explaination:

“We can interpret the CC&Rs to mean anything we want them to mean.”

Life may be like a box of chocolates, but when I sign a contract, I expect to know what I am going to get.

And, if that were not enough, there is another vague clause, “the nuisance clause” that also serves to render the true meaning of the CC&Rs perpetually indeterminable.

“No noxious or offensive activity shall be carried on upon any lot, nor shall anything be done thereon which may be or may become an annoyance or nuisance to the neighborhood.”

This particular clause, which I’m sure you’ll find in any version of CC&Rs in effect today, is actually a holdover from the 1950s. It was first used as a substitute for the race restrictions outlawed in the late 40s. Today, it is used to harass and intimidate anybody over anything.

With this clause, anything (even your children) can be interpreted to be a nuisance.

sometimes it works
Are there situations where deed restrictions do seem to make sense? Yes, there are a few. There are communities that are designed specifically to reflect a certain architectural style.

It would not be prudent to build a mid-century modern in a community called Canterbury, which is made up exclusively of English Tudor style homes. Attached condominiums would be another example where deed restrictions appear to be a reasonable safeguard. In a community of 200 units all painted pale rose, you don’t opt for mustard yellow. Protecting unique and clearly discernable design elements is not an unreasonable use of deed restrictions. It’s when there are no unique and discernable design elements to protect that deed restrictions serve only to invite abuse by HOA boards whose motives and judgement are questionable.

you got warned!
Now if you’ve read this far, you know a little bit about what life in a CID is all about. In other words, you have been given fair warning. If you still chose to purchase a home in a CID and sign the CC&Rs knowing what you know now, then there should be no complaints. But as we’ll see in the next chapter, a full and honest disclosure of the pros (if any) and cons of CID living will not be forthcoming - it just wouldn’t be good for business.


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