CC&R’s or 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.
It wasn’t until the 19th century that real estate developers in this country would devise numerous other ways to employ deed restrictions. Deed restrictions were often used to deny the right to own property in a development on the basis of race and religious affiliation. Generally, all but the rich, white, and Protestant were banned from these exclusive communities. These restrictions were written and legal and the practice continued until 1948 when the U.S. Supreme Court outlawed the practice.
To wit: Leawood Estates Homes Association in Leawood, Kansas wrote their first Declaration of Restrictions in 1945. One of the restrictions read:
“Land is not to be sold, conveyed, transferred, devised, leased or rented to any person of the Negro blood or by any person who is more than one-fourth of the Semitic race, blood, origin or extraction, including without limitation of said designation, Armenian, Jews, Hebrew, Turks, Persians, Syrians and Arabians, excluding, however, from the application of this paragraph partial occupancy by bona fide domestic servants employed thereon”.
By the early 20th century, builders developed a desire not only to control the design of their subdivisions, but also to control the actions and behavior of the people who lived within them. By incorporating these communities, developers and their lawyers were able to create legal, private governments and dictate lifestyles by writing deed restrictions limiting the constitutional and civil rights of the property owners who lived in homes associations. Later municipalities began to require builders to incorporate HOAs in their plans submitted for approval.
CC&R’s 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&R’s; they are referred to as ‘reciprocal negative encasements’. As a homeowner in a deed restricted community, you may have your largest financial investment tangled up in one of those! By purchasing a home in a planned development, you are assumed to have agreed to the adhesion contract whether or not the seller made full disclosure of its contents or implications. Sellers will try to withhold as much information as they can possibly get away with since the act of filing deed restrictions at the proper governmental department legally constitutes full, public disclosure. When you move into your new purchase, you are now living in, and being governed by a corporation. Some constitutional rights and protections under U. S. law are not recognized in a private corporation. In America, the corporate form of government is as close as you can get to a total monarchy.
Welcome to the neighborhood! The CC&R’s will grant a handful of your neighbors, referred to collectively as the Board of Directors, powers beyond those enjoyed by local, state and federal governments. They will also be shielded from personal liability and thus eliminate any incentive to exercise that power in a reasonable and rational manner. And best of all for them, no experience is required so closet dictators in the neighborhood will be hustling for a seat on the board or its committees.
The documents that they will govern by, in some cases, were written 20 to 30 years ago, have never been updated, or were later amended or appended. They were and are often written and/or approved by attorneys and are typically vague leading to controversy and litigation. The documents also give the people in power a great deal of latitude in interpretation of the restrictions, and that they will use with wild abandon.
Of course, someone along the way has recommended that you read the CC&R’s. That can be an act of absolute blind faith. The document will be full of words that have an undefined meaning and subject to various interpretations. And what you are really doing when you sign the closing documents is agreeing to something that can be rewritten at any time in the future by persons who are, as of that moment, unknown to you.
Since the majority of folks in homes associations are sheep, not shepherds, the system works like a charm to the advantage of boards, committees and lawyers.