A homeowners association's recorded CC&Rs limit exterior paint colors and require design review. For valuation these covenants are:
Correct Answer
D) Private restrictions that can protect or burden value — a market question
Why this is correct: Covenants, Conditions, and Restrictions (CC&Rs) are private deed restrictions. Their impact on value is a market question—they can protect value by maintaining standards or burden it by limiting owner choices. The appraiser must analyze market evidence to determine the effect. Why the other choices are wrong: "Unenforceable restrictions on liberty" is incorrect; properly recorded CC&Rs are generally enforceable. "A government police-power regulation" describes zoning, not private covenants. "A title defect that requires a quiet-title lawsuit to clear away" is wrong; CC&Rs are a known encumbrance, not a defect requiring litigation. Exam tip: CC&Rs are private restrictions. Analyze their market acceptance, not just their existence.
Why This Is the Correct Answer
Why this is correct: Covenants, Conditions, and Restrictions (CC&Rs) are private deed restrictions. Their impact on value is a market question—they can protect value by maintaining standards or burden it by limiting owner choices. The appraiser must analyze market evidence to determine the effect. Why the other choices are wrong: "Unenforceable restrictions on liberty" is incorrect; properly recorded CC&Rs are generally enforceable. "A government police-power regulation" describes zoning, not private covenants. "A title defect that requires a quiet-title lawsuit to clear away" is wrong; CC&Rs are a known encumbrance, not a defect requiring litigation. Exam tip: CC&Rs are private restrictions. Analyze their market acceptance, not just their existence.
More Property Description Questions
A property is located in FEMA flood zone AE with a base flood elevation of 485 feet. The lowest floor is at 487 feet. What is the significance for the appraisal?
In a leasehold estate, the tenant's interest in the property is called:
A residential property is located in a subdivision governed by covenants, conditions, and restrictions (CC&Rs) recorded in 1985. One CC&R prohibits detached accessory structures over 12 feet in height. The property currently has a 14-foot-tall detached garage built in 2012. No enforcement action has been taken. How should the appraiser reflect this violation in the appraisal report?
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