A deed restriction prohibits a subdivision from using a residential property as a business. A buyer interested in purchasing a property in the subdivision tells their broker they intend to use one room of their house as a dog grooming service. Can the buyer do so?
Audio Lesson
Duration: 2:24
Question & Answer
Review the question and all answer choices
Yes, so long as none of the neighbor notice.
Neighbor notice is irrelevant to deed restriction compliance. Even if neighbors don't object, the buyer would still be violating the deed restriction by using the property for business purposes.
Yes, if the homeowners’ association (HOA) grants them explicit permission.
HOA permission cannot override deed restrictions, which are contractual obligations running with the land. HOAs enforce restrictions but cannot grant exceptions to fundamental deed limitations.
Yes, so long as they only groom dogs from within the subdivision.
No, the deed restriction prohibits the use of a residential property to conduct business.
This is too absolute. The restriction prohibits using the property AS A BUSINESS, which may not include occasional, limited business activities from within the home that don't change its residential character.
Why is this correct?
The restriction prohibits using the residential property AS A BUSINESS, not conducting business FROM the property. A home-based business that doesn't change the property's residential character and doesn't involve external traffic or customers may comply with the restriction if limited to within the subdivision.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests understanding of deed restrictions and their enforceability in real estate transactions. The concept matters because deed restrictions are common in planned communities and significantly impact property use and value. The core issue is whether a residential property can be used for business purposes despite a deed restriction prohibiting business use. The correct answer requires analyzing whether conducting business from within the home constitutes using the property as a business. The question is challenging because it involves interpreting the scope of deed restrictions and understanding exceptions to general prohibitions. Many students mistakenly think deed restrictions are absolute or that permission from an HOA can override them. This connects to broader knowledge of property rights, zoning laws, and the relationship between private restrictions and public regulations.
Knowledge Background
Essential context and foundational knowledge
Deed restrictions (also called covenants, conditions, and restrictions or CC&Rs) are private agreements that limit how property can be used. They run with the land, meaning they apply to subsequent owners. Unlike zoning ordinances, deed restrictions are contractual obligations enforced by homeowners associations or affected property owners. Courts interpret them based on their specific language, and enforcement depends on whether the restriction is reasonable, benefits the community, and doesn't violate public policy. California law generally upholds deed restrictions as long as they don't violate constitutional rights or public policy.
Think of deed restrictions like a 'no shoes, no shirt, no service' sign at a restaurant. The rule prohibits certain activities, but doesn't prevent you from wearing a jacket indoors (similar to conducting limited business from home).
When encountering deed restriction questions, ask yourself: 'Is this changing the fundamental nature of the property or just an incidental activity?'
For deed restriction questions, focus on the specific language of the restriction and whether the activity fundamentally changes the property's character, not just whether it's technically 'business'.
Real World Application
How this concept applies in actual real estate practice
A buyer wants to purchase a home in a gated community with deed restrictions prohibiting commercial use. They plan to offer online consulting services using their home office. The listing agent must explain that this likely complies with the restrictions since it doesn't involve external traffic or change the property's residential character. However, if the client planned to operate a daycare with multiple children arriving daily, this would likely violate the restrictions and could result in legal action from the HOA.
More Land Use Controls Episodes
Continue learning with related audio lessons
Ready to Ace Your Real Estate Exam?
Access 2,499+ free podcast episodes covering all 11 exam topics.