Buying a Rural Property? Check for deed restrictions.

When buying a rural property, the buyer should always ask if the property has any deed restrictions as these can impose various limitations on how the property can be used and also potentially decrease the property’s value.

What exactly is a deed restriction?

A deed restriction removes some of the property rights from the full ownership bundle. This could include restrictions on housing, transfer of water/mineral rights, future development, etc.

What are some common deed restrictions?

• Housing limitations – This could restrict the number, size or type of residential structures allowed on the property.
• Transfer of water/mineral rights – The deed may restrict the owner's rights to water sources or mineral deposits on the land.
• Restrictions on future development – This limits the owner's ability to develop the land beyond its current state, such as prohibiting subdivisions or construction.
• Removal of development rights – A very common restriction, in areas with urban sprawl, that prevents the owner from building new structures or making significant improvements to the property beyond what already exists. The extent of these development restrictions can vary from minimal limitations to only allowing agricultural use and prohibiting motor vehicles.
• Agricultural use only – The deed may mandate that the land can only be used for agricultural/farming purposes and no other types of development.
• Prohibiting motor vehicles – Some highly restrictive easements don't allow the use of motor vehicles on the property.
• Right of first refusal – Granting the easement holder the ability to match any purchase offer if the owner wants to sell the property.

Next Steps

When purchasing any property, it's crucial to obtain and thoroughly review the deed restriction document, ideally with the help of an attorney specializing in easements, to understand the limitations and ensure future plans are allowed.

Just because a property has deed restrictions doesn’t mean it’s not a good purchase. You just want to be sure you’re aware of deed restrictions, understand their specific limitations, and enlist expert guidance to navigate a rural property purchase with such restrictions in place.

Working with specialists like realtors and mortgage lenders familiar with deed restrictions can simplify the process of buying a restricted rural property. The mortgage specialists from Country Living Loans from Farm Credit East understand these restrictions and can make your experience much simpler.

Visit CountryLivingLoans.com to find a mortgage specialist that serves your area.

Contact A Country Living Loans Specialist Today