Restrictive Covenants in Arizona Real Estate Law

Restrictive Covenants in Arizona Real Estate Law

Restrictive covenants come in various stripes, but in real estate law they can most broadly be considered an agreement that requires one party to a contract (usually a buyer) to either take a particular action or to abstain from a particular action. These covenants are generally adopted as part of the purchase, and are written into the deed of the property. Those who purchase the property and fail to follow these covenants become subject to penalties.

What sorts of restrictions and actions may be applied to a parcel of property? Really, in the abstract, the sky’s the limit. It can be as minor as a requirement that the property be maintained in a specific condition. It can be restrictions upon colors used to paint the structures on the property. It can even go to timing and placement of holiday decorations.

If you’re thinking this sounds similar to rules applied to properties that are governed by homeowners association rules, you’re right. In fact, properties subject to homeowners associations are purchased with restrictive covenants that affix them to the rules made by an association. The rules then become something of a “live restrictive covenant” subdocument—capable of changing over time but enforceable nonetheless.

While the property laws in Arizona long tended to favor free use of purchased property over the strict enforcement of restrictive covenants, in a 2006 case called Powell v. Washburnthe Arizona Supreme Court instead adopted an approach laid out in the Restatement (Third) of Property: Servitudes. (These “Restatements” are model laws created by legal experts with an eye toward homogenizing laws to create more predictability over larger areas.) The Court chose to “hold that restrictive covenants should be interpreted to give effect to the intention of the parties as determined from the language of the document in its entirety and the purpose for which the covenants were created.” The Court’s decision to take this tack came down to the fact that, in fact, Arizona courts had long been favoring the intent of the parties as to these covenants, despite giving lip service to favoring free use; and that they wanted to bring Arizona in line with the trend in courts across the nation of “recognizing the benefits of restrictive covenants.”

If you’re looking to purchase real estate in Tempe or anywhere else in the state of Arizona, Provident Law’s attorneys stand ready to help—even if there are restrictive covenants at play. We structure, negotiate and document a variety of real estate and financing transactions, such as leases, purchase and sale agreements, loans and development agreements for a variety of commercial and residential projects—and we litigate over issues of ownership when necessary. Contact us for more details.

Christopher J. Charles is the founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions.

Christopher is a licensed Real Estate Instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at Chris@ProvidentLawyers.com or at 480-388-3343.