What is a deed restriction, and how can it affect property value or use?

• A. A constraint recorded in the deed limiting use, size, or redevelopment; can constrain value and financing
• B. A government ordinance requiring property maintenance
• C. A bank loan clause restricting sale
• D. A typical tax assessment method

Answer: (A)

A deed restriction is a private limitation attached to a property and recorded in the deed, typically created by the seller or developer. It’s a covenant or condition that runs with the land, binding current and future owners to certain uses, sizes, styles, or redevelopment rules. Because it constrains how the property can be used or developed, it can directly affect value and financing. Buyers may face a smaller market or higher restrictions on how they can use the property, which can lower market value or complicate financing if lenders are concerned about restricted uses. Conversely, restrictions that preserve neighborhood character can sometimes support value by maintaining desirability.

This is different from government ordinances or zoning, which are public rules; from bank loan clauses tied to financing terms; or from tax methods used to assess property taxes.