National Real Estate Exam (PSI)Property OwnershipEasy
A developer is planning a new residential community and wants to ensure that all future homes maintain a consistent architectural style and minimum square footage. To achieve this, the developer records specific limitations on land use that will apply to all current and future property owners within the community. What type of encumbrance is the developer creating?
- AAn encroachment, as it involves an unauthorized intrusion onto another's property.
- BA restrictive covenant, as it limits the use and development of land.
- CA lien, as it places a financial claim against the property.
- DAn easement, as it restricts how property owners can build.
Show answer & explanationAnswer & explanation
Correct answer: B. A restrictive covenant, as it limits the use and development of land.
Restrictive covenants are private agreements that govern the use of land, often found in homeowners association (HOA) documents or deeds for subdivisions. They are used to maintain uniformity, property values, and quality of life within a community.
Why the other options are wrong
- A. An encroachment is an unauthorized physical intrusion of an improvement onto another's property, which is not applicable here.
- C. A lien is a financial claim against a property, not a restriction on its physical use or appearance.
- D. An easement grants a right of use over another's property, not general restrictions on building style or size.
Restrictive Covenant
A private agreement that restricts the use or occupancy of real estate, often found in deeds or recorded declarations for subdivisions.
- Also known as 'CC&Rs' (Covenants, Conditions, and Restrictions).
- Aimed at maintaining property values and community standards.
- Can be enforced by homeowners associations or other property owners.
Memory trick: Encumbrances are property burdens, not benefits.