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Understanding deed restrictions on commercial properties

On Behalf of | Mar 8, 2022 | Commercial Real Estate |

Some commercial properties, just like some residential properties, have deed restrictions on the land they’re built on. Those who are new to buying property might not think to look for these restrictions, which are usually found in the title search. 

Deed restrictions “run with the land.” That means they continue for that piece of land, even if a property is torn down and another one built and when a property changes ownership. 

What is the purpose of deed restrictions?

Deed restrictions on commercial properties may resemble zoning ordinances because they often restrict what kind of business can be practiced. They may also cover things like design requirements, fence height, environmental restrictions and more. However, unlike zoning ordinances, they typically only apply to one property and don’t require any approval beyond that of the party (or in some cases a government entity) that placed the restriction.

Commercial deed restrictions are often used to prevent competitors from moving into a development. A restriction, for example, may allow only one restaurant per commercial development. Some business owners may be able to negotiate the addition of such a restriction into their lease agreement. 

If you’re adding a deed restriction to a property or seeking one, it’s wise to be as specific as possible. Vague deed restrictions can cause confusion and conflicts that may have to be resolved in court.

How can a restriction be removed?

Getting a deed restriction removed isn’t always easy. It usually requires that all parties affected by the restriction approve the removal. 

Illegal restrictions can be removed by a court. These are more common on residential properties. Some home buyers have found that the deed to their property includes an old restriction prohibiting people of certain races to live there.

Whether you’re purchasing, selling or leasing a piece of commercial property, it’s wise to be aware of any deed restrictions that could affect you either in the future. That’s just one reason why it’s wise to have legal guidance throughout the transaction.

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