Selling a House With a Deed Restriction or Restrictive Covenant

Educational only. This explains how these situations generally work. It is not legal, tax or financial advice, and the rules differ by state — talk to an attorney or CPA about your own situation before you act on any of it.

Selling a house with a deed restriction: the short answer

Yes, you can sell a house with a deed restriction or restrictive covenant. It's recorded language in your chain of title that limits how the property can be used — age restrictions, rental caps, architectural rules — and it runs with the land regardless of whether an HOA is even active. It rarely blocks a sale outright, but it can narrow your buyer pool, and for a small number of old deeds, may contain void racially restrictive language some states now let you formally strike.

This is general educational information, not legal advice. Covenant enforceability, modification procedures and disclosure duties vary by state — confirm your specific situation with a real estate attorney or title company before relying on anything here.

What a deed restriction actually is, and how it differs from an HOA

A restrictive covenant is a provision in a property's recorded deed or chain of title that limits how the land can be used, binding the current owner and — because it's recorded against the land itself, not against a person — every future owner too (Cornell Law School Legal Information Institute: restrictive covenant).

This is different from an HOA rule or lien. An HOA's authority comes from an active association with bylaws and dues; a deed restriction is baked into the title itself and can exist — and keep binding owners — whether or not any association is still operating, or ever existed at all.

Common types you'll actually run into

• Age restriction (55+ communities). The federal Housing for Older Persons Act (HOPA) of 1995 lets qualifying communities legally restrict occupancy by age without violating the Fair Housing Act's familial-status protections — but only if at least 80% of occupied units have one resident 55 or older (24 CFR §100.305), the community publishes and adheres to policies demonstrating that intent (24 CFR §100.306), and it verifies resident age through reliable documentation at least once every two years (24 CFR §100.307).
• Rental caps / no-rental covenants. Some deeds or community declarations limit or bar renting the property out, aimed at keeping a neighborhood owner-occupied.
• Architectural control covenants. Rules on exterior changes, fencing, paint colors, or additions.
• Single-family-use-only or minimum-square-footage covenants. Limits on how the lot can be developed or subdivided.

How it affects a sale and financing

For most single-family houses, a deed restriction doesn't block a retail sale to an ordinary owner-occupant buyer — it mainly narrows the pool of who can buy, not necessarily what the house is worth. The clearest, most concrete financing example is at the project level, not the single-house level: Fannie Mae's own Selling Guide makes a condo, co-op or planned development ineligible for Fannie Mae financing if it has a mandatory rental-pooling arrangement or a deed restriction limiting owner occupancy (Fannie Mae Selling Guide, B4-2.1-03: Ineligible Projects). If your property is part of an attached-housing project with that kind of restriction, it's worth confirming with a lender early, since it can eliminate a chunk of financed buyers before you even get an offer.

If your deed restricts the property to owner-occupants only, that also affects your cash-sale options: ask any cash buyer, including us, whether they plan to hold it as a rental or resell it to an occupant, since that can determine whether they're even eligible to make you an offer that honors the restriction.

The part almost nobody talks about: void racial covenants still sitting in some deeds

Before the Fair Housing Act of 1968 and the Supreme Court's 1948 ruling in Shelley v. Kraemer, many developers recorded covenants barring sale to buyers of certain races. That language is legally void and completely unenforceable today — nobody can use it to stop or condition a sale. But the physical language often still sits in the recorded chain of title, because voiding it legally didn't erase the paper.

A growing number of states now let homeowners formally strike that language from the public record. Two of them are states Restar Acquisitions buys in:

• Maryland — under Real Property §3-112 (enacted via House Bill 182, 2023), a property owner, a nonprofit fair-housing enforcer, or a county or municipality can record a modification striking unlawful restrictive covenant language, subject to county attorney review.
• New York — under RPL §327-a, effective June 3, 2026, sellers must record a modification document striking known unlawful covenant language and give the buyer a copy at or before closing; HOAs, co-ops and condo boards must strike such language within a year, without needing an owner vote.

For scale: the University of Washington's Racial Restrictive Covenants Project, reported February 2023, had by then identified roughly 15,000 restrictive documents covering nearly 80,000 parcels in Washington State alone — a figure specific to that state's own research project, not a national count, but a useful sense of how common this old language can be in areas that have actually gone looking for it (University of Washington, February 6, 2023).

None of this blocks your sale — the language is already void whether or not it's struck from the record. But if you're selling in New York and know your deed carries this kind of language, state law now requires you to act on it; in Maryland, you have a clear process available if you choose to.

The honest math: a deed restriction usually isn't a value problem, it's a buyer-pool problem

Take a $210,000 house with a no-rental, owner-occupant-only covenant.

The honest takeaway: for a house like this, the restriction itself usually isn't what's costing you money — the standard cash-vs-listing tradeoff applies the same way it would without the covenant. Where a deed restriction genuinely hurts your net is when it excludes most of your realistic buyer pool, for example a rental-cap covenant on a property mainly attractive to investors, not just some of it.

Alternatives to consider

• Get a title company or real estate attorney to review exactly what your covenant says before you assume it's a problem.
• If you're in New York and know of unlawful covenant language on your deed, confirm your obligations under RPL §327-a before closing.
• If you're in Maryland and want void racial covenant language struck from the record, Real Property §3-112 gives you a path to do it.
• If a rental cap or owner-occupancy covenant is the issue, ask early whether your preferred buyer type is even eligible under its terms.
• Talk to a real estate attorney about your specific deed language — covenant enforceability and modification rules vary significantly by state.

What this means for your decision

A deed restriction is rarely the reason a sale falls through — it mostly decides who's eligible to buy, not whether the house can sell. Review what your covenant actually says, confirm any state-specific obligations if there's old racial-covenant language involved, and then the decision comes down to the same cash-versus-listing math as any other sale. Send us the address and we'll tell you plainly where you stand.

Common questions

Can I sell a house with a deed restriction or restrictive covenant?

Yes. Most deed restrictions don't block a sale — they limit who can buy or how the property can be used once sold, not whether it can be sold at all.

What's the difference between a deed restriction and an HOA rule?

A deed restriction is recorded directly in the property's chain of title and binds every future owner regardless of whether an HOA exists or is active. An HOA rule comes from an active association's governing documents and generally only has force while that association exists and enforces it.

Do I have to disclose a known deed restriction to a buyer?

Yes, in practice — a title search will typically surface recorded covenants during the sale process, and most sellers are expected to disclose known restrictions rather than let a buyer find out at the title company.

What if my deed has old racially restrictive language in it?

That language is void and unenforceable under federal law and has been since 1968. It doesn't stop your sale. Some states, including Maryland and New York, now have specific legal processes letting you or your title company formally strike it from the public record.

Can a lender refuse to finance a deed-restricted property?

For individual single-family homes, usually not just because of a restriction. For condos, co-ops and planned developments with mandatory rental-pooling arrangements or owner-occupancy restrictions, Fannie Mae's own guidelines can make the project ineligible for that financing, which matters more at the project level than the single-house level.

Does a deed restriction lower what my house is worth?

Not necessarily. It mainly narrows who can realistically buy it. If the restriction excludes only a small slice of likely buyers — for example, investors, on an otherwise owner-occupant-friendly house — the effect on price is often minimal.