According to Investopedia, a restrictive covenant is a clause in a deed that defines and limits what the owner can do with their property. One thing to note about a restrictive covenant is that surrounding property owners, or a homeowners' association, can take the case to court to enforce the restrictions.  

Restrictive Covenants:

Residential restrictions often control size of dwellings, outbuildings, exterior appearance, landscaping, and distance from the street or property line. Typical restrictions include twenty-foot setbacks from the street, or that fences will be wood and no more than six-feet tall. When the property is purchased, the owner is immediately bound by all covenants in the deed or homeowners association agreements.

When shopping for McAllen home insurance, a home owner must be aware of all the requirements of the restrictive covenants. For example, if the agreement says that all homes are to be unpainted brick with slate roofs and paved driveways, this should be factored into replacement cost.
Seems straight-forward, however, there may be a ticking time bomb inside a restrictive covenant or homeowners' association by-laws. 

Grandfather Clauses:

A homeowner must be very aware when buying an older home in a community with restrictions and associations. A "grandfather clause" is legally defined as a statement in a contract that allows an existing situation to remain, while creating a new rule for future situations. The most common example of being "grandfathered-in" to a community involves setbacks. 

Setback restrictions exist in almost every planned community. When all the houses are the same distance from the curb, it creates an appealing visual image and symmetry on the street. However, some developments added setbacks after homes were already built. These existing homes were usually "grandfathered" into the association rules and covenants. The rules also might contain a clause that any significant change to the structure will trigger the new requirements. 

Insurance Repercussions: 

If an owner isn't aware of, or doesn't tell their insurance agent about a restrictive covenant or grandfather clause, the agent may not be able to correctly compute the replacement value of their home. 

For example, if a home doesn't meet the current setback standards, the rebuild or significant repair may not be able to use the existing foundation. All or part of the house may have to be moved or even redesigned to meet the new requirements. Or if the appearance criteria has changed, the home may need to be upgraded to meet the new standards. 

Only a professional insurance agent can evaluate the effect of a restrictive covenant on the scope and cost of homeowner's insurance. Call Raymond Longoria Insurance at 888-296-0345 for an appointment today.