When most people think of real estate covenants, they envision residential neighborhoods with strict, lengthy rules governing all aspects of life in the development: architecture, landscaping, paint colors, and even what type of recreational vehicles a homeowner can and cannot keep in the driveway. Although not the norm on larger acreage, high value ranches, every so often a Rocky Mountain legacy ranch will have covenants that need to be fully examined and understood.
Generally, a landowner decides to put covenants in place prior to subdividing his or her large ranch into smaller parcels and then selling those parcels to new owners. In an effort to have some sort of “quality control” over what will and will not be permitted on the parcels, the landowner (or more likely, the landowner’s attorney) writes up covenants and has them recorded at the county recorder’s office. Once recorded, the covenants are attached to each parcel’s deed, and future parcel owners must abide by the rules that are spelled out in the covenants and enforced by the homeowners association (“HOA”).
Covenants help remove some of the uncertainty that inevitably comes with purchasing rural real estate, specifically related to neighboring landowners. For example, if I were to purchase a rural 100-acre ranch with no covenants surrounded by other 35- to 100-acre private tracts, neighboring landowners would be allowed to do or build whatever they wanted, so long as it complied with county regulations. This could mean dilapidated trailers, broken down cars, and junk strewn about the property, or possibly even small-scale mining operations. On massive, 1,000+ acre ranches, eyesores and noise pollution from adjoining land are not usually an issue because of the distance between neighbors. On smaller ranches, however, problems can range from minor annoyances to major issues that degrade the ranch’s value. Covenants are an effective solution to eliminate the threat of negative consequences brought about by bad neighbors.
On the flip side, many people buy western ranches to be free of the excessive governmental and HOA regulations that may bother them at their current homes. These buyers want to use their land however they please, without any interference from municipalities or the brigade of bored senior citizens that so often play “enforcer” in urban HOA communities.
There are also many buyers who do not object to covenants, and yet certain restrictions would not fit with their goals for a western ranch. For example, I have seen covenants that prohibit hunting, ATV riding, or the use of firearms, any of which could be a deal killer for most recreational-minded buyers. For these buyers, it is important to fully research and understand the covenants prior to purchase in order to avoid any unnecessary conflicts, monetary fines, and a serious case of buyer’s remorse.
It is important to note that covenants, while attached to the deed, are not permanent like conservation easements. Conservation easements are “in perpetuity” (i.e. “forever”), while covenants can be amended, removed, modified or updated as is allowed by the HOA by-laws.
The 198-acre Flat Rock Ranch, located in the foothills of Larimer County, CO, is an example of a ranch with covenants that strikes the perfect balance between protecting neighboring landowners without being overly restrictive. The covenants disallow unsightly mobile homes, inoperative cars, and trash piles, as well as most commercial activity. The HOA does maintain roads for Flat Rock Ranch and the neighboring properties, which is a huge benefit, particularly in the winter.
Fazenda Ranch, a 140-acre retreat located near Westcliffe, CO, has covenants that also prohibit mobile homes, the construction of homes less than 800 square feet, and the construction of buildings in excess of 25 feet high. Because Fazenda Ranch already includes a 7,000 square foot log home, future owners would most likely not have a problem with these restrictions. Instead, they do a great job of protecting the ranch’s view sheds by preventing unsightly construction on adjoining properties.
At Mirr Ranch Group, we are experts in understanding covenants attached to ranchland, and we pride ourselves on being able to communicate the pros and cons of specific covenants, given our buyers’ individual goals.