Understanding deed restrictions on affordable housing units in Boston

The demand for housing in the Greater Boston area far exceeds what is available, according to the Metropolitan Area Planning Council. In an effort to create and maintain affordable housing for individuals and families in Massachusetts, the state offers various incentive programs, encouraging Boston area developers to construct affordable housing units.

Early this year, Mayor Martin J. Walsh reported that Boston is on pace to reach his affording housing goal outlined in Housing a Changing City: Boston 2030. More than 1,000 homes were permitted in 2015; a number that includes housing units containing deed restrictions that keep home prices low.

Boston homeowners and deed restrictions

In Massachusetts, deed restrictions are often used in new subdivisions and developments and help to maintain steady pricing for buyers. These affordable housing restrictive covenants – also referred to as Deed Riders – are quite common in the state. Unfortunately, too many owners and purchasers either do not realize that their deeds contain restrictions or do not know what they mean.

Deed restrictions can impair homeowners’ rights to use or transfer their properties as they want. Some deeds for affordable housing units in Massachusetts contain limiting provisions, such as:

• Renting: Some housing units must remain owner-occupied for a set number of years, restricting owners’ options should they wish to relocate or gain rental income. Deed provisions may dictate how much rent can be charged to tenants – regardless of the fair market rental rate – and may also establish specific rental terms.
• Refinancing: Homeowners may have to obtain permission before refinancing their mortgages and may be limited in the amounts they can borrow.
• Resale: Frequently, resale prices are set at the time of purchase or based on mathematical formulas, which calculate maximum sales prices for deed-restricted homes. Deed provisions may also grant state or local agencies first rights of refusal or set the maximum allowable numbers of bedrooms and bathrooms in units.

One Cape Cod homeowner recently filed a real estate lawsuit against numerous local officials. She alleges that she agreed to a two-bedroom deed restriction in exchange for the removal of a sales price restriction. Now, with two deed restrictions, it appears less likely that she will receive the purchase price she wants should she decide to sell.

A lawyer can help you understand your deed restrictions

Buyers and owners of deed-restricted homes should carefully review the provisions in their deeds with an experienced real estate attorney from the Boston law firm of Phillips & Angley before buying, refinancing or attempting to sell or lease their properties.