Neighborhood covenants may be permanent, expire naturally, or have a declared term of existence. For example, a builder will often initiate covenants running with each lot in a subdivision, that address such restrictions as type of dwelling that can be constructed on a lot (e.g. single family structure only) or setback from street (e.g. minimum of 100 feet). Once the houses have been built upon the lots, the covenants regarding setback and type of dwelling naturally expire as between the builder and the purchasers of the lots. However, more likely than not, a homeowners’ association will adopt the prior covenants to prevent subsequent homeowners from either converting their homes to multiple-family dwellings or building additions to the home that are closer than 100 feet to the street. In such an example, the builder is no longer a party to the covenants, but they nonetheless will be binding among subsequent homeowners represented by the association.
Such a transfer of covenants is most often provided for by the developer in the initial covenants filed with the city or county at the time the subdivision development is approved. An example contained in a declaration of covenants might read something like, “After 50 percent of the total lots in the Subdivision have been sold by the undersigned developer, or after ten (10) years, whichever occurs first, the “Triple Crown Homeowners Association” shall be established as a not-for-profit corporation. The owners of each lot shall collectively own one share in the Homeowners Association. It shall be the duty of The Homeowners Association to enforce these covenants and restrictions, majority rule shall prevail except as otherwise stated herein_”
Commonly, CC&Rs have a declared term of existence, after which they expire naturally. The positive side of having covenants with fixed terms of life is that subsequent property owners are not burdened with restrictions that have become arcane, dated, or no longer desirable. For example, in 1950, a homeowners association wanted to preserve the charm of a residential area and created covenants restricting the sale of any properties for use only as single-family homes. But as the area grew, commercial properties surrounded the residential area, making it unattractive to prospective homebuyers. A well-written covenant with a term life would have contemplated this scenario and limited the restriction to 25 or 30 years, for example. At that time, new owners could voluntarily agree to extend the life of the covenants or adopt new ones. Or, with expired covenants, they could petition local zoning boards to rezone their neighborhood as commercial or multiple-family resi-dential properties, to maximize the return on their investments.
It is also possible that some expired covenants are converted into new zoning laws affecting the residential area, and will therefore be binding on subsequent property owners as well.