When transferring property, an owner may wish to place certain restrictions in the deed to limit the new owner’s use of the property. Such restrictions typically “run with the land” – meaning they are not personal to the owner and will affect future owners.
Typical deed restrictions are the following:
Grantee retains the right to use the land for hunting purposes.
The Property may not be rented or leased to any third party.
Only one single-family residence is permitted on the Property.
No trees may be removed from the three acres of the Property bordering Buckeye Creek.
Grantee retains the right of first refusal and option to purchase, in the event Grantee wishes to sell the Property to a third party.
While most deed restrictions are valid, those that are against public policy are unenforceable. For example, restrictions that bar the grantee from transferring the property are considered a restraint on alienation because they prevent the free flow of property. A restriction that limits transfer of the property to buyers of a certain race is invalid.
Ohio’s legislature and judiciary have also looked at specific restrictions in recent years. In 2003, the Ohio General Assembly amended the statutes to specifically provide that deed restrictions prohibiting flagpoles or the display of the American flag were invalid. In 2012, the Ohio Supreme Court held that a public school district could not sell a vacant school building for sale with a deed restriction preventing the property to be used for school purposes, because Ohio’s public policy supports community schools.
Sellers should consider whether they should insert deed restrictions into the transfer documents, particularly in cases in which they will live nearby or gain some value from the restrictions (be it a protected view, the option to buy back the property, or some other benefit). Likewise, before purchasing property, buyers should hire a reputable company to perform a title search to make sure that they are informed about any existing deed restrictions on the property.