The City of Austin will issue a permit in direct violation of deed restrictions, and the permit does not control, the deed restriction controls. This can be a devastating financial loss for a project.
One of the most frustrating parts of watching both YIMBYs and NIMBYs argue for or against the HOME initiative (a pro-housing initiative in Austin, Texas, which proposed among other things allowing three units per lot by right across Austin), was how little discussion there was on deed restrictions, which in many parts of Austin (ahem, most of west Austin) drastically change what would otherwise be allowed to be built under the HOME initiative. Many deed restrictions limit a lot to one single family home, or in other words, prohibit more than one unit on a lot. In fact, the HOME initiative was never going to change certain neighborhoods and large parts of Austin, a NIMBY win, so really the argument against the HOME initiative for many NIMBYs should have been NIYBY either (not in your back yard either).
“I have a permit to build an ADU or a duplex, and someone told me I may not be able to build the ADU or duplex on my lot. How can that be, as I have a permit?”
It is my least favorite conversation to have with clients, and it is a conversation that I have a couple of times a week. It starts something like this, “I have a permit to build an ADU or a duplex, and someone told me I may not be able to build the ADU or duplex on my lot. How can that be, as I have a permit?” Sadly, what they did not find out before their conversation with me, is that the City of Austin will issue a permit in direct violation of deed restrictions, and the city issued permit does not control, instead the deed restrictions control. And this can be a devastating financial loss for an owner wanting to build an ADU or a development project.
"So, the deck is stacked against buyers, owners and developers on this one."
It usually starts with the owner/buyer not reading the title commitment issued during escrow, prior to their purchase of the property. Often, the owner could not read the restrictions contained in the title commitment even if they wanted to, as not all title companies provide hyperlinked commitments. I will never understand why some title companies do not provide hyperlinked commitments - we are in 2024 after all, except that some title companies have chosen to save a bit of time and money at the expense of buyers. If the commitment is not hyperlinked, then it is up to the buyer to request copies of the restrictive covenants. Most often buyers do not know to ask for copies of the restrictions, because they are not consulting an attorney and their realtor and title company do not mention it. Additionally, these restrictions are usually not available online, as they pre-date the county clerk online records.
If the buyer does look at the restrictions, the restrictions often start with something like, only Caucasians may purchase a lot in this neighborhood, and so they stop reading, often incorrectly assuming these deed restrictions no longer apply to my lot. Although the restrictions based on race are unenforceable, the remainder of the restrictions are enforceable.
So, the deck is stacked against buyers, owners and developers on this one.
"I wish that somewhere along the road of permitting, someone or some form at the City of Austin would warn property owners - we may issue a permit that may be in violation of the deed restrictions on your property - please check your deed restrictions!"
And then it continues, when owners and developers are not advised to check deed restrictions during the permitting process. I understand that the City of Austin permitting office can not provide legal advice to people seeking permits by interpreting private deed restrictions that encumber a property. However, I wish that somewhere along the road of permitting, someone or some form at the City of Austin would warn property owners - we may issue a permit that may be in violation of the deed restrictions on your property - please check your deed restrictions! As most clients assume, if I have a permit to build it, I am allowed to build it, and that is simply not the case with deed restrictions, as deed restrictions trump city permits.
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Need help reviewing your deed restrictions? Contact Julie Alexander at Julie@TexasCondoLaw.com.
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