Reference no: EM132611182

In addition to public (government) limitations on property rights, many properties are also subject to private (non-government) property right limitations. For example, a property pledged as collateral for a loan is considered to have a private property right limitation because the owner and a lender have agreed to loan terms that give the lender a secured interest in the property. Lenders include language in loan documents that is intended to limit how the borrower can use the property while the loan is in place. Similarly, many properties are subject to covenants, conditions, and restrictions (CCRs) placed on the property by a prior owner or the current owner. CCRs are often encountered for properties located in property owners' associations. By private agreement, the owners of such properties have agreed to use (or not use) their properties in certain ways in attempt to maintain high desirability (and value) of the properties. CCRs are not government regulations. Instead, they are privately agreed upon limitations that the other owners in the association enforce through legal action against violators. Generally, people who want the protection CCRs offer from nuisance uses by nearby property owners are the people most attracted to properties that are limited by CCRs and enforced by property owner associations through lawsuits. Obviously, limitations on property rights that negatively impact property values are a concern of lenders who are considering accepting such a property as collateral for a debt.

1. If you own a house in a neighborhood with a homeowners' association that has a rule against parking pickup trucks and motorcycles on driveways at any time, what should you expect to happen if you consistently violate this CCR?