Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties

Covenants, Conditions, and Restrictions (CC&Rs)

In addition to the governmental codes and rules that affect a property, the developer or the owner of a project might have recorded covenants, conditions, and restrictions (CC&Rs) that might affect the development. These CC&Rs supplement code. To the extent that a CC&R violates an existing law, it is not enforceable. An obvious example of this would be a racial or religious restriction. It would be unenforceable for a CC&R to bar people of a certain race or religion from being a tenants in a retail or office project. However, wide latitude is given to other restrictions that do not run afoul of the law. CC&Rs might prohibit specific usages and goods that can be sold. They might also dictate who manages the property, its hours of operation, permissible delivery areas, and so forth. The main point is that if a development opportunity is contemplated, the CC&Rs should be read and thoroughly understood prior to moving forward with the project.