Deed Restrictions

Deed restrictions (also known as “deed covenants” or “restrictive covenants”) are a common tool for placing limitations on the uses of land and are frequently required by grant funders.7 Funders are motivated to monitor these restrictions in order to protect their investments, and funding recipients are motivated to comply with restrictions in order to avoid repaying grants or loans. Recipients also want to maintain good standing for future funding opportunities. For instance, the Madison Area CLT was required to grant a deed restriction to the City as a condition for funding the 26-acre conservancy parcel at Troy Gardens, restricting uses of the land solely for conservation and agriculture. Failure to abide by the terms of the deed restriction would trigger immediate repayment of all subsidy funds provided by the City of Madison.

While a deed restriction can be effective in ensuring that land is restricted to certain (in this case, agricultural) uses, it does not necessarily offer security of tenure for the grower or farmer. Further, the efficacy of deed restrictions is contingent upon their enforcement by the stewarding agent. Risks of noncompliance with restrictions are highest at the point of transfer of title, either due to inattentiveness by the title company or disregard by the buyer and seller.