Restrictive Covenants in Custom Home Subdivisions

The Indianapolis Star has an interesting article this morning describing a situation that is doubtlessly occuring in many upscale communities across the country.  There are several subdivisions in Hamilton County, just north of Indianapolis, that were marketed as available to custom home builders only.  The large lot sizes, large home sizes, and required architectural features were supported by both restrictive covenants and zoning restrictions.  But, as you may have heard, the economy crashed.  Many smaller custom home builders in Indianapolis have gone out of business.  The original developers of the subdivisions either lost unbuilt lots to the bank or have been forced to sell them in a bulk sale to production home builders.

So the people who built their $1 million plus custom dream homes (which is a VERY VERY nice house in Indianapolis) in these subdivisions are now battling to keep out the $350,000 to $500,000 production homes. 

Lawsuits have already been filed, so I suspect that we will be seeing more appellate court decisions across the country soon interpreting restrictive covenants that the homeowners understood as limiting the subdivisions to custom-built homes.

Tanya Marsh

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