Zoning versus Deed Restrictions

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In a free-market, innovators and entrepreneurs have the freedom to offer new ideas and new products. And each individual has the freedom to choose which ideas and products he will support. So long as he recognizes and respects the mutual rights of others, each individual is permitted to pursue his values without interference.

Henry Ford, for example, was chastised for his horseless carriage. The free-market permitted Henry Ford to offer an unpopular product for sale. The free-market permitted individuals to voluntarily purchase that product. The free-market permits individuals to make choices for themselves, and prohibits them from forcing those choices onto others. The essence of the free-market is freedom of choice.

This is as true of land use as any other value. The free-market allows property owners to pursue their values in a voluntary, cooperative manner, yet also provides a means to ensure predictability in property use. That means is deed restrictions.

Deed restrictions are contractual agreements made between property owners restricting land to a particular use. Deed restrictions can restrict a piece of property to virtually any use: residential (multi- or single-family), retail, industrial, etc. Deed restrictions can also govern such features as the presence and dimensions of trees, fencing heights, or the color of a home. In most communities, an association made up of homeowners enforces the deed restrictions.

Many people see little difference between zoning and deed restrictions, between zoning officials and a homeowners’ association. They do not understand that zoning is political and mandatory, while deed restrictions are contractual and based on free choice.

The homeowners in deed restricted communities a) have chosen where they will live based (partly) on whether the deed restrictions are acceptable to them; b) have been given the opportunity to read and consider the contractual restrictions they and their neighbors agree to; and c) may leave those communities (or exercise legal remedies) if the specific and very limited authority given the homeowners’ association is abused. Because deed restrictions vary across the city (and are non-existent in some areas), consumers are provided with an unlimited array of choices regarding the use of their land.

In contrast, the homeowners in a zoned municipality have no power to choose the conditions under which they will live, and have nowhere else to move if those conditions are unacceptable. In short, the difference between deed restrictions and zoning is the difference between voluntary choice and coercive imposition, between the private agreements of individuals and the dictates of public tribunals.

The advocates of zoning point to areas where land use has changed, and claim that this proves the ineffectiveness of deed restrictions. This claim is false, for deed restrictions allow homeowners to choose to change the land use if they desire (voting requirements vary). In some cases, property owners in a subdivision have exercised their right to change the land use. In other cases, deed restrictions were written poorly, so that it was too easy to change the land use. Homeowners who thought they contracted for a certain guarantee of protection discovered they were in error. However, the remedy here is to write more precise legal language into the deed restrictions. One of the requirements of responsible home purchasing is to ensure– through legal advice if necessary– that one’s values are being upheld by the contracts one signs.

Another objection raised against deed restrictions is that they are costly to enforce. Occasionally, a homeowner will fight enforcement of deed restrictions by suing the homeowners’ association. This is not an argument against deed restrictions per se, but an illustration of how frivolous lawsuits can undermine the enforcement of any contract. Such obstructive lawsuits are relatively rare in deed restriction enforcement. Proper responsibility to stop such attempts must continue to reside with the judiciary, which by and large acts on the principle that mere enforcement of a contract (with no auxiliary circumstances) cannot by itself constitute grounds for a civil suit.

To make this point clearer, consider the same argument from the context of a home mortgage, i.e., a contractual agreement between a borrower and a lender. If a lawsuit challenging the initial contract were filed, no one would claim that the cost of litigation invalidates all mortgages. Instead, we would focus on the faulty legal mechanisms which permit unscrupulous individuals to break long-term contracts.

What about those people who settle in communities without deed restrictions? That is their right and their choice. Those who did so mistakenly, and don’t like the way their community has evolved, are free to learn from their errors and make a better choice in the future. Many people in Houston, it should be noted, choose to live in non-restricted communities because property values are lower, and hence houses are more affordable. They don’t mind that a convenience store is near their house, because if it weren’t they wouldn’t have a house. This is an example of how the free market provides a wide variety of land uses, meeting the individual needs of everyone.

Master-planned communities, like The Woodlands or First Colony (in the Houston area), are generally larger than the small subdivisions, and more restrictive in land use. They are also more comprehensive: The developer plans shopping areas, schools, streets, etc., usually along a common pattern or theme. Some people value this unity of design enough to pay the higher prices for land and community fees that exist in master-planned communities.

The advocates of zoning often say that the popularity of master-planned communities attests to the fact that individuals want “planning”, which they say means zoning. Again, we find that the zoning advocates are equating private choice with political coercion. Some individuals do want planning, and they have found a voluntary way to achieve it. It is disingenuous on the part of zoning advocates to twist a practical free-market alternative into an argument for political intervention.

The advocates of zoning seek to posit themselves as the agents of the public, declaring that they will lead us to economic growth and a better “quality of life.” But the truth is, developers– who must meet the freely chosen demands of the marketplace– are the true agents of the public. Throughout history such developers have fueled and kept pace with unparalleled economic growth, and improved the quality of life immeasurably.

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