Denver County Affordable Housing
What is affordable housing?
Across the U.S., housing costs are considered “affordable” if your monthly rent or mortgage, plus utilities, add up to no more than one-third of your gross household earnings. Affordable Housing programs afford low income individuals and families who are within the Area Median Income (AMI) limits the opportunity to purchase “affordable housing” units. Limits on income, purchase price, and resale price are all typical conditions of these programs.
Affordable housing programs have been a prominent issue in Colorado’s real estate market for many communities statewide and particularly for high-end resort communities like Aspen and Vail for some time. However, metro regions are now undergoing rapid appreciation of home values due to inventory and population pressures. The housing difficulties with inventory and pricing faced by Coloradans are at all-time highs. Title companies are just one part of the equation when it comes to ensuring that affordable housing transactions are in compliance with local regulations and that future transactions are set for success as well.
Covenants vs. Deed Restrictions
What is the difference between a restrictive covenant with affordable housing restrictions and a deed with affordable housing restrictions?
Restrictive covenants can be written in a separately recorded set of “Covenants, Conditions and Restrictions”. These are typically all the subdivision rules about the use of all of the properties in a particular subdivision. They are very common for most platted properties. They set various rules for how the property may be used – Can it be rented? Can the house be painted purple? Can you have pigs? Goats? Dogs? Privacy fences? Can you use the property for commercial purposes? How much are dues and how are they collected? The covenants may also contain some reference to affordable housing rules. These rules and regulations regarding the use of a property in a subdivision are sometimes quite lengthy at 50, 60 even 70 pages long!
Deed restrictions are generally written into the deed that is recorded in the county records. Deed restrictions impose a specific rule (or rules) on a specific property regarding how present and future owners may use the land or buildings. A deed restriction could say the land can never block the view of an adjacent property, can’t be sold for development, contains a right of first refusal (an option for the seller or the benefited person to buy back the property), or that the property is subject to affordable housing restrictions. Deed restrictions remain with the property and cannot be removed by new owners. The benefiting party, whether it be a former owner, or a government entity, or the benefiting individual, would be the one who could negotiate the removal of deed restriction.
Requirements and Exceptions
Properties should have an exception on the commitment and, after closing, on the policy for the recorded document which created the affordability restrictions. It is typically in the form of a deed restriction or as part of the covenants. Land Title provides links to these documents on our commitment.
What Land Title is doing about affordable housing
• Each municipality or county, such as the City and County of Denver, has different affordable housing programs. The title plant used to post all recorded documents for Denver County has been updated using the list of addresses under management by the City and County of Denver. These are converted into legal descriptions so notifications about the property can be added to the plant index. This means that on each search of the property this notification will be seen and included in the commitment creation process.
• Because an Affordable Housing restriction may not always show up as a requirement on a
commitment, Land Title is taking some specific actions to notify buyers agents when a property is found to be subject to these restrictions. Upon discovery of any affordable housing restrictions during the examination phase, Land Title will call the buyer’s agent to inform them of the discovery and instruct them that they should read through the covenants and restrictions to understand the exact impact.
• Generally, a seller would know that their property is subject affordable housing restrictions as they needed to quality at the time of purchase. However, that information is not always conveyed to the listing agent. Given the updates that were made to the title plant in Denver County, Land Title is able to make a note on an Ownership and Encumbrance report that the property is currently listed under management of the Denver program.
• You and your buyer may wish to engage legal services in order to fully understand and be aware of the implications of the effect of these documents on your title.