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A deed restriction is a contact provision contained in a deed that limits or puts restrictions on the full use of the property in question.
This means that the new owner of the deed does not have full absolute control over the usage of the property.
While investors might find that such limitations can negatively affect the potential value-in-use of the property, deed restrictions seldom have terms that directly affect the use of the property to it’s best potential.
Otherwise, the market for buyers would be very limited. And there would be nobody considering these issues in the first place.
However, these restrictions demanded by sellers do serve as a negotiation factor to help buyers push down the price.
Deed restrictions are often inserted into sales contracts due to personal reasons on the part of the seller.
For example, the seller don’t want alcoholic beverages to be sold in the premises, the seller don’t want the space to use for any religious activities, or that the seller want to have a first refusal clause should buyer intend to sell the property in future.