A Change Approval Levels clause in restrictive covenants establishes a hierarchical framework determining who has authority to approve, modify, or waive covenant restrictions based on the nature and scope of the proposed change. Restrictive covenants are promises that "run with the land"—binding not just the original parties but also future owners—making them particularly powerful and difficult to modify. This clause typically creates different approval requirements depending on factors like the magnitude of the change, number of affected properties, financial impact, or whether the change affects the covenant's core purpose. For example, minor modifications affecting one property might require only homeowner association board approval, while changes affecting multiple properties or the fundamental character of a neighborhood might require supermajority votes from all affected property owners.
This clause matters significantly because restrictive covenants can persist for decades or centuries, and improper modification procedures can render changes invalid or create litigation. By establishing clear approval hierarchies, the clause prevents unauthorized modifications while also providing pathways for reasonable changes as circumstances evolve. However, poorly drafted approval levels can either paralyze decision-making (requiring impossible consensus) or concentrate too much power in a small group's hands. The clause essentially balances the stability that covenants provide with the flexibility communities need as conditions change.
Carefully calibrate approval thresholds to match the significance of changes—minor administrative adjustments should require fewer approvals than changes affecting property values or neighborhood character. Consider including a tiered system: routine matters (board approval), significant changes (majority vote), and fundamental modifications (supermajority or unanimous consent). Ensure the clause specifies how votes are counted (per property owner, per property value, per affected party only, etc.) and includes provisions for breaking deadlocks, such as mediation or judicial modification procedures. Document the rationale for approval levels so future decision-makers understand the intended balance. Include sunset provisions or periodic review requirements so approval structures can adapt as communities evolve.
Frequently Asked Questions
What does this clause mean in simple terms?
A Change Approval Levels clause in restrictive covenants establishes a hierarchical framework determining who has authority to approve, modify, or waive covenant restrictions based on the nature and scope of the proposed change. Restrictive covenants are promises that "run with the land"—binding not just the original parties but also future owners—making them particularly powerful and difficult to modify.
Why should I care about this clause?
This clause typically creates different approval requirements depending on factors like the magnitude of the change, number of affected properties, financial impact, or whether the change affects the covenant's core purpose. For example, minor modifications affecting one property might require only homeowner association board approval, while changes affecting multiple properties or the fundamental character of a neighborhood might require supermajority votes from all affected property owners.
What are my options?
This clause matters significantly because restrictive covenants can persist for decades or centuries, and improper modification procedures can render changes invalid or create litigation. By establishing clear approval hierarchies, the clause prevents unauthorized modifications while also providing pathways for reasonable changes as circumstances evolve.
How does this affect small businesses?
However, poorly drafted approval levels can either paralyze decision-making (requiring impossible consensus) or concentrate too much power in a small group's hands. The clause essentially balances the stability that covenants provide with the flexibility communities need as conditions change.