two family dwelling, single family covenants (disclosure, mortgage, lawsuit, property)

[Bridget]

Here is the scenario.
Last year we bought a rambler that has a complete apartment as the basement (full kitchen, master, dining, seperate entrance). We didn't really care about that at the time since we are just using the whole house for our family. Well, we decided that we wanted to move closer to family and will be selling our house (I know bad time but the distance we thought would be managable is driving us crazy). The question is, the home has approval with the city to be a two family residence but the neighborhoods covenants are for single family residence.

I think the guy that built the house and that we bought from sold because the neighbors to the side took legal action against him because he had renters in a single family neighborhood. I think it was easier for him to sell than fight it and see if he wins. We didn't really care either way but since we are now marketing the house I was wondering if anyone had experience with a situation like this? If the potential buyer wants to rent the basement what would their chances be if legal action was taken again? I know that the two family residence transfers to any new owners (that was in the city recorded city notes online) I mentioned before that we didn't have any interest in this but I am curious to know who might have won in the rental situation.

Also, when it is time to fill out the sellers disclosure (need a buyer first) I am sure that we will be indicating that it is a two family residence as far as the city is concerned but do we disclose the problems that the neighbors had with that, etc. We have a realtor but I like to get other peoples opinions and see if anyone has run into this two family/single family covenant thing.

[jimj]

From what I know about CC&R's they trump zoning if they are more restrictive. The city can say an area as a whole is zoned multi-family but if the CC&R's say no then it's no. The house was built knowing the basement couldn't be rented but I'll bet it was approved by the association as a inlaw unit. We have similar CC&R's here and they are clear about rentals and allow the inlaw unit for a direct member of the family.
As for disclosure, all I'd say is that it's an inlaw unit (if allowed by your CC&R's) and the new owners can read the rules themselves. I wouldn't list it as a 2 family property. If they ask you directly I'd be honest and tell them it cannot be a rental per the covenents.
I can say as president of our association I'd have to file legal papers to stop someone in our subdivision if they rented out something like that, sorry....

[Silverfall]

CC&R's override zoning out here as well. So if the house has a conditional use permit, it would be useless because the CC&R's, which the buyer is agreeing to when they purchase the property, will override.

Sell it as a single family with a mother-in-law suite (or whatever your local terminology is for this).

[Bridget]

This isn't part of an HOA but apparently the neighbors were getting people together and going in on the lawsuit against the previous owner. A couple of weeks after we moved in, the neighbors that started the legal action (directly west of us), gave me a copy of the protective covenants that are for our subdivision. They just thought we might want a copy :-)
I can see both sides. The previous owner was living upstairs and basically having the people downstairs pay his mortgage. We have lived by rentals before and they can be awful. In this case the owner was living on site but you can't say that would always be the case.

[Bridget]

Mother-in-law is applicable. Actually the company that came out to take the pictures labelled it as "apartment" and I asked them to change it to "basement" and "basement kitchen".

The two family dwelling was a conditional use permit and in the city council notes they indicated that "when a conditional use is passed it moves on with the home" but I understand what you are saying about the new owner signing under the CC&R's. Thanks!