Navigating land use restriction agreements can feel overwhelming, especially when you are trying to understand how they might impact your property rights and investment plans. These legal documents create specific limitations on how land can be used, potentially affecting everything from development options to rental income potential.

In this comprehensive guide, we will explore what Land Use Restriction Agreements (LURAs) are, how they impact property ownership, and what Texas landowners need to know before selling or buying land with these restrictions.

What Is a Land Use Restriction Agreement (LURA)?

A Land Use Restriction Agreement (LURA) is a legally binding contract that restricts how a property can be used and developed for a specified period. These agreements typically limit property usage to ensure compliance with specific programs, like affordable housing initiatives or tax credit requirements. LURAs are recorded against the property’s title and remain binding even when ownership changes, creating long-term obligations that prospective buyers must understand before purchasing.

The restrictions within a LURA vary depending on the program they support. However, they commonly include limitations on rent amounts, income qualifications for tenants, and property maintenance standards. These agreements often arise in connection with government subsidies, tax incentives, or development approvals where public benefits are exchanged for the owner’s commitment to certain property uses. The U.S. Housing and Urban Development (HUD) announced more than $10 million to house families and youth and promote self-sufficiency, highlighting continued federal support for affordable housing.

LURA Compliance Period

The compliance period in a LURA represents the timeframe during which all restrictions remain legally enforceable. According to Texas law, the LURA period is a minimum of 30 years split into two 15-year phases. During this time, property owners must maintain detailed records demonstrating their ongoing compliance with all LURA provisions.

Many LURAs contain an “extended use period” that continues beyond the initial compliance term. This extension ensures the long-term preservation of affordable housing or other public benefits secured through the agreement.

Violations during either the compliance or extended use period can result in severe penalties, including financial recapture of tax credits or other benefits previously received. These penalties highlight the importance of understanding and adhering to all LURA requirements throughout the entire restricted period.

What is Due Diligence in LURA?

Due diligence in the context of a land use restriction agreement is a critical process for developers, investors, and property owners involved in affordable housing projects, particularly those utilizing Low-Income Housing Tax Credits (LIHTC). This process ensures that all parties fully understand and comply with the long-term obligations and restrictions associated with LURAs.

Types of Texas Land Use Restrictions

Land use restrictions in Texas fall into two main categories: private and public. Each type of restriction plays a vital role in shaping how land can be used and developed in Texas communities.

Private LURAs

Private restrictions are typically established through agreements among property owners and are enforced by individuals or associations. Examples include:

• Restrictive covenants: A legal obligation within the property’s deed that limits how the property can be used. This restriction is normally put in place to preserve the neighborhood’s appearance.
• Property owners’ associations: A group of property owners that enforce rules, collect dues, and maintain shared amenities like pools, parks, etc.
• Easements: The legal right that allows a person to use a portion of a property owner’s land without owning it.

Public LURAs

Public restrictions, on the other hand, are imposed and enforced by local governments to promote public health, safety, and orderly development. Examples include:

• Zoning: Zoning is the process by which local governments divide land into areas (zones) and regulate how the land in each zone can be used, such as residential, commercial, industrial, or agricultural.
• Platting: Platting is the process of mapping and legally recording the subdivision of land into lots, blocks, streets, and easements. A plat is a detailed survey map that must be approved by a local government before development or sale.
• Building and fire codes: These are sets of rules and standards that regulate the construction and safety of buildings. They cover structural integrity, electrical systems, fire prevention, accessibility, and more.
• Signage: Signage regulations govern the size, location, lighting, and type of signs allowed on a property. These rules aim to balance visibility for businesses with community aesthetics and safety.
• Drainage: Drainage refers to the system by which water is moved off of land, especially stormwater, to prevent flooding, erosion, and water contamination.

How Land Use Restrictions Agreements Impact Property Value

Land use restriction agreements can have a significant impact on property value, both positively and negatively. These agreements often limit how a property can be used or developed, which may restrict certain high-value uses. However, by ensuring a consistent and predictable use of land, LURAs can also protect neighborhood character and support long-term property stability.

Quality of Life

LURA helps uphold the quality of life standard by enforcing zoning regulations and laws for neighborhoods and residential areas. This ensures that certain types of properties cannot be built near homes, neighborhoods, and schools. LURA also promotes neighborhood appeals and the concept of making residential areas desirable to the eye, including greenscapes, landscapes, and infrastructure.

Increased Demand

Due to LURA and different zoning regulations, there may be an increase in property demand. In urban areas, zoning restrictions can limit new builds, making properties that are allowed under law in high demand.

Functionality of the Property

Zoning regulations can benefit communities and neighborhoods that want to maintain character and charm. However, this can also limit development and functionality for mixed-use, commercial, and in some cases, residential properties.

How to Navigate Land Use Restriction Agreements in Texas

Navigating land use restriction agreements in Texas requires a clear understanding of both public regulations and private covenants that impact how land can be used or developed.

Whether you are buying property, starting a development project, or trying to change a property’s use, it is critical to evaluate any LURAs tied to the land.

1. Research Local Zoning Laws

Texas municipalities and counties may have different zoning classifications—such as residential, commercial, agricultural, or industrial—that determine how land can be used. In addition to general use, zoning laws may also address building height, lot size, density, and setback requirements. This research helps ensure that your intended use of the land is legal and viable under current regulations.

2. Consult with Land Experts

Working with professionals who understand Texas land regulations can simplify the often complex process of navigating LURAs. Liberation Ranches is a trusted Texas-based team of land and ranch experts that specializes in finding the right property to build a home, start a farm, and more.

Their team offers end-to-end support, from identifying land opportunities to closing on the land. Liberation Ranches’ main goal is to make the overall process of buying land in Texas easy and accessible. Whether you are seeking beautiful pastureland to start a farm, a peaceful property with water access, or a picturesque spot just a short drive from the city, each property is more than just a land purchase—it is an opportunity to create a dream getaway for relaxation, adventure, and family fun.

Liberation Ranches’ Land Specialists are available to help you learn more about and find your ideal property in Texas. Unlike other companies, they will guide you through the process from start to finish, so that you have one point of contact for the entire transaction.

Explore land options with the Liberation Ranches team

3. Understand the Zoning Change or Variance Process

If a property’s current zoning doesn’t align with your intended use, a zoning change may be necessary. This process usually involves submitting a formal application to the local planning and zoning department, attending public hearings, and gaining approval from city or county officials.

Property owners must provide justification for the change—typically showing that the new use would benefit the community and align with long-term development plans. Understanding the timeline, documentation, and community input required is crucial for success.

In situations where a full zoning change isn’t practical, applying for a zoning variance may be a better alternative. A variance allows property owners to deviate from specific zoning requirements—such as lot size or building height—without altering the zoning classification. This is often used when unique property characteristics create hardship under existing rules.

Variances must be approved by the local Board of Adjustment, and applicants must demonstrate that the request won’t negatively impact surrounding properties.

4. Consider Economic Development Incentives

Texas offers a range of economic development incentives that may offset the cost of compliance with land use restrictions. Local governments and state agencies often provide grants, tax funds, or infrastructure support for projects like starting a farm, building housing, and more.

Exploring these incentives can make a development more financially viable and may even ease some zoning restrictions as part of a broader public-private partnership. Always check with local development offices for available programs.

Learn More About Land Use Restriction Agreements in Texas

Understanding the ins and outs of LURAs is essential for making informed decisions about property ownership, investment, and development in Texas. These restrictions can shape everything from how land is used to its long-term value and potential. Whether you are navigating complex zoning laws, researching permitted uses, or seeking opportunities for land development, having the right guidance makes all the difference.

Liberation Ranches is here to help—offering expert insight and full-service support to ensure you understand every detail from start to finish. Our mission is to make the overall buying process easier, with multiple resources to help you find the perfect place for you to build a home or start a farm.

We also offer an owner financing option, which allows you to buy land without a traditional bank loan. This option comes with multiple benefits like flexible down payments, faster loan approval, faster closing, and no bank fees.

If you are ready to find your piece of paradise, contact us today!

FAQs On Land Use Agreement Restrictions in Texas

How Long Does a LURA Last?

A land use restriction agreement typically lasts at least 30 years. This is broken into:
– 15-year initial compliance period (required under the federal Low-Income Housing Tax Credit program)
– 15-year extended use period, which ensures the property remains affordable even after tax credits have been claimed

However, some states or funding sources may extend the LURA to 40 years or even longer—in some cases up to 99 years—to preserve long-term affordable housing.

What Is a Private Land Use Restriction?

A private land use restriction is a limitation on property use that is imposed by a non-governmental entity, such as a:
– Homeowners’ association (HOA)
– Developer
– Previous property owner

These restrictions are usually found in deed restrictions, restrictive covenants, or easements. Common examples include rules on fencing, building styles, land use (e.g., residential vs. commercial), or even noise limits. Unlike public restrictions (like zoning laws), private restrictions are enforceable under civil contract law.

How Does The Low-Income Housing Tax Credit (LIHTC) Program Impact LURA?

The LIHTC program requires property owners who receive tax credits to enter into a LURA. This agreement ensures:
– A certain percentage of rental units are set aside for low-income tenants
– The property maintains affordability restrictions for at least 30 years
– If the property is sold, the affordability obligations remain in place for the full term.

In short, the LIHTC program activates the need for a LURA and defines its minimum terms, protecting affordable housing over the long term.