When zoning reform meets private covenants: the HOA obstacle to backyard cottages

A city council votes to allow second homes on single-family lots. Homeowners begin sketching plans for backyard cottages for ageing parents or adult children. Then they open the closing binder from when they bought the house and find a restriction recorded decades ago: one house per lot.

The gap between public zoning and private covenant is becoming a central obstacle in the push to increase housing supply through accessory dwelling units, or ADUs. While cities across the United States have rewritten zoning codes to permit more density, homeowners’ association rules recorded with individual properties can remain in force for generations, blocking the very projects that zoning reform was designed to enable.

The gap between two rulebooks

When a city changes its zoning, it alters the public rulebook. A council vote can permit ADUs on lots that previously allowed only one house. But a second set of rules — private covenants, conditions and restrictions, commonly known as CC&Rs — is attached to the property itself. These are recorded when a subdivision is built and pass from one owner to the next. They are enforced not by the planning department but by the homeowners’ association or, in some cases, by neighbours.

The practical consequence is that a homeowner can receive a building permit from the city and still be unable to build because the HOA can enforce a covenant that limits each lot to one dwelling. The city has no authority over that covenant, and the HOA has no obligation to align its rules with the updated zoning.

How widespread is the HOA barrier?

The scale of the problem is larger than many planning discussions acknowledge. According to the National Association of Home Builders’ analysis of Census data, nearly two out of every three new single-family homes started in the United States in 2024 were built within a homeowners’ association — roughly 652,000 homes. In 2009 the share was just under half.

Regional variation is significant. In the Mountain West, more than 80 per cent of new single-family homes are built in HOAs. In the Middle Atlantic states, the figure is closer to one in three. For older cities with rowhouse stock, HOA rules may rarely surface. In newer subdivisions, they are part of the baseline conditions for homeownership.

Private restrictions do not expire with time. A rule written by a developer decades ago remains enforceable until the HOA votes to change it or a court strikes it down. As household sizes shrink and housing needs shift, those old rules can block precisely the kind of incremental density that cities are now trying to encourage.

State-level responses: Oregon and Colorado

A small number of states have begun to address the conflict directly. Oregon and Colorado have each passed legislation that limits the ability of HOAs to enforce covenants that block ADUs or other types of middle housing.

Oregon’s House Bill 2138, which takes effect on 1 January 2027, makes certain private restrictions unenforceable when they conflict with state law and local zoning that permit ADUs, duplexes or cottage clusters. The law applies inside urban growth boundaries, which cover every city in the state and most of the surrounding suburbs. Land outside those boundaries is largely reserved for farming and forestry. Crucially, the law reaches backward: existing covenants recorded before the legislation was passed can become unenforceable. An HOA cannot rely on a pre-existing covenant to block housing that the state now protects, though homeowners must still meet local permitting and building code requirements.

Colorado takes a more targeted approach. House Bill 24-1152 requires qualifying local governments to allow ADUs on lots where single-family homes are permitted. In jurisdictions covered by the law — generally cities with at least 1,000 people inside a metropolitan planning region — HOAs cannot use their rules to prohibit ADUs or effectively block them. They can still impose reasonable restrictions on design and materials, so an HOA may influence how a unit looks without being able to ban it outright. Smaller towns outside metropolitan planning regions are not automatically covered, though they can opt in.

Both laws represent early experiments in untangling the knot between public permission and private restriction. Neither is a complete solution. Oregon’s law is broader in geographic scope and in the types of housing it protects. Colorado’s is narrower in reach and focuses exclusively on ADUs.

Key facts

What this means for homeowners and planners

For a homeowner in most US cities, the sequence is still uncertain. A city may have changed its zoning. The homeowner may have sketches, estimates and a clear idea of what they want to build. But until they check the CC&Rs, they do not know whether the project is feasible. Some discover the restriction early, while still getting quotes. Others find out only after the drawings are complete, when a letter arrives from the HOA.

The result is that many cottages simply never get built, and the obstacle remains invisible to the planning department. The city counts its zoning reform as a success. The homeowner counts a lost deposit on architectural drawings.

Only a handful of states have intervened so far. Everywhere else, the balance of power still sits with the private covenant. For planners and housing advocates in London and the UK, the dynamic is worth watching: as the UK government pushes forward with planning reform and permitted development rights, similar questions about private covenants, leasehold restrictions and estate management rules may become more prominent.

The next step for any homeowner considering an ADU is to check the property’s recorded covenants before spending money on design work. For policymakers, the Oregon and Colorado models offer two different templates for bridging the gap between public reform and private restriction.

Source: Strong Towns, “Permitted, Pending HOA Approval”, https://www.strongtowns.org/journal/2026-10-23-permitted-pending-hoa-approval