A recorded owner-occupancy covenant is why I got the price down
Bought a house with an existing permitted detached ADU, 560 sf, already leased at $1,725. Asking was $612k, closed at $571k, and the discount came out of a document the listing didn't mention.
When the ADU was permitted six years ago the city required the owner to record a covenant against the property committing to owner-occupancy of one of the two units, with the covenant running with the land. The city's ordinance later dropped the owner-occupancy requirement for new permits, but the recorded covenant on this parcel was never released, and releasing it requires an application and a fee. It sat in the title commitment as an exception and every buyer's agent apparently read past it.
What it meant in practice: a buyer planning to rent both units and live elsewhere would be buying a problem. Two prior offers had fallen through and the listing agent didn't know why. I did, because I read the commitment.
I wanted to owner-occupy anyway, so the covenant cost me nothing on day one. I priced the release process, about $1,400 in fees plus staff review time, and used the uncertainty as the negotiating position. Seller had been on market 94 days.
What nearly broke it: my lender's underwriter flagged the covenant as a potential restriction on transfer and wanted an opinion on whether it impaired marketability. That took nineteen days and a letter from the title company. I had a 45 day close and used 41 of them.
What I'd keep: reading the full title commitment including every exception, before writing the offer rather than during the option period. Cost me an afternoon. Whether a recorded covenant like this binds a later owner, and what it takes to release it, depends on the language and on state law, so that's an attorney question and I paid one $600 to read it before I offered.
The unit covers most of the payment. The interesting part was that the discount lived in a document that was free to read.