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Whether or not you can have an off-campus house varies by school. Some schools do (and yes they do have the legal right to) require that all students live on campus, or that all students under 21 live on campus. In the face of policies like this, a house is next to impossible to maintain.
Whether "unrecognized" Greeks can make it depends very much on how hard the school is trying to get rid of them. It can simply not recognize them. Or it can make everyone live on campus, encourage coaches to forbid their members to be Greek, ban their advertisements in the school paper (in exchange for funding), etc.
This is not to say that NO unrecognized fraternity or sorority can make it. What it does mean is that being unrecognized makes fraternity life harder most of the time. That is why some national organizations will not colonize under those conditions (and they'll pull charters). Others don't.
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Alpha Xi Delta
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