During the 20th century, discriminatory restrictive covenants peppered property records in communities across the country.
The popular use of racially restrictive covenants emerged in 1917, when the U.S. Supreme Court deemed city segregation ordinances illegal. In Buchanan v. Warley, the court ruled that outright segregation ordinances violated the 14th Amendment. After the ruling, segregationists turned to restrictive neighborhood covenants. Racial deed restrictions became common after 1926 when the U.S. Supreme Court validated their use in the case Corrigan v. Buckley. The restrictions were an enforceable contract and an owner who violated them risked forfeiting the property.
Racially restrictive covenants refer to contractual agreements that prohibit the purchase, lease or occupation of a piece of property by a particular group of people. Racially restrictive covenants were not only mutual agreements between property owners in a neighborhood not to sell to certain people, but were also agreements enforced through the cooperation of real estate boards and neighborhood associations.
The National Housing Act of 1934 also played a part in popularizing these covenants. Passed during the Great Depression to protect affordable housing, the legislation introduced the practice of redlining.
In 1948, the U.S. Supreme Court ruled in Shelley v. Kraemer that these covenants were legally unenforceable and violated the Equal Protection Clause of the 14th Amendment. Although racial restrictive covenants were no longer legally enforceable, they were not illegal to establish and privately enforce.
Because of this, these covenants remained commonplace in much of the nation until 1968, when the Fair Housing Act made them explicitly illegal. The act prohibits the publication or printing of any notice, statement or advertisement with respect to the sale or rental of a dwelling that indicates any preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status or national origin.
Remnants of these covenants remain, however, in public land records in most states. Because of this, title companies go to great lengths to not republish them when discovered in a title search. Some of these steps include:
- Leaving a blank where the covenant appears and state “This covenant omitted.”
- Crossing out the covenant
- Stamping, typing or printing across the covenant or in the margin “This covenant omitted.”
- Adding on the first page of the instrument a stamp that omits any discriminatory covenant.
Lastly, the title insurance policy will also usually include an ALTA standard exclusion that states, “Covenants, conditions and restrictions but omitting any covenant, condition or restriction, if any, based on race, color, religion, sex, handicap, familial status, or national origin unless and only to the extent that the covenant, condition or restriction (a) is exempt under Title 42 the United States Code, or (b) relates to handicap, but does not discriminate against handicapped persons.”
In July, U.S. Sen. Tina Smith, D-Minn., introduced the Mapping Housing Discrimination Act to research and examine discriminatory covenants in land records to help better understand current disparities in wealth and homeownership.
The legislation would:
- Create a competitive grant program for educational institutions to conduct primary data analysis of local historic property records from 1850-1988 for the purpose of identifying racial covenants and racially restrictive language.
- Support efforts by local governments to digitize historic deeds and other property records at the local level.
- Create a national, publicly available database at the Department of Housing and Urban Development of historic housing discrimination patterns in property records, including local datasets produced by grant recipients.
Sen. Smith’s legislation is co-sponsored by Sens. Richard Blumenthal, D-Conn., Sherrod Brown, D-Ohio, Bob Casey, D-Pa., Martin Heinrich, D-N.M., Bob Menendez, D-N.J., Chris Murphy, D-Conn., Amy Klobuchar, D-Minn., Jon Ossoff, D-Ga., Alex Padilla, D-Calif., Bernie Sanders, I-Vt., Chris Van Hollen, D-Md., Elizabeth Warren, D-Mass., and Ron Wyden, D-Ore.
Historic land records often exist in paper form, making the search for discriminatory covenants onerous. Providing funding to research and document discriminatory covenants addresses this challenge and provides a critical first step toward fully understanding the negative impacts of these abhorrent covenants.
With no uniform method, state lawmakers have taken varied approaches to address discriminatory covenants in their public records. The most common options include notification, repudiation, modification and redaction approaches. Each of these has various benefits and drawbacks. Expunging of records containing discriminatory covenants impact the chain of title and jeopardize property rights and the ability to buy, sell or refinance property.
Here’s a quick look at the approaches:
- Notification posted by county offices on websites and at record access points indicating the historical land records may contain harmful content in illegal and unenforceable discriminatory covenants. These notices are general and do not identify specific recorded instruments.
- Repudiation of identified discriminatory language by recording a declaration in the land records of the illegal and unenforceable nature of discriminatory covenant(s) associated with a particular property.
- Modification, through judicial or public official action, of the land record(s) containing an identified discriminatory covenant, resulting in creation of a superseding document without the discriminatory language.
- Redaction, through judicial or public official action, of discriminatory covenants in identified documents within the land records, resulting in removal of the discriminatory language from existing land records.
With each of these methods, lawmakers should consider the potential for inadvertent removal of enforceable records or content. Repudiation measures avoid this potential outcome. Modification approaches, with care to remove only the illegal and unenforceable content, minimize this risk. Other approaches, such as expungement of entire records containing illegal covenants, threaten the chain of title and create gaps in land records that jeopardize consumer property rights and the ability to buy, sell or refinance property.
Addressing the existence of discriminatory covenants in land records is a major priority for the American Land Title Association. In the past year, ALTA convened a work group of industry experts to examine the scope of the problem, as well as key legislative approaches to remedying discriminatory covenants in land records. The work group is actively collaborating with industry partners and academic experts on recommendations and best practices.
The title industry is uniquely positioned to be a thoughtful partner in addressing discriminatory covenants and working to end housing discrimination. ALTA is strongly opposed to any form of housing discrimination and is committed to proactively working toward solutions that protect the property rights of all homebuyers.
Bill Burding NTP, past president of the American Land Title Association, is executive vice president and general counsel for Orange Coast Title Company.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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