Racially Restrictive covenants have been around for a very long time, with the first one traced back to a subdivision in Brookline Massachusetts in 1843. The process of restricting the ability to sell property to people of a particular racial or ethnic group rapidly grew in the early 1900s.
In 1896, the US Supreme Court heard a case about state-sponsored segregation of rail cars, and determined that “separate but equal” accommodations were not considered a violation of the Fourteenth Amendment’s Equal Protection clause [this case was overturned in 1954 with Brown v. Board of Education]. The landmark lawsuit ushered in significant growth of Jim Crow laws. In the early 1910s, an estimated six million black people moved from the South to other parts of the United States, seeking higher wages and safer conditions in the Northeast, Midwest and West. These other regions of the United States did not necessarily have Jim Crow laws, but many began to push back against the new arrivals through other mechanisms and actions of law, and discriminatory practices proliferated nationwide. In 1926, the Supreme Court ruled in Corrigan v. Buckley that private individuals were allowed to “enter into contracts respecting the control and disposition of their own property,” allowing homeowners to contract together to restrict the sale of their property to specified minorities. NAR even produced the “model racial covenant” in 1928 for members to promulgate the covenants around the nation. This model racial covenant paralleled NAR’s early versions of the Code of Ethics, where one code even held that it was unethical for a broker to introduce nationalities or races into a neighborhood that would “detriment property values.” There was an explosive expansion of restrictive covenants, applied to properties by way of intentional restraints within deeds, plat map restrictions, and discriminatory homeowner association CC&Rs.
In 1948, with Shelley v. Kraemer, the NAACP successfully challenged a racial covenant and the Supreme Court ruled that racial covenants were clear violations of the Fourteenth Amendment. By this time however, the covenants had been etched into most property records. Some areas like Chicago and Los Angeles had racially restrictive covenants on upwards of 80% of the residential properties. For the next 20 years, properties continued to have racially restrictive covenants placed on them, albeit in an unenforceable capacity due to Shelley. In 1968, with the Fair Housing Act, it finally became federally illegal to discriminate on the basis of race or nationality, functionally marking the end of any new racially restrictive covenants as a matter of law.
Nonetheless, the old covenants from the post-Corrigan era remained on many properties and many still remain on property to this day. Your clients may very well attempt to purchase a property with remaining, outstanding but unenforceable racially restrictive covenants. Many clients want these restrictions removed. The process was previously very onerous and required a substantial number of courtroom procedures and several different court filings, but in 2023 with the passage of HB 3294, the process was streamlined somewhat:
- Now, under ORS 93.274, an owner of real property that contains a provision that violates ORS 93.270 may file a petition to remove the covenant from the title of the property with the circuit court of the county.
- The petition must include:
- The name and mailing address of the petitioner;
- A legal description of the property;
- The name, recording number and date of recordation for each instrument or declaration that contains a provision that is void by reason of ORS 93.270(1)(a);
- a clear reference to the provision claimed to be in violation of ORS 93.270 [this law holds that a conveyance may not include a provision that is for the purpose of “restricting the use of the real property by any person or group of persons by reason of race, color, religion, sex, sexual orientation, gender identity, national origin or disability”]; and
- A complete certified copy of the recorded instrument or recorded declaration which contains the provision that is void.
- If the court finds that the provision is in violation of ORS 93.270(1)(a), the court will strike the provision from the public record and eliminate it from title.
- There will typically be a filing fee required to rerecord the deed without the restrictive covenant, generally around $100-$150.