Addressing a Painful PAST

ALTA Helps Find Solutions to Illegal Covenants in Public Records

By Jeremy Yohe

ISSUE 100 | VOLUME 9 | September 2021

DURING THE 20TH CENTURY, discriminatory restrictive covenants peppered property records in communities across the country. In Minneapolis, the first racial covenant appeared in 1910, when Henry and Leonora Scott sold a property to Nels Anderson. The deed conveyed in that transaction contained what would become a common restriction, stipulating that the “premises shall not at any time be conveyed, mortgaged or leased to any person or persons of Chinese, Japanese, Moorish, Turkish, Negro, Mongolian or African blood or descent.”

Racially restrictive covenants refer to contractual agreements that prohibited 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, but were also agreements enforced through the cooperation of real estate boards and neighborhood associations.

The use of racial restrictive covenants emerged in 1917, when the U.S. Supreme Court deemed city segregation ordinances illegal. That year, 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.

The court held that while states are barred from creating race-based legislation, private deeds and developer plat maps are not similarly affected by the 14th Amendment. This was because individuals entering into covenant agreements were doing so of their own volition, whereas segregation ordinances were forced upon populations from the state and municipal levels. Racially restrictive covenants superseded segregation ordinances as instruments to promote and establish residential segregation in U.S. cities, according to the court.

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.

The NAACP recognized these covenants were a threat to racial equality. The civil rights organization launched a legal campaign against covenants in the 1940s. In 1945, an African American couple named J.D. and Ethel Shelley knowingly purchased a restricted home in St. Louis. They made the purchase to protest the legitimacy of the restrictive covenant that had been drafted by the St. Louis Real Estate Exchange. The following year, in Shelley v. Kramer, the circuit court decided that the restrictive covenant was unenforceable because it had been haphazardly assembled.

The Missouri Supreme Court, however, rejected that ruling and upheld the covenant by invoking Corrigan v. Buckley. The plaintiffs appealed to the U.S. Supreme Court, which in 1948 ruled that the racial 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 appeared 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 omitted any discriminatory covenant.

Lastly, Schedule B in the title insurance policy says, “Some historical land records contain Discriminatory Covenants that are illegal and unenforceable by law. This policy treats any Discriminatory Covenant in a document referenced in Schedule B as if each Discriminatory Covenant is redacted, repudiated, removed, and not republished or recirculated. Only the remaining provisions of the document are excepted from coverage.”

Jerris Leonard, an assistant attorney general for civil rights during the Nixon administration, sent letters to title companies asking them to not republish the restrictive covenants as a potential violation of the FHA. The industry voluntarily stopped.