Big Win for Victims of Restrictive Covenants

On April 23, 2023, the Washington state legislature passed the Covenants Homeownership Act (CHA), pioneering legislation that will provide compensation to victims of the racist restrictive covenants that destroyed opportunities for generations of Black, Asian, Latinx, and Indigenous families. Historians have been working in dozens of locations to document the extent and impact of racial restrictive covenants, finding them in thousands of neighborhoods and showing that they have a close connection to today’s disparate rates of homeownership and wealth.

Now the state of Washington is taking action to compensate the victims, and doing so with a law designed to survive court challenges that might scuttle reparations or programs that are overtly race based.

Racial restrictive covenants were legal instruments that developers or owners recorded with county authorities to bar certain populations from buying, renting, or occupying property in designated neighborhoods. They were binding in perpetuity. Future owners could face costly penalties if they rented or sold to the wrong party. Some covenants said, “Whites only.” Others specified banned populations which sometimes included Jews and Middle Easterners along with anyone perceived to be Black, Asian, “Indian” or “Mexican.” In the Seattle area, one subdivision developer specified “Aryans only.”

Covenants were widely implemented in the decades from 1910s through 1960s, promoted by the American Board of Realtors in cities and suburbs across the country. Although they became void with the passage of the 1968 Fair Housing Act, millions of covenants remain embedded in property records and continue to shape housing inequality.

Redlining and restrictive covenants worked together to destroy property rights for generations of BIPOC families. Redlining maps were created by the Home Owners’ Loan Corporation (HOLC) in 1936 to show banks and mortgage lenders where it was supposedly risky to make housing loans. Covenanted neighborhoods received high ratings while areas where nonwhites or other minorities lived were redlined as “hazardous” to lenders.  The Federal Housing Authority (FHA) then joined other lenders in refusing loans in redlined areas. From 1934 until 1962 less than two percent of FHA loans went to families of color.

It is sometimes wrongly assumed that restrictive covenants became illegal in 1948 with the Shelley v. Kraemer decision in which the Supreme Court declared that a racist covenant was a private contract that lacked standing in a court of law because enforcement by a state government would violate the equal protection clause of the 14th Amendment.

But the ruling did not make covenants illegal and had little impact. After 1948, race discrimination remained perfectly lawful and White neighborhoods continued to enforce covenants by other means. Indeed, segregation worsened over the next twenty years. For example, the Washington Supreme Court issued rulings in 1960 and 1961 affirming the legal  “right of segregation”.