Both in a historical and general sense, covenant law is the solemn promise for engaging or refraining from a certain action or activity. Covenant under historical common law had been distinguished by having a seal, whereas ordinary contracts did not. Due to the seal, it acted as indication of unusual solemnity of a promise made within a covenant. Thus, the covenant would be enforced under common law, without consideration. Within the United States, it is presumed as an implied covenant of good faith.
Covenants are considered a form of contract that allows the covenanter to conduct a promise to the covenantee to conduct (affirmative covenant) or refrain from a specific action (negative covenant). Under real property law, real covenants is a term used for situations connected to the land usage. Furthermore, land with a running covenant imposes restrictions or duties for that land no matter the owner. This makes restrictive covenants similar in a way to equitable servitudes and easements, creating some talk on whether or not the concepts should be merged. Whereas, steps are taken by the Restatement (Third) of Property to merge the concepts into servitudes. In the United States, real covenant law is also referred as “unspeakable quagmire” in one court.
Additionally, when a covenant is for a title, it comes with a title or deed to the property, describing the grantor of the deed or title ensures specific guarantees to the grantee. In the U.S a non-compete clause is also called restrictive covenants.
In the mid-19th century, racial covenants were introduced and began gaining prominence after the 1890s. Although, a widespread national significance was not adopted until the 1920s, a continuing situation until the 1940s. These racial covenants acted as an alternative option for racially restrictive zoning, whereas ordinances were enforced of residential segregation depending on race. This ruling was implied by the 1917 U.S Supreme Court based on Buchanan v. Warley and was determined, based on constitutional grounds to be invalidated.
In the 1920s, many unsuccessful legal challenges were sponsored by the NAACP (National Association for the Advancement of Colored People), fighting against the racial covenants. In 1926, due to campaigners fighting against the racial segregation, racial restrictive covenant legality had been affirmed by the Corrigan v. Buckley (271 U.S. 323) landmark. It was ruled by judgement that these types of clauses had consitutied as “private actions” and therefore, was not subject of the Due Process clause according to the 14th amendment. Thus, as a result form this decision, racial restrictive covenant was proliferated throughout the U.S from the 1920s and 1930s.
In 1940, such invalidation of covenants continued by the United States Supreme Court. In the case of Hansberry v. Lee, little was done to reverse this trend due to the final ruling being considered a technicality, failing to set legal precedent. The judgement of Corrigan v. Buckley was not overturned until the case of Shelley v. Kraemer (1948), stating exclusionary covenants had been unconstitutional according to the 14th amendment, and thus legally unenforceable.
During this time, there were commentators that attributed exclusionary covenant popularity in the response to urbanization after WWI of black Americans, which brought fear of “black invasion” to white neighborhoods. It was feared this would lower property value, increase crime, and create social instability. In addition, several African Americans had defied covenants openly, trying to be a “pioneer” within restricted areas.
In 1968, the Fair Housing Act was passed by Congress, outlawing discrimination for housing based on color, race, sex, religion, or national origin.
In 1988, this act was expanded further, prohibiting discrimination based on disability or familial status, such as presence of children.
Modern Exclusionary Covenants
Although not enforceable today, exclusionary covenants continue to exist in various of the original property deeds, considered an ‘underlying document’. Additionally, title insurance policies commonly have exclusions that prevent coverage based on these restrictions. It was found that over 400 properties located in Seattle suburbs had retained discriminatory language (unenforceable) in 2010, which historically excluded racial minorities from living on the property.
Covenant Law Relating to Land
Under property laws, covenant related to land is referred to as ‘real covenant’, a large type of covenant that commonly imposes restrictions on the way land is able to be used (negative covenant) or as a means to require specific continued actions (affirmative covenant). In addition, covenants can run with the land (covenant appurtenant), which means that the covenant will remain attached to the land in the future, even if the property is transferred to a different party, therefore making the new land owner bound by the terms. Although, covenants can apply to a single person, known as covenant in gross. Typically, affirmative covenants do not run with the land under English law, while covenants in the United States are examined, with certain exceptions an affirmative covenant can be attached to run with the land.
The property deed may indicate the covenant and should be disclosed to potential property buyers. Additionally, covenants might be recorded, or shown in Torrens title as in the case of Commonwealth countries. Furthermore, equitable servitudes, easements and covenants are all similar. It was discussed in 1986 if equitable servitudes, easements and real covenants should simply be combined and unified. However, in time the original covenant promise may not be involved with the land, making enforcement become laxed.
United States Law Requirements
Generally, covenants are written within the deed, and have to be created in writing because of statute of fraud. However, it has been argued by scholars that certain areas should become greatly relaxed. For a burden to continue with the land, the following factors must apply:
- Original parties must have intent of agreement successor be bound.
- Covenant has to be created in writing.
- Covenant has to concern or touch the land, and be related to enjoyment or use of the land.
- Subsequent owners had to receive actual notice, constructive notice (record) or inquiry notice at purchasing of land.
- Horizontal privity must exist between original parties.
- Must have strict vertical privity of estate.