Restrictive Covenants

Judicial History

Segregation was validated by Plessy v. Ferguson, the 1896 Supreme Court decision that established the “separate but equal” doctrine. After Plessy, Blacks were separated from the mainstream of American society, but they were not treated as equals. When northern cities began to industrialize at the beginning of the 20th century, thousands of African American families migrated from the rural South to cities in the Northeast and Midwest. When they arrived in urban communities, these migrants encountered residential obstacles. Municipal ordinances were enacted that prohibited African Americans from occupying properties except in designated neighborhoods. The ordinances were challenged and declared unconstitutional in a 1917 decision, Buchanan v. Warley.

After Buchanan, the real estate industry resorted to racially restrictive covenants. The covenants were provisions in deeds that prevented property owners and subsequent purchasers from selling their homes to racial and religious minorities. The U.S. Supreme Court implicitly endorsed the covenants in a 1926 decision, Corrigan v. Buckley. The 14th Amendment applies only to “state action,” which consists of actions taken by state and local governments. The Court declined to decide the merits of Corrigan on jurisdictional grounds, but it issued an opinion that stated the 14th Amendment did not prohibit private parties from controlling the use and disposition of their property.

As the migration from field to factory continued, the severe housing shortages grew worse. Blacks were shoehorned into existing ghettos that expanded as Whites moved out of adjacent neighborhoods. In the 1940s, the National Association for the Advancement of Colored People (NAACP) launched a litigation campaign that challenged restrictive covenants.

In 1948, the Supreme Court held in Shelley v. Kraemer that restrictive covenants were private arrangements, but the judicial enforcement of discriminatory agreements constituted state action that violated the 14th Amendment. After Shelley, the covenants could not be enforced. This was an important victory for the NAACP, but it did not end discrimination in the nation's housing markets.

Government and Legislative Background

During the post–World War II era of the 1940s and 1950s, White families were rapidly moving out of the central cities. The suburban communities that became a staple of the American landscape developed during this period. Homeownership was made possible by the introduction of fixed-rate, 30-year mortgages insured by Veterans Administration and the Federal Housing Authority (FHA). The Home Owners’ Loan Corporation (HOLC), a federal agency established during the 1930s depression, fostered discriminatory practices through “redlining.” Homer Hoyt, an influential land economist and FHA consultant, believed that property values were closely linked to the racial composition of neighborhoods. Relying on Hoyt's theories of valuation, the HOLC rated every urban and suburban neighborhood in America A, B, C, or D using color coded maps. The lowest quality rating, D, was colored red. Neighborhoods rated A had to be homogenous and occupied by the families of business and professional men who were White and usually native born. Neighborhoods in which Blacks resided were rated D and coded red. Lenders were discouraged from making loans in neighborhoods that were redlined.

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