Transforming Real Estate Law: Nationwide, a Quest for Racial Fairness Gains Ground

Racial fairness is undergoing significant progress in real estate law this year — particularly in the area of confronting offensive deed restrictions. In some notable updates for 2021-2022, Connecticut, New York, Massachusetts, Illinois and Texas are confronting tackling race-based covenants in deeds. Parallel provisions are already available in a handful of states, including Florida, Maryland, Utah, and Washington.

And, in what might be a nationwide first, the state of Oregon is prohibiting the practice of writing “love letters” to sellers in order to win in the home-buying arena.

Confronting the Remnants of Segregation

As we’ve previously noted, the language of racial exclusion on real estate deeds is an all-too-common problem.

Of course, not all deed restrictions are illegitimate. Various types of restrictions legally limit the kind, size or number of things that may be built on a property. They set forth permissible lot sizes.

They notify buyers of easements, acceptable and unacceptable land use, and so forth. But not all deed restrictions focus on limiting things or activities. Some have disadvantaged certain groups of people to the advantage of others. For a long time, the courts and the real estate industry went along with this.

The buck stopped on May 3, 1948, when the U.S. Supreme Court held racially restrictive covenants unenforceable under the 14th Amendment. Two decades later, the Fair Housing Act outlawed racial discrimination in housing.

While language forbidding certain groups to move into homes and subdivisions is known to be unenforceable, it wasn’t deleted from the deeds. The doctrine of “covenants running with the land” seemed to mean these clauses were etched in the chain of title forever. The question many people are asking today is this: If federal and state law rejects and renders these clauses unenforceable, why must they be allowed to linger uncorrected in the property records?

Connecticut Voids Race Identifiers in Legal Documents 

Legal advocacy to denounce “whites-only” and similar language is surging this year and one of the places it’s happening is Connecticut.

David Ware, a lawyer raised in Manchester, Connecticut, found out that a clause supporting racial segregation existed in his family home deed, and in the deeds of several nearby subdivisions created in the 1940s. Ware further learned that Connecticut lacked any method to remove or denounce the language. Ware set out to work on a possible law that would declare these clauses void by Connecticut.

Fast-forward to Jul. 1, 2021. An Act Concerning the Removal of Restrictions on Ownership or Occupancy of Real Property Based on Race and Elimination of the Race Designation on Marriage Licenses became law in Connecticut. Under the new law, also known as HB 6665, homeowners who find race-based restrictions in their deed may have an affidavit recorded in their home’s county, addressing and renouncing the clause.

As enacted, the law impacts deed recording in the following ways:

  • The law expressly prohibits race-based deed restrictions.
  • The law allows for the official removal of discriminatory covenants from documents in the land records throughout Connecticut. Individual homeowners may file — at no charge and with no need for professional assistance — a notarized document with their county recorder that expressly says the racial restriction is void.
  • The law offers a legal method for homeowners’ associations to vote to amend their governing documents accordingly. The Community Associations Institute backs this measure. CAI insists the action should not require a majority vote of approval from homeowners.

The Land of Lincoln Steps Up

Illinois State Senator Adriane Johnson also thinks “[h]omeowners shouldn’t have to jump through hoops to strike such harmful and antiquated provisions from their property records.”

So, a new Illinois law makes a form available for individuals and homeowners’ associations to submit to their county recorders. Real estate instruments, deeds included, can have the language taken off in the recorder’s office. The maximum fee that can be charged for a restrictive covenant modification is $10.

This is HB 58, and it is effective in Illinois on Jan. 1, 2022.

New York Gets Serious About Ending Race-Based Exclusion

A bill is pending in New York to address restrictive covenants. It targets transfers of title, and is triggered during the sale process of deeds with restrictive covenants that “discriminate on the basis of race, color, religion, sex, sexual orientation, familial status, marital status, disability, national origin, source of income or ancestry.”

Once the provision becomes law, before closing on a real estate sale the seller must give buyer a restrictive covenant modification document. Condo properties must “delete or amend” the offending restrictions.

Texas Wrangles With Racial Restrictions

SB 222 in Texas amends the state Property Code to direct county clerks to remove void, discriminatory language from deeds. Texas already has a law, enabling courts to remove the unconstitutional language from real estate deeds. SB 222, though, offers a way to address the problem with a form at the county clerk’s office — not by having to resort to a court action.  

Under SB 222, the deed recorder, within a month of receiving a new deed or real estate instrument for recording, will delete any void clauses and attach a statement explaining the change. If a resident has approached the recorder’s office but the language is not void (per the recorder’s determination), then the recorder will inform the resident that the language has not been removed. By Dec. 1, 2021, the Texas Attorney General’s office will make the request forms available, so that action can be taken from Jan. 1, 2022 on.

Oregon to Spurn Home Buyers’ Love Letters

In a national first, Oregon has outlawed home buyers’ “love letters” to sellers. The new law, HB 2550, is to take effect New Year’s Day 2022.

What are love letters? In a competitive market, some buyers write to sellers to present themselves as the perfect new homeowners. The National Association of REALTORS® has discouraged the practice, because photos and letters from homebuying hopefuls might be taken, “knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer.” Oregon clearly agrees.

The new law sets out to ensure seller avoid picking a buyer based on “race, color, religion, sex, sexual orientation, national origin, marital status or familial status as prohibited by the Fair Housing Act.” To this end, Oregon real estate agents for sellers may not accept any personal documents coming from buyers.

Williamstown, Massachusetts Stands Up for Respect…

Person sitting on a bench outside looking at a computer.

Residents of a subdivision in Williamstown, Massachusetts, which is a three-hour drive or six-hour train ride from Boston, can look forward to a new provision letting them strike out race-based exclusionary language stuck in their property deeds in the 1940s. The restriction states: “No persons of any race other than the white race shall use or occupy any buildings or any lot, except that this covenant shall not prevent occupancy by domestic servants of a different race domiciled with an owner or tenant.”

Residents first added news language promoting inclusion. Then, in 2020, they went further, working for a law to allow the offensive language to be deleted. A bill is under consideration in Massachusetts do make it possible.

…And a Note From North Carolina

A comprehensive initiative from North Carolina’s Division of Archives and Records and the University of North Carolina Greensboro Libraries will offer a public search service so people can research the histories of enslaved people across the state.

As part of this major work, students and historians at Shaw University in Raleigh, NC are working with the Wake County Register of Deeds on The Enslaved Persons Project. Their goal? To create a catalogue of bills of sale and property deeds. Often, these were the only legal documents related to enslaved people. The Wake County Register of Deeds is working to create a searchable database of these records online, to allow descendants a way to do research into their family histories.

Supporting References

David Ware: The Black and White of Greenway: Racially Restrictive Covenants in Manchester, Connecticut (Mar. 2020).

Jaclyn Severance for UConn Today (University of Connecticut) Discovery of Racist Property Restriction Leads to New Law (July 27, 2021).

TX Property Code Section 5.0265(d).

Scott Stafford for The Berkshire Eagle (Pittsfield, MA): Legislation Moving Through Statehouse Might Address Racist Covenants Hidden in Williamstown Property Deeds (Aug. 14, 2021).

Jeffrey M. Schlossberg and John A. Snyder for Jackson Lewis P.C.: Oregon Bans Home Buyers’ ‘Love Letters’ to Sellers (Aug. 25, 2021).

Jessica Ruf for Diverse: Issues in Higher Education. Unlocking Stories of Slavery in North Carolina – Shaw University, Local Deeds Office Hope to Uncover Human Stories Lost to Slavery (Fairfax, VA; Aug. 24, 2021).

Lora Lavigne for WRAL: Unlocking Stories of Slavery, Wake County Register of Deeds and Shaw Research History of Enslaved People Locally (Aug. 26, 2021). Sellers Rejected Your Offers? Get Back on Track to Closing – Making a Strong Offer in 3 Strategic Stages (Jul. 3, 2021).

Photo credits: Any Lane and Ono Kosuki, via Pexels.