While racial covenants prohibiting the sale or occupancy of homes by non-whites have been void and unenforceable for decades under both state and federal laws, deed restrictions that evidence the history of race discrimination in housing remain on record for a countless number of homes throughout the state and country. For example, a deed restriction recorded on a home originally built in 1943 and recently sold in Marin County reads as follows:

Said premises shall not, nor shall any part thereof nor any estate or interest therein, or any structure, building or improvement thereon, at any time to be sold, conveyed, leased or transferred to, or permitted to be occupied or used by, any person of African, Asiatic, Japanese, or Chinese or of any Mongolian Descent, except that persons of such descent may be employed as household or domestic servants by the occupant or occupants of said premises.

Under this deed restriction, in the event of a breach, all of the right title and interest of the grantee in the property immediately ceased and was deemed forfeited and reverted to the grantor. This and other racial covenants that eliminated a critical source of wealth accumulation by people of color are, of course, void under current law and have no legal, binding effect. And under an existing statutory procedure, a homeowner may record a modification of a racial covenant to strike unlawful language. Pending legislation would expand the scope of persons authorized to record a modification and create a program for the eventual redaction of racial covenants throughout the state.

Private covenants as a land use control

Two of the most effective means of restricting the use of land are through local zoning regulations and the recording of private covenants, which appear on any preliminary report prepared by a title company prior to the issuance of a title insurance policy in connection with the purchase of a home.

Beginning in the late 1800s, local governments achieved racial segregation in certain neighborhoods through their adoption of race-based exclusionary zoning ordinances, a practice the U.S. Supreme Court struck down in 1917 in Buchanan v. Warley (1917) 245 U.S. 60. Until the 1940s, however, private covenants were used to prohibit non-whites from owning or occupying property. In 1948, the Supreme Court made such covenants unenforceable in Shelley v. Kramer (1948) 334 U.S. 1. And today, state legislation expressly prohibits such covenants, as well as other forms of discrimination under the Unruh Civil Rights Act of 1959 and the California Fair Employment and Housing Act, which render restrictive racial covenants void.

Recording a restrictive covenant modification

Existing law specifically authorizes a homeowner to record a modification striking offensive language contained in a racial covenant. In 2000, a statutory procedure was established to (1) require a cover page or stamp on previously recorded title documents that flag for a buyer any unlawfully restrictive covenants contained therein, and (2) authorize a property owner to record a Restrictive Covenant Modification (RCM) striking racially restrictive language.

First, Government Code section 12956.1 requires a county recorder, title insurance company, escrow company, real estate broker, real estate agent, or association that provides a copy of any recorded declaration, governing document, or deed to place a cover page or stamp on the first page of the previously recorded document or documents, stating in at least 14-point boldface type that any restriction based on race, color, religion, genetic information, national origin, or ancestry is void. It further requires that the cover sheet include a notice to buyers of their right to file an RCM with the county recorder. Any person who records a document for the express purpose of creating a racial covenant is guilty of a misdemeanor.

Second, section 12956.2 authorizes the owner of any property that is the subject of an unlawfully restrictive covenant to record an RCM that includes a copy of the original document with the illegal language stricken. The county recorder, however, must submit the modification document to the county counsel for a determination of whether the original document contains an unlawful restriction before the county recorder may record the modification. The county recorder must refuse to record the modification document if the county counsel finds that the original document does not contain an unlawful restriction. The RCM “records over” the existing covenant, and the offensive language is thereafter removed from future documents relating to the transfer of the property.

The goal of the legislature in enacting the procedures was not to remove the covenants and pretend that the overt practice of racial housing discrimination never occurred, but rather to empower homeowners to take affirmative steps to remove the unlawful and offensive language from the deed.

Pending legislation to reallocate the burden away from homebuyers

A renewed legislative effort seeks to help shift the onus and expense of recording an RCM away from individual homeowners. Assembly Bill 1466 would take existing law a step further and require that a title company, escrow company, real estate broker, or real estate agent with actual knowledge of an objectionable racial covenant in title-related documents to notify the buyer of their ability to have it removed — and if requested by the buyer before close of escrow, assist in the preparation of an RCM. AB 1466 would also simplify the procedures to file an RCM by eliminating filing fees and notarization requirements, and allowing any person (not just an owner) who suspects the existence of a restrictive covenant to file an RCM form with the county recorder.

As originally proposed, AB 1466 sought to protect buyers from being exposed to any racial covenants in the first instance by requiring a title insurance company that transfers any deeds or other documents to a buyer to identify unlawful discriminatory covenants and record an RCM with the county recorder, prior to the transfer of any documents to the buyer. Those opposing the bill as proposed largely support the bill in concept, but expressed concerns regarding the burden imposed on title companies and potential delays to the escrow process caused by requiring searches for every property transaction without the benefit of a single, searchable database of recorded documents. Due to similar concerns, in 2009 then-Gov. Arnold Schwarznegger vetoed Assembly Bill 2204, which would have given county recorders the responsibility to strike unlawful racial covenants from record.

AB 1466 was amended to pursue a more global approach, as opposed to a point of sale approach. As amended, it includes a mandatory $2 fee on each real property transaction, with the funds to be deposited in a newly created Unlawfully Restrictive Covenant Redaction Trust Fund administered by the Department of Housing and Community Development. The revenues deposited in the fund would be used for the development of a task force to coordinate the identification and redaction of unlawfully restrictive covenants in the records of the county recorder’s offices throughout the state. The task force would partner and collaborate with the University of California and other universities to conduct research regarding identified unlawful, restrictive covenants, and to create a centralized database for them and map their locations throughout the state.

For a further discussion of restrictive covenants and other servitudes, see CEB’s California Easements and Boundaries: Law and Litigation § 1.8.

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