Uniform Laws Update: Creating a Uniform Process for the Removal of Discriminatory Restrictions in Deeds

Throughout the history of the United States, racial discrimination, including government-sanctioned discrimination in real estate ownership, prohibited people of color from fully and equally participating in American society. Racial covenants were used throughout the early and middle twentieth century to segregate homeowners’ associations, neighborhoods, and large swaths of many cities and suburbs. When a racial covenant was added to the title records for a parcel of real estate, it almost always excluded black people from occupancy, and some restrictive covenants excluded members of other ethnic or religious groups in addition or allowed occupancy of the property only by members of the Caucasian race. In 1940, an estimated 80 percent of residential properties in Los Angeles and Chicago had a restrictive covenant prohibiting occupancy by black residents. Racial covenants kept neighborhoods physically segregated, and because their use was so widely encouraged by those in the real property industry, these covenants served to perpetuate racism and segregation in American society on a broader and more lasting scale.

In 1948, the Supreme Court held that racial covenants were unenforceable in Shelley v. Kraemer, 334 U.S. 1 (1948), and in the 1953 decision in Barrow v. Jackson, 346 U.S. 249 (1953), the Court ruled that it was unconstitutional to allow an owner of a parcel with a racial covenant to recover damages for a neighbor’s violation of that covenant. Racial covenants were still widely used, however, until the Fair Housing Act became law in 1968 and outlawed them entirely.

Currently, even though racial covenants are unenforceable and can no longer legally be added to a property’s title records, the chains of title for many properties still contain historical restrictions discriminating on the basis of race, ethnicity, and religion, which are understandably disturbing to the property’s owners and their neighbors. The Mapping Prejudice Project at the University of Minnesota has located at least 26,000 racially restrictive covenants that remain in property records in the Minneapolis-Saint Paul area alone; experts estimate there are millions of restrictive covenants in deeds throughout the United States. Many homeowners have wished for a path to functionally remove these illegal restrictions without disrupting title, and a few states, including California, Delaware, Illinois, Maryland, Minnesota, Nevada, New Jersey, and Oregon, have created some procedures to allow the redaction or removal of these prohibited restrictions. However, the procedures differ from state to state.

After these early state laws were enacted, the American Land Title Association proposed that the Uniform Law Commission (ULC) undertake a study of the issue to determine whether a more uniform process for the removal of discriminatory restrictions was feasible. As a result, over the past two years, the ULC has been working to address this issue with its drafting committee for the Uniform Unlawful Restrictions in Land Records Act. This drafting committee engaged commissioners who are experts in real property and observers from the title insurance, realty, lending, and property records industries, along with government and academic professionals. Together, they set out to draft a comprehensive piece of legislation that allows homeowners to address the painful history of their property without compromising their title or any other aspects of their ownership.

At the outset of this project, the drafting committee sought to create legislation that would allow owners to expunge or remove racial covenants without incurring significant costs or disrupting existing recording practices. The committee later decided to expand the scope of its project to include not just restrictive racial covenants but to also include any discriminatory covenant that restricts ownership or tenancy on the basis of any class that is protected under fair housing legislation in a given state.

The new Uniform Unlawful Restrictions in Land Records Act achieves these stated goals in several ways.

First, the act empowers any individual owner of a property that is subject to a prohibited restriction to record an amendment to remove that restriction and requires the property owner to comply with state requirements for the recording and execution of any such amendment. The specific wording of this section acknowledges that there are differences in local recording statutes while ensuring that any amendment is properly recorded under those laws so that future purchasers will have notice of the change.

Next, the act creates procedures that allow the removal of prohibited restrictions from the governing documents of a condominium or homeowners’ association. The drafting committee recognized that these prohibited restrictions are contained in the governing documents for many communities, even if individual deeds do not contain a reference to any such restrictions. Under the act, the association’s governing body can vote to remove the prohibited restriction, and any member of the association may request that the association remove the restriction from the governing documents.

The act also provides specific language for inclusion in all amendments removing prohibited restrictions and specifies that the removal of the prohibited restriction does not invalidate any other, non-prohibited restrictions contained within the instrument. To protect the chain of title and preserve the historical record, the act clarifies that original documents from the land records are not to be altered or destroyed in connection with the amendment removing a prohibited restriction.

Finally, the act shields recorders from liability for recording amendments in accordance with the law.

At press time, the Uniform Unlawful Restrictions in Land Records Act was expected to be approved at the ULC’s July 2023 Annual Meeting and available for state legislatures to consider beginning in the fall of 2023. The act creates a standard process for property owners to erase painful histories from their deeds and forge a path forward that is free from discrimination and bias. It should be considered by all state legislatures.