Restrictive covenants

Written By North Carolina History Project

Restrictive covenants are clauses in property deeds that contractually limit how owners can use the property. Use of these covenants in property deeds remains widespread. During the early-twentieth century, however, they were used as instruments of residential segregation in the United States. By stipulating that land and dwellings not be sold to African Americans, restrictive covenants kept many municipalities residentially segregated in the absence of de jure racial zoning.

In North Carolina, the effects of restrictive covenants were far-reaching, particularly in Charlotte. Though Charlotte never had racial zoning ordinances, the use of restrictive covenants there resulted in the de facto segregation of the city. As late as the mid-1890s, suburbs springing up around Charlotte tried to cater to whites and African-Americans alike. After the 1898 white supremacy campaign, racial attitudes in Charlotte shifted. New neighborhoods in Charlotte enforced restrictive covenants that prevented property sales to African Americans and poor whites.

During the first three decades of the twentieth century, North Carolina and U.S. courts repeatedly upheld racially restrictive covenants. In the 1930s, a New Deal program, the Federal Housing Administration (FHA), began to foster the spread of restrictive covenants. The FHA, created in 1934, was intended to alleviate the substantial risks that banks had undertaken on mortgages. The FHA’s support of racially restrictive covenants began with its development of an appraisal table for mortgages that took into account home values. For a home to receive the highest rating in this table, the home had to be located in an all-white neighborhood. Similarly, the FHA recommended that racially restrictive covenants be used to prevent sales of homes to African Americans; the rationale for this recommendation was that if African Americans moved into a mostly or all-white neighborhood, home values there would plummet. In Charlotte, many new housing developments were constructed with FHA support.

As a consequence of widespread use of racially restrictive covenants, Charlotte had become, by the time of Brown v. Board of Education of Topeka (1954), one of the most segregated cities in the United States. A few years before Brown, in 1948, racially restrictive covenants were rendered impotent by the U.S. Supreme Court’s decision in Shelley v. Kraemer. At issue in Shelley was an African American family’s right to keep a home they had purchased in a St. Louis neighborhood of residences with racially restrictive covenants. The Supreme Court ruled that racially restrictive covenants, while not in themselves unconstitutional, cannot be enforced due to the Equal Protection clause of the Fourteenth Amendment.  

While Shelley effectively eliminated racially restrictive covenants, it did not mitigate their effects. In the 1950s, Charlotte was a city of four clearly demarcated quadrants, with one populated by African Americans and the other three populated by whites. The failure to achieve residential integration in Charlotte and many other U.S. cities owes in part to the damage wrought by racially restricitive covenants.