The Power of State Legislatures to Invalidate Private Deed Restrictions: Is it an Unconstitutional Taking?

Abstract

Over the past several years state legislatures confronting a severe housing shortage have increasingly preempted local land use regulations that restrict housing supply in an effort to facilitate more housing production. But even where state legislatures have been successful, they now confront another problem: many of the preempted land use regulations are duplicated at the neighborhood or block level through private “covenants, conditions and restrictions” (CCRs) enforced by homeowners associations. In response, California’s legislature has begun aggressively invalidating or “overriding” these CCRs. While many states have barred HOAs from prohibiting pets, clotheslines, signs and flags, California has moved much farther, prohibiting HOAs from unreasonably limiting accessory dwelling units and overriding any private CCR that would inhibit the construction of 100% affordable housing of any density.

These overrides present serious legal questions because CCRs are property and contract rights that may be protected by the Constitution’s Takings and Contract clauses. Overrides have not resulted in much published litigation in the past, but California’s new wave of aggressive CCR overrides may change that. While the Contract Clause argument is exceptionally weak, homeowners who are disabled from enforcing a servitude benefitting their property due to a legislative override have a viable argument that the override interferes with their reasonable expectations regarding the use of their property, and therefore constitutes an unconstitutional taking. On balance, however, I argue that most CCR overrides will survive a takings challenge because the enforceability of CCRs has long been subject to alteration or even termination by courts or legislatures on public policy grounds, so a homeowner would reasonably expect a CCR to be unenforceable if it conflicts with public policy as determined by the legislature. Nevertheless, the current Supreme Court has been very aggressive in recent takings cases so legislatures will have to be careful in crafting overrides to ensure they satisfy the Court’s increasingly stringent takings standards.

This article will be published as part of the Pepperdine Law Review symposium on affordable housing.

Keywords: takings clause, contract clause, homeowners associations, CCRs, CC&Rs, servitudes, preemption, zoning, land use