Covenants and the Contract Clause

Abstract

Nearly one in four Americans lives in a homeowners’ association, particularly in the South and the West, those parts of the United States that are fastest growing. In several decisions this decade, courts have suggested that their state or federal constitutions act as limits on the power of the state to interfere with the regulatory activities of these associations, namely because of the regulation’s impact on subdivision covenants. A handful of other scholars and practitioners have begun considering how those within homeowners’ associations might challenge regulations affecting the enforceability of covenants under the state or federal takings clauses, which require just compensation for certain regulations that “go too far.” But there are early signs that the contract clause may also play a substantial role in the next round of housing-related litigation, and that is my focus in this Essay.

In Part I, I offer a brief overview of the contract clause, today one of the less well-known provisions of the federal Constitution, as well as its state analogs. In Part II, I investigate previous contact between the contract clause and covenants, finding conflicting lines of decisions in different states as to the power of a state to void or invalidate preexisting restrictions. In Part III, I turn to a small number of recent decisions that have again brought covenants and the clause into contact, one involving housing-related legislation specifically. I conclude by examining what these recent cases foretell about the battles to come in tackling housing affordability, which are unlikely to end with public law change.

Keywords: property, covenants, deed restrictions, constitutional law, contract clause, takings clause, zoning, land use, local government, homeowners associations