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Removing Unlawful Restrictive Covenants

by | Aug 13, 2021 | Fair Housing, Miscellaneous

Q:  My Buyer is upset that the Conditions, Covenants & Restrictions (“CC&Rs”) of the property she is buying contain racially offensive restrictions; she still wants to buy the home but wants the restrictions removed.  Is there anything that can be done to correct this problem?

A:  Yes; under a California Housing Discrimination law that went into effect January 1, 2020, homeowners may request the County where the property is located to modify the CC&Rs. 

I.   BACKGROUND 

Unfortunately, restrictive covenants which excluded people based upon color, ethnicity or religion have been allowed to exist for many years.  The U.S. Supreme Court decision of Corrigan v. Buckley (1926)) set the precedent that racially exclusive covenants were acceptable and not prohibited by law.  In 1948, the U.S. Supreme Court case of Shelley v. Kraemer struck down racially restrictive housing covenants and held that such restrictions could not be legally enforced.

The California Legislature attempted to correct the problems of CC&Rs that restrict the type of people who can live in any area by enacting Government Code Section 12856.1.  That statute provided that whenever a county recorder, title insurer, escrow company, homeowner’s association or real estate licensee provides anyone with a copy of CC&Rs, there had to be a cover sheet that stated in 20-point boldfaced red type that informed the recipient of the CC&Rs that such restrictions which violated the Fair Housing Laws were legally unenforceable.     

Government Code Section 12956.2 provides that a property owner who believes that a restrictive covenant in their CC&Rs that violates the California Fair Housing laws may request that the County Recorder modify the CC&Rs by striking the discriminatory language from the title of their property.  This law may not apply to people holding an ownership interest in property that is part of a common interest development if the board of directors is legally obligated to remove the restrictive covenants pursuant to Civil Code Section 4225 or Section 2206(b).

II.  MODIFICATION PROCEDURES 

     A.  Restrictive Covenant Modification Forms:

Homeowners who want discriminatory, restrictive language stricken from their CC&Rs need to contact their County Recorder’s Office and obtain the County’s Restrictive Covenant Modification forms which the County Recorder is legally obligated to make available to the public under Government Code Section 12956.2(e).

Generally, the County will need the following information from the homeowner who completes the Restrictive Covenant Modification forms:

    1. The recording number of the original document that contains the racially restrictive covenant;
    2. The names of all current owners of record; and
    3. The legal description of the property along with the street address.

     B.  Review Process:

After the homeowner has completed the County’s Restrictive Covenant Modification forms and has submitted that documentation to the County Recorder, the County Counsel must first determine whether the original document

contains an unlawful restriction based on race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, veteran or military status, national origin, source of income or ancestry (in other words, the covenant violates California’s Fair Housing Laws as specified by the Department of Fair Employment and Housing).

      See also Weekly Practice Tip, Overview of New DFEH Fair Housing Regulations (02/14/2020)

If the County Counsel determines that the CC&Rs violate the Fair Housing Laws, the County will then record the Modification and it will be indexed in the same manner as the original document.

 PRACTICE TIPS:  

    1. Agents should not handle requests to modify the CC&Rs. The Housing Discrimination statute specifies that the Modification requests must be made by the property owner.
    1. If clients have any questions regarding the process of obtaining a Modification of a Restrictive Covenant, they should be encouraged to contact the County Recorder’s Office for the county where the property is located.
    1. If clients are not satisfied with the information supplied by the County Recorder’s office and/or they disagree with any determinations made by the County Recorder or the County Counsel, then the clients should be advised to consult with their own qualified California real estate attorney for further advice.

WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS.  This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents.  It may not be reproduced or distributed without the express written consent of Broker Risk Management.  The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.

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