Property Law and Inequality: Lessons from Racially Restrictive Covenants

Carol M. Rose | August 28, 2022

A long-standing justification for the institution of property is that it encourages effort and planning, enabling not only individual wealth creation but, indirectly, wealth creation for an entire society. Equal opportunity is a precondition for this happy outcome, but some have argued that past inequalities of opportunity have distorted wealth distribution in contemporary America. This article explores the possible role of property law in such a distortion, using the historical example of racially restrictive covenants in the first half of the twentieth century. I will argue that the increasing professionalization and standardization of real estate practices in that era included racial covenants to appeal to a predominately white market clientele, resulting in a curtailment of opportunities for African Americans to acquire wealth in real estate. Racial covenants have been unenforceable under constitutional law since 1948, but I will argue that they were also a distortion of standard property law and that they undermined the principles on which property law rests. Courts could have recognized this at the outset and later, but for some reasons that this article suggests, they did not, with long-lasting repercussions for racial wealth inequalities.