Covenants without Courts: Enforcing Residential Segregation with Legally Unenforceable Agreements

Richard R. W. Brooks

American Economic Review, 2011, vol. 101, issue 3, 360-65

Abstract: Racial restrictive covenants are private agreements prohibiting sale, rental, use or occupancy of properties by persons of designated races, ethnicities, nationalities and religions. Widely acknowledged for facilitating residential segregation, the Supreme Court ruled covenants unenforceable in 1948. Yet they remained legal to write and reference, allowing realtors, banks, insurers, title companies and government agencies to continue to rely on unenforceable covenants in their decisions and policies. Beyond legal enforceability, covenants were essentially signals that coordinated the behavior of a variety of private individual and institutional actors--signals that remained effective without the courts. Evidence is presented to support this claim.

Date: 2011
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