In recent years, some states have attempted to address the U.S. housing crisis by pulling certain aspects of zoning control that affect housing supply away from local governments. In a few states, this preemption focuses on eliminating or limiting single-family zoning, while in others it more narrowly eliminates limits on accessory dwelling units (“ADUs”). State preemption has shown some promise (and also faced some legal challenges). Some land use scholars have questioned whether changing zoning laws is enough to address housing supply and affordability because much single family housing in the U.S. is within neighborhoods that are governed by covenants, conditions, and restrictions (“CC&Rs”). Those CC&Rs often mirror or go further than the local zoning code when it comes to restrictions on density, height, and residential use.
Ken Stahl’s new article addresses this concern head-on using examples from California which has both preempted local zoning and begun to limit or override certain CC&Rs. Stahl considers whether property owners have a viable claim under the Fifth Amendment Takings Clause when the state overrides CC&Rs so that owners can no longer rely on or enforce these restrictive covenants.1
Stahl begins by describing older and more recent CC&R override legislation in California. The older laws include those that require homeowners associations to allow “small day care centers, group homes, [and] senior and employee housing.” The newer round of legislation prohibits homeowners associations (“HOAs”) from unreasonably restricting the construction of ADUs, and allows owners to construct housing that is 100% affordable on their land even if there are CC&Rs that restrict residential property use. He explains that these newer laws are different because they focus directly on housing density, which is often at the heart of exclusionary concerns expressed by HOAs and their members.
In the next part of the Article, Stahl considers the constitutionality of these CC&R overrides, focusing on whether they would withstand a takings analysis under Penn Central. He considers each of the three elements of the test, finding that the reasonable expectations prong would likely offer the most support to a neighbor challenging a state override of a CC&R as a taking: neighbors who live in communities with CC&Rs that limit housing density likely have a reasonable expectation that multifamily housing will not be permitted in their single-family communities. As he explains, “even if the wisdom of segregating uses is highly dubious, the fact that it has been enshrined in law for the last century works powerfully in its favor on the question of reasonable expectations.” (P. 618.)
On balance, though, Stahl determines that the homeowners would be likely to lose their takings claim. As we know, plaintiffs often lose under a Penn Central analysis, a factor of which can be that people’s investment backed expectations are already influenced by anticipating their property will be subject to land use regulation even before the regulation at issue is imposed. Further, Stahl suggests there has long been uncertainty about the enforceability of certain CC&Rs and it is reasonable to assume that as our public policies change, a state’s view about the enforceability of specific restrictive covenants might change. Here, Stahl notes that one of the justifications for CC&R overrides in California that limit housing density is because of the housing affordability and availability crisis in that state. Considering all of the above, Stahl asserts that even aggressive legislative overrides of CC&Rs are likely to withstand judicial scrutiny.
Stahl also briefly addresses whether the Contract Clause of the U.S. Constitution, which prevents the government from impairing contractual obligations, could be used to invalidate these overrides. Here, he notes that although the few decisions that have addressed CC&R overrides focus on the Contract Clause, the analysis is misplaced because he views CC&Rs as property rights rather than contracts.2 Thus, he believes courts should look at CC&R overrides as a potential deprivation of property rights which could violate the Takings Clause, rather than as a potential interference with contracts. Regardless though, Stahl suggests that even if they were considered under the Contract Clause, they would stand up, given that the analysis “strongly favors the government as long as the government can articulate a legitimate public policy interest and a reasonable connection between that interest and the means employed.” (P. 629.) For example, he points out that in one case, a court examined a legislative override of a CC&R that prohibited family day care centers. The court there found that the statute was appropriate even though it worked a significant impairment.
He concludes by noting that, even if the current types of legislative CC&R overrides withstand judicial scrutiny, we might expect to see more aggressive overrides that focus on more than just 100% affordable housing developments. Legislation that seeks to override density restrictions in CC&Rs in favor of constructing more market-rate housing might face political and legal opposition. But, Stahl notes, the real fight will be over loosening existing zoning restrictions; “[o]nce that debate is over, liberalizing CCRs is something of an afterthought.” (P. 632.)
- Around the same time that Stahl’s article was published, Gerald Korngold posted an article making similar points. See Gerald Korngold, Repealing Single-Family Zoning is Not Enough: A Proposal for Removing Existing Parallel Private Covenants for Violating Public Policy, 89 Mo. L. Rev. __ (forthcoming, 2024) (Arguing that “[e]xisting single-family covenants can be voided under a longstanding doctrine that bars enforcement of covenants violating public policy” and “that a voided covenant is not ‘property’ requiring Fifth Amendment compensation”).
- Molly Brady, in a recent related essay, considers the interplay between covenants and the Contracts Clause in more depth. See Maureen E. Brady, Covenants and the Contract Clause, __ Va. Env’t L.J. (forthcoming, 2025) (stating that, for purposes of her essay, she is “assuming that covenants are properly handled by the contract clause” and noting “that some state courts may indeed use the contract clause to take a closer look at pro housing legislation that voids or affects the enforceability of private deed restrictions”).
