Clauses on real estate deeds, known as racial deed restrictions or restrictive covenants, were key to imposing segregation on African Americans. Restrictive covenants are limits on property such as use, improvement, and inhabitants, that “run with the land,” meaning that they remain in effect even after the property is sold to a new owner. Realtors and neighborhood associations promoted restrictive covenants to ensure racial stability—that white neighborhoods would stay white. Whole neighborhoods entered into restrictive covenants and reflected a consensus on racial segregation—if a black resident moved into a neighborhood, whites would quickly move away and the resulting flight would reduce the value of homes in the neighborhood.
These began as local practices, but HOLC and FHA officials made restrictive covenants central to home finance during the 1930s and 1940s. Borrowers could not get aid or a mortgage guarantee without having a restrictive covenant on their home or covering their neighborhood. A U.S. Supreme Court ruling in 1948, Shelley v. Kraemer, declared that covenants could no longer be enforced in the courts.