30 Jun 2010

Restrictive Covenants

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Over at Cato Unbound Sheldon Richman writes what strikes me as a very unpersuasive (short) essay (HT2 Bryan Caplan). I’m just going to comment briefly on a few excerpts:

Many concerns could be raised about racially restrictive deed covenants and the State, including:

1) the risk of defining “private action” out of existence;

2) the risk of the slippery slope (what other agreements might the State decide not to enforce?)…

Sheldon might just be covering his bases in #2, but for the record I want to reiterate that anarchist libertarians shouldn’t ever be worried about the State not enforcing something. (See my unraveling of the standard–and I think, wrong–libertarian complaint that the State doesn’t protect the property of drug dealers, or the rights of “scabs” to cross picket lines.)

I should think that in a fully free society restrictive covenants in deeds would be unenforceable because they are feudal in nature and thus violate fundamental libertarian principles. A restrictive covenant constitutes a prohibition that “runs with the land” in perpetuity, permitting rule by the dead hand of the past.

Does Sheldon object to wills?

Many years ago I got into a huge argument with a guy on this very topic. I was saying that you could obviously include contractual provisions when selling something that limited its use, and that in principle you could say, “Sure I’ll sell you my dog, but only if you agree to keep up with his shots.” Or: “Sure, I’ll sell you my house, but only if you agree not to cut down the oak tree in the backyard. My mom planted that when I was little and then we lost her to cancer. I have to leave town to take a new job, but I don’t want to sell this place unless I know the tree won’t be cut down.”

The guy arguing with me, though, took Sheldon’s tack. He pointed out that I could be dead for 50 years and yet everybody would have to deal with this stupid oak tree. He started citing Thomas Paine’s critique of hereditary monarchy and things were getting heated (seriously).

The eventual resolution we reached was that if no one in the whole society wanted the property with its eccentric stipulations, then it would revert to unowned property and could be homesteaded in standard libertarian fashion. But the catch is, the great grandson inheriting the estate can’t just say, “I don’t want to go to college with this money like the will says, so I’ll ‘not accept’ it, wait two seconds, then claim the unowned pile of money with no strings attached.” No, the will would have clauses to get around that kind of thing, like, “If my good for nothing heirs don’t want to go to college, then the money goes to…” And then only if literally no one on earth wants to accept the money with the strings attached, does it revert to unowned property. And even then, there wouldn’t be a presumption in favor of the grandson getting it.

Back to Sheldon:

I acknowledge that in throwing out the bathwater of racially restrictive covenants, I may also be throwing out some desirable babies. But my hunch is that the constructive things we might get from covenants could be achieved other ways. The virtue of my approach to invalidating racially restrictive covenants is that we would both strike another blow against racism and rid ourselves of the last vestiges of feudalism.

Sorry but that last sentence seems rather irrelevant and flashy to me. The point isn’t to take positions on rights that yield the outcome you want. If that’s what you’re doing, then you might as well just say, “I don’t like racism, so that’s why you can’t have racially restrictive covenants, and it’s why you can’t write racist books.”

Maybe someone like Gene Callahan is right, and it’s a waste of time to try to use general principles when solving questions of legality in specific cases. But Sheldon isn’t going that route; he is trying to use libertarian principles to get rid of something that strikes him as yucky, it seems to me.

8 Responses to “Restrictive Covenants”

  1. Sheldon Richman says:

    Because of the press of time, I can make only two points right now. First, my #2 was only meant to suggest that there is something unkosher about the State’s claiming a monopoly on a broad service (enforcement) and then arbitrarily deciding that it will not offer certain applications of that service — while also precluding anyone else from doing so. That’s one problem with a legal monopoly. I assure you I am no fan of State enforcement of anything.

    Second, contrary to your suggestion I did not begin with my conclusion then search for grounds to support it. (Although that is not automatically bad — if the grounds are legitimate.) I have always opposed the idea that rights and restrictions run with the land. I learned that from Murray Rothbard.

    • ADA says:

      I think the debate is really about the nature behind the restriction. So Rothbard is correct and so is Murphy except they may not agree on how to legally define those restrictions.

      Rather then seeing the restriction as a “restriction that runs with the land”, the restriction should be seen as a partial ownership that the seller retains be contractual agreement. So the Oak tree is jointly owned by the new property owner and the old property owner, and a cutting down of it would require the approval of both owners.

      As for Bob’s example of the will setting restrictions on the use of the money (say for college), the 3rd party that would enforce the restriction essentially acquires a part ownership over that money, where the terms of use by the owners of that inherited money voluntarily agree to them. So the child agrees to the terms where he can spend acquire the money only for the sake of college, and the enforcement agency agrees to the terms where it’s only function is to not approve its use for anything other then college.

  2. Louis B. says:

    What’s really striking here is the left-libertarian tendency to dismiss anything they consider “feudalism” as automatically incompatible with libertarianism.

  3. Contemplationist says:

    As I mentioned on Bryan’s blog on this post, Richman is simply trying to prevent things he doesn’t like by throwing out basic principles of liberty. Sorry, this just doesn’t work…you dont get to throw out property rights like that as a libertarian.

  4. Bob Roddis says:

    Is Richman limiting his idea merely to “restrictions that run with the land”. He mentions that neighbors with no legal relationship with the buyer who violated the covenant shouldn’t be able to enforce it. Covenants that run with the land must have “horrizontal privity”. See:


    What about a covenant condo community with private streets where everyone in the community is in contractual privity with everyone else and where the contractual terms state that everyone has an express interest in everyone else in the community abiding by the restrictions?

  5. David R. Henderson says:

    Well done. And I think Bryan knocked it out of the park on the link above that you cite. Your point about wills is a good one.

    • bobmurphy says:

      Thanks Dave. I’ll have to go back and re-read Bryan. I got so wrapped up in Sheldon’s post that I think I forgot to go back to Bryan’s.

  6. Michael Suede says:

    I think we can all agree that “rule by the dead hand of the past” applies to Constitution given Spooner’s work.

    But I think the distinctions between private and public “rule” is the deciding factor here.

    Since whoever is acquiring the property is not homesteading nor have they rightfully purchased it, if they wish to claim it they must abide by the restrictions governing its use. They could just as easily not accept it if they don’t like its restrictions as Bob points out.

    In a public sense, this doesn’t apply since citizens have no way of “not” accepting the contract.

    Why am I writing this? Mostly because I wanted an excuse to comment on Bob’s sexy forehead being the only slippery slope around here, so I felt obligated to say something mildly thought provoking.

    Perhaps Bob with a shaved head and tats.



    and leather.