PLAINVIEW LEGAL GROUP PLLC is excited to bring you an important update from the Oklahoma State Legislature that directly impacts real property law in this state. House Bill No. 2288 (HB 228), passed by the House of Representatives and the Senate, and signed by the governor in May 2023, introduces significant changes to conveyances and real estate transactions in our state. HB 2288 is set to become effective on November 1, 2023.

What is HB 2288?

HB 2288 is a new law prohibiting discriminatory restrictive covenants in real estate transactions. It declares that such covenants are illegal and unenforceable. HB 2288 also provides a mechanism for property owners, or other individuals with the owner's written and notarized permission, to remove these discriminatory restrictive covenants from their property records by filing a declaration with the county clerk of the county where the real property is located. Property owners may seek to remove any discriminatory restrictive covenants from their property deeds before the recordation of a deed conveying the real property to a new purchaser or whenever the owner discovers the existence of such discriminatory restrictive covenants.

What are Discriminatory Restrictive Covenants?

In general, a "restrictive covenant" in real estate is a clause in a deed or lease to real property that limits what the owner of the land or lease can do with the property. When such a covenant is "discriminatory," it typically means it unlawfully discriminates against certain protected classes of people. For example, under the Fair Housing Act, 42 U.S.C., § 3601 et seq, it is illegal to discriminate in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, familial status, or disability. So, a "discriminatory restrictive covenant" could be a clause in a deed that attempts to restrict ownership or occupancy based on one of these protected categories (e.g., a racially restrictive covenant stating that the covenantor/buyer will not sell, rent, or lease property to minority groups). While HB 2288 does not explicitly define "discriminatory restrictive covenants," it refers to them in the context of being illegal under the Fair Housing Act.

During the first half of the 20th century, racially restrictive covenants were commonly used as discriminatory tools. White homeowners employed them to deter people of color from moving into their neighborhoods. In 1948, the U.S. Supreme Court, in its Shelley v. Kramer opinion, ruled that racially restrictive covenants could not be legally enforced. However, the practice of including such covenants in title documents continued. It wasn't until 1968, with the introduction of the Fair Housing Act, that the inclusion of racial covenants in deeds was declared illegal under federal law.

Despite these legal advancements, racially restrictive covenants remain prevalent in real property deeds, even 75 years post-Shelley and 55 years after the Fair Housing Act. This persistence can be attributed to several factors. Firstly, covenants run with the land and are enduring, becoming a permanent part of the land title. Secondly, the process of removing covenants is both costly and time-consuming. Lastly, many property owners may not even realize that their properties are subject to racially restrictive covenants.

Generally, to terminate a covenant, it usually requires a written release by the covenantee(s), or the establishment of a new covenant that modifies or releases the obligations of the original one. Even when a covenant is no longer enforceable, such as a racially restrictive covenant, they remain visible in the chain of title and even within the deed's language. This enduring presence is a byproduct of the Anglo-American conveyancing system, which uses the history of past transactions to determine the claims against any given title. While removing racially restrictive and discriminatory covenants from real property deeds is possible, the process is typically lengthy and can be quite costly.

Tax Exemption

HB 2288 also amends 68 O.S. § 3202, which relates to property deed tax exemptions. It exempts declarations to remove discriminatory restrictive covenants from real estate conveyance taxes imposed by § 3201. This amendment adds to the list of several types of deeds and other instruments already exempt from the tax imposed by § 3201.

What Does This Mean for Oklahoma Property Owners?

HB 2288 empowers Oklahoma real property owners to take action against discriminatory restrictive covenants in their property records without going through a lengthy and costly process. Suppose a property owner discovers a discriminatory restrictive covenant in their deed (e.g., the deed's language states that "no part of the land now owned by the parties hereto, shall ever be used or occupied by, or sold, conveyed, leased, rented, or given to, Negroes, or any person or persons of the Negro race or blood.”). In that case, they can now declare the covenant illegal and unenforceable and file a declaration with the county clerk of the county where the property is located. The passage of HB 2288 is a significant step towards ensuring fairness and equality in real estate transactions in Oklahoma.

As always, we at PLAINVIEW LEGAL GROUP PLLC are committed to informing you about changes in Oklahoma real property law that may affect you. If you have any questions about HB 2288 or need assistance with a real estate transaction or dispute, please don't hesitate to contact us.

Sources:

1. New Oklahoma law makes discriminatory real estate covenants 'null and void'  [https://www.kosu.org/local-news/2023-06-06/new-oklahoma-law-makes-discriminatory-real-estate-covenants-null-and-void]

2. Corrigan v. Buckley, 271 U.S. 323 (1926)

3. Shelley v. Kraemer, 334 US 1 (1948)

4. Fair Housing Act, 42 U.S.C., § 3601 et seq.

*Please note that this blog post is intended to provide general information and does not constitute legal advice. If you are seeking legal representation or advice in any aspect of real estate law, don't hesitate to contact PLAINVIEW LEGAL GROUP PLLC today. Schedule a consultation with one of our experienced real estate attorneys by calling (405) 310-0183 or filling out our online contact form. We look forward to working with you to achieve your real estate goals.*