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Land use planning is often effected through the use of covenants. Covenants facilitate the creation of particular types of neighborhoods as part of a neighborhood plan. A housing developer might, for example, buy up vacant land to divide into building lots. A low price is paid for the undeveloped land, which the developer subsequently sells burdened with a number of restrictive covenants. The developer might stipulate in the contract of sale that the owner must retain the original size of a lot. Developers can also make owners agree that houses to be constructed upon the lots must be larger than a certain size and include other specifications to ensure that such property will more than likely sell for premium prices because of the desirability of the neighborhood. Courts enforce such covenants provided they benefit and burden all the property owners in a neighborhood equally.

Covenants will not, however, be enforced if they are intended to accomplish an illegal purpose. The Supreme Court ruled in Shelley v. Kraemer, 334 U.S. 1, 68 S. Ct. 836, 92 L. Ed. 1161 (1948), that no court or state officials have the power under law to take any action toward the enforcement of a racial covenant. In this case, a group of neighbors were bringing suit to prohibit a property owner from selling his home to blacks, based on the argument that the owner had purchased the home subject to the restrictive covenant not to sell to blacks. The covenant was found to be unenforceable based on equal housing laws. To enforce it would constitute a CIVIL RIGHTS violation.

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Law Library - American Law and Legal InformationFree Legal Encyclopedia: Costal cartilage to Cross‐appealsCovenant - Covenants Running With The Land, Covenants For Title, Purposes