Recently, Adam, Stephen, and I did a podcast with Jake at The Voluntary Life about The Voluntary City. The book is a collection of papers on free market solutions to urban challenges, and we will post a link to the podcast here when it’s available. In one chapter of the book, Stephen Davies discusses covenants as an emergent solution to the externality challenges inherent between neighbors using their property as they see fit. Since this topic came up in the comments of a recent post about neighborhoods built before Euclidean zoning was widely adopted, I thought it deserved further discussion. A couple of commenters suggested that because properties in Baltimore’s Roland Park neighborhood were sold with deed restrictions attached, the development there was not “organic.” My word choice was ambiguous, but in the post I meant it to signify that the development occurred in response to a market process as opposed to a regulatory regime. Private contracts governed land use as opposed to municipal rules. Davies explains that covenants first came into widespread use in England, as the country was urbanizing between 1740 and 1850. Because developers could achieve higher values for their land by ensuring complementary uses between adjacent property owners, they put covenants in place to restrict the land uses that would be permitted within a community. Some of these covenants even went so far as to specify house’s architectural details. He writes: Covenants were used in almost all urban development of the period and for a long time thereafter. Whenever a piece of land or the power to use that land was transferred from one party to another, the transfer, whether a lease or a sale, would normally contain a number of specific stipulations, or covenants. Covenants (literally, treaties) were legally binding agreements between the parties that […]
