Minnesota State Real Estate Practice Test

Which restrictive covenant is illegal?

1. A covenant that allows no commercial building

2. A covenant that specifies types of tenants

3. A covenant that restricts property construction types

4. A covenant that mandates building codes

The correct answer is: A covenant that restricts property construction types

The choice regarding which restrictive covenant is illegal is tied to the nature of the restrictions imposed. A covenant that restricts property construction types can be deemed illegal when it disproportionately affects certain groups or when it goes against regulations that promote fairness and equal opportunity in housing. In Minnesota and many other jurisdictions, restrictive covenants must comply with fair housing laws, which prohibit discrimination based on race, color, religion, sex, disability, familial status, or national origin. When a covenant imposes limitations on the types of construction that can take place, it may inadvertently lead to discriminatory practices or violate zoning laws in a manner that does not serve the public good. By contrast, covenants that disallow commercial buildings or specify certain types of tenants can be legally enforceable as they are often used to maintain the character of a neighborhood or ensure it is used for residential purposes. Similarly, building codes are generally necessary for safety and welfare and do not typically discriminate against groups, thus they are considered legal.