November 09, 2015
Nazi-Era Restrictions Still Block Long Island Home Purchases: What You Need to Know
We all love a real estate story with implications that seem too strange to be true, and we recently came across one on Long Island that has it all: serious present day real estate issues in New York rooted in World War II and Nazi-driven racism (yes, on Long Island), open litigation over racial and ethnic restrictions linked to housing, and differing opinions that can shape a broad range of transactions.
Recently, a homebuyer seeking a cottage on Long Island found an attractive house for sale in a private community there. The price was right. When he met the community’s leadership body, however, a member asked him, “Are you of German descent?” It sounds farfetched in 21st century America that anyone would openly ask about ethnicity as part of a real estate transaction. But the homebuyer was visiting Siegfried Park, where questions about a homebuyer’s ethnicity are still asked openly during the vetting process. In fact, the community’s corporate bylaws still contain the ethnic restrictions. (The only part that doesn’t sound farfetched: the bylaws’ restriction is currently the subject of litigation in the Federal courts.)
Today, the private corporation that owns the land—the German American Settlement League—calls itself a year-round, private residential community in Yaphank, part of rural Suffolk County on Long Island, New York. However, the roots of the League’s seemingly bucolic community are far darker and linked to Nazi Germany.
The German American Bund, an American group of Nazi sympathizers, bought a homestead in Yaphank in 1935 to establish Camp Siegfried, a pro-Nazi summer camp for children. The German American Settlement League eventually became the owner, after its incorporation in 1937, and continued to receive funding from the Bund until 1940. The original owners of the land inserted a clause into their corporate bylaws—a clause that remains today—requiring the homeowners to be “primarily of German extraction,” which has allowed the community to remain almost entirely Caucasian since before World War II.
In the late 1930s, weekend visitors marched down Main Street wearing swastikas. Pro-Nazi rallies reached a peak in Yaphank in 1938, but dropped in 1939 after Hitler invaded Poland. In 1940 the German American Settlement League, under new leadership, became independent of the Bund, although ethnic Germans from New York City continued to buy into the League to build summer cottages. The League still owns the land; the residents own only their houses and rent their lots. Buyers must be approved by the League’s members, in a structure similar to a co-op, and have a League member as a sponsor.
In the United States, racial deed restrictions became common after 1926 when the U.S. Supreme Court validated their use. The restrictions were an enforceable contract and an owner who violated them risked forfeiting the property. Many neighborhoods prohibited the sale or rental of property by Asian Americans, Jews and Blacks. Then, in 1948, the U.S. Supreme Court decided that racial restrictions would no longer be enforced, but it remained legal for realtors and property owners to discriminate on the basis of race. In 1968, Congress passed Title VIII of the Civil Rights Act called the Fair Housing Act, finally outlawing discrimination on the basis of race or ethnicity in the sale or rental of housing. Since then it has been illegal to act on the race restrictions that are embedded in the deeds of homes in so many U.S. communities because the restrictions are no longer enforceable under U.S. law.
So, the question is: did the Fair Housing Act undermine the restriction on German decent? One couple says “yes” and is suing in Federal District Court to prove it. They assert that the German American Settlement League’s bylaws are similarly unenforceable because they violate the Fair Housing Act and are discriminatory to persons not of German extraction. The League’s covenants prevent residents from advertising their homes for sale on the open market; only other League members and members’ friends are told of a home’s availability. In a similar case from 2010, a legal advocacy group asserted that a Bronx co-op’s requirement that buyers procure recommendation letters from three current residents—residents are overwhelmingly white—had a discriminatory effect. That case’s 2013 settlement provides a general injunction requiring the co-op to abide by fair housing laws and permanently eliminate the three shareholder reference requirement. Many other co-ops in New York, however, still have and enforce similar requirements.
The League has held elections to vote to remove the restrictive language in the past, but the membership voted down the change. The League claims that the bylaw language is permitted by its general freedom to associate according to the choice of the individual, and the rights of the group to promote its interests in German nationalism.
Groups that engage in activities protected by the First Amendment – speech, assembly, press, petitioning government for a redress of grievances, and the free exercise of religion – are protected. In fact, the Supreme Court has ruled that a group may exclude people from membership if their presence would affect the group’s ability to advocate a particular point of view. However, the implicit First Amendment right of association in the U.S. Constitution has been limited by subsequent court rulings.
For example, it is illegal in the United States to consider race in the making and enforcement of private contracts (other than marriage). This limit on freedom of association results from Section 1981 of Title 42 of the United States Code, as balanced against the First Amendment in the 1976 decision of Runyon v. McCrary. The holding of Runyon is that the defendant private schools were free to express and teach their views, including white separatism, but could not discriminate on the basis of race in the provision of services to the general public. So, if the plaintiff African-American children wished to attend such private schools, were clearly qualified in all respects (besides race), were able to pay the fees, and were willing to attend despite the fact that the school’s professed principles were inconsistent with admitting them, then the schools were required by Section 1981 to admit them. This doctrine rests on the interpretation of a private contract as a “badge” of slavery when either party considers race in choosing the other.
This latest case, Long Island Housing Services, Inc. Philip Kneer and Patricia Flynn-Kneer vs. German American Settlement League, Inc., may turn on whether the German American Settlement League is actually a group primarily engaging in activities protected by the First Amendment or, in fact, a group that is primarily a housing association engaging in housing discrimination via its policies and procedures that restrict access to housing based on race or other protected characteristics in violation of the Fair Housing Act. Recently, the League’s primary role seems to be that of a Landlord/landowner. For example, the League has only hosted a few parties in the clubhouse with German themes, such as Oktoberfest, and nobody in recent memory can cite any particularly nationalistic German political activities.