Bryan Caplan suggests that under libertarian law, racial covenants could operate in the form of home owner association agreements (HOA):

By assumption, A gave/sold limited resale rights to the HOA before he sold to B, so he can’t sell B an unlimited resale right. It’s no longer his to sell. Or to be more realistic, the builder gave the HOA limited resale rights before it sold the homes in the first place, so no owner ever held unlimited resale rights in the first place.

There is one problem with Bryan Caplan’s argument – it presupposes that you can somehow “unbundle” ownership as a legal right.

Obligation not to resale your property without third party’s consent is merely an obligation, which means that you are allowed to sell your property without this consent and only then you have to compensate the third party for breach of contract (assuming that there was one in the first place). The transfer of property rights in question is valid and legal nevertheless.

What prof. Caplan suggests would mean a “real” effect of a contract not to resell, ie. unbundling of this set of rights we call “ownership” and alienating one of them (unrestricted right to resell – ius disponendi). But there are issues with that, and in jurisdictions I am familiar with, it is impossible for private parties to achieve this.

Why should we not allow for such unbundling? Well, standard explanation is that it would undermine the notion of ownership and its social utility – you would never know whether the seller transfers to you “full bundle” or just a “limited option.”