Chapter 6 - Federal Procedures and Laws Governing Real Estate

Sherman Antitrust Act (protecting competition in a free and open market) prohibits:

*Price Fixing* - Collusion between brokers and sales people with competing companies to set commission rates is illegal. Example: "Everyone charges the same so you might as well list with me." *Group Boycotts* - Firms may never "get together" and boycott a competing firm. Example: "Let's not do business with ABC Real Estate Company because they discount their commissions." *Division of markets by location or price* - Example: "Why don't you take the south side town and our company will take the north side."

ADA ADA prohibits discrimination in 4 areas:

- employment - public services - public and commercial buildings - telecommunications.

An aggrieved party may make a complaint to?

1. Federal District Court 2. Department of Housing & Urban Development (HUD)

Fair Housing Amendments Act of 1988

1. Protected classes were added to include persons with a handicap, a mental or physical disability that impairs life functions. 2. Landlords must allow people with handicaps to make reasonable modifications to an apartment, at the tenant's expense. 3. The second added protected class is familial status, defined as an "adult with children under 18, a person who is pregnant, one who has legal custody of a child or who is in the process of obtaining such custody. 4. The amendment also provided for senior housing, under state or federal programs, as long as: all units are occupied by individuals age 62 or older, OR 80% of the units have persons age 55 or older and seniors. 5. Requires all real estate brokerages to prominently display the Fair Housing Poster.

The Civil Rights Act of 1866

1. all citizens have the same right to inherit, buy, sell or lease all real and personal property as is enjoyed by white citizens thereof. Initially only applied to federal funded housing. 2. Jones v. Alfred H. Mayer Company broadened this interpretation to prohibit racially based discrimination in any housing.

Federal Fair Housing Act of 1968

1. prohibits discrimination in housing on the basis of race, color, religion, or national origin. NOTE: did NOT include handicap. 2. Housing and Community Development Act of 1974 added the prohibition against discrimination on the basis of gender. 3. Fair Housing Amendments Act of 1988 added provisions to prevent discrimination based on mental or physical handicap or familial status.

Broker Associate

A broker employed by another broker. All new licensees must perform at the associate level until attaining 2 years of active licensed experience.

Does ADA does affect private housing?

ADA does not affect private housing except for the rental office and common areas of multi-family housing.

Discriminatory Advertising

Advertising that shows preference based on race, color, religion, sex, national origin, handicap, or familial status is illegal.

Colorado is a single-license state - meaning?

All Colorado real estate licensees are brokers, educated and licensed from their first day of licensure.

Fair housing acronym - FRESH CORN

All are protected for Equal Opportunity: Familial status Race EQUAL Sex (Gender) Handicap Color OPPORTUNITY Religion National Origin Do not be tricked. Age, marital status, or sources of income from welfare are protected classes under federal law.

Blockbusting

Also known as "panic peddling," this is the attempt to persuade people to sell their homes by suggesting that members of a protected class are moving into the neighborhood. The persuader buys the property below its value and sells at a profit.

SARA - Superfund Amendments and Reauthorization Act

Came after CERCLA and increased cleanup standards. SARA also granted innocent landowner immunity from liability under a number of clear criteria - for instance: it can be proven the property was acquired long after the pollution of the site occurred.

Interstate Land Sales Full Disclosure Act

Enacted to prevent real estate scams - selling worthless desert or swamp property by telephone or mail.

CERCLA - Comprehensive Environmental Response, Compensation and Liability Act

Enforce cleanup of sites containing hazardous substances. It is administered by the Environmental Protection Agency with moneys known as the *Superfund*. CERCLA expired in 1985

Equal Credit Opportunity Act (ECOA)

Makes it unlawful to deny credit based on 5 of the 7 Fair Housing Act protected classes: race, religion, color, gender and national origin - and adds three more: age, marital status and income derived from public assistance (welfare). Lenders can only base decision on income, net worth, job stability and credit rating

Lack of Positive Salesmanship

Not giving everyone the same service regardless of color, religion, national origin, handicap, or familial status.

Americans with Disabilities Act (ADA)

Protects handicap (including AIDS, alcoholism, & mental illness)

Uniform Commercial Code (UCC)

Requires a security agreement to be signed whenever personal property is encumbered by a loan. This prevents selling the real property including its fixtures without a buyer realizing that seller owes money on the fixtures.

Securities and Exchange Commission (SEC) and real estate

SEC guidelines can apply to real estate investments such as: General or limited partnerships Joint ventures Timeshares Real estate investment trusts (REITs)

Exemptions to the Federal Fair Housing Act

Sale or rental of a single family home by an owner if: - Does not own more than three homes at the time and doesn't sell more than once every two years. - Does not use discriminatory ads. - Does not use a real estate broker. - Owner-occupied 1-to-4 family dwelling. - Religious organizations. - Private clubs.

National Association of REALTORS Code of Ethics - Section 10

The REALTOR shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status or national origin. The REALTOR shall not be party to any plan or agreement to discriminate against person or persons on the basis of race, color, religion, sex, handicap, familial status or national origin, sexual orientation or gender identity.

Steering

The practice of the broker selecting and showing only certain properties, and not show housing or areas the prospect would select if given a choice. (Examples: show whites a white neighborhood, placing handicap tenants in a separate building)

Exclusionary Land Use

When laws (such as zoning ordinances), regulations, practices, and growth policies of a local government have the effect of preventing choices for protected classes

Redlining

When lenders and insurers refuse their services to certain neighborhoods, citing "company policy" or similar reasons, regardless of the applicant's qualifications.

Independent Broker

With two years of active licensed experience, a licensee may establish his or her own firm licensed to practice real estate.

Employing Broker

With two years of active licensed experience, plus an additional 24-hour Commission-approved course entitled Brokerage Administration, a licensee is qualified to employ or manage others in a multi-person firm.

Do Not Call Act

You may not cold call numbers on this list to solicit real estate business (Do you know anyone thinking of buying or selling a home?). The law does not regulate calls to numbers who have made a recent (3 months) inquiry to your business, nor to numbers with whom you have "an established business relationship."

Civil Rights Act of 1970

affords equal rights to make and enforce contracts.

Section 504, Rehabilitation Act of 1973

prohibits discrimination against handicapped in any program or activity receiving federal financial assistance.

Title VI of Civil Rights Act of 1964

prohibits discrimination in any program or activity receiving Federal financial assistance.

National Housing Act (1961)

prohibits gender discrimination in granting of mortgages; requires consideration of both husband and wife income for married applicants.

Executive Order 11063 (1962 - President Kennedy)

requires anti-discrimination regulations in all federal agencies with any financial connection to housing or land.

Community Reinvestment Act of 1977

requires federal financial supervisory agencies to assess lender's records in meeting community credit needs, including low/moderate income neighborhoods.

Home Mortgage Disclosure Act

requires that lenders report loan amounts by census tract/zip codes to preclude redlining.

Fair Housing Amendments Act of 1972

requires the prominent display of the "Equal Housing Opportunity" 11x14-inch poster in all offices performing real estate related services. (Absence is automatic evidence of discrimination by the Broker, if investigated by HUD in response to any allegation.)