Chapter 7 - Fair Housing Laws

Civil Rights Act of 1964

First, in 1962, President John F. Kennedy issued Executive Order 11063, which prohibited discrimination in the selling or leasing of property owned or funded by the federal government, including those properties relying upon Veterans Administration (VA) and Federal Housing Administration (FHA) loans. Because only a few transactions were done with federal involvement in those days, the law had few results. Then came the Civil Rights Act of 1964, which included a prohibition against discrimination on the basis of race, color, and national origin in any program or service funded by the federal government.

Federal laws define a person with a disability as any person who has a physical or mental impairment that substantially limits one or more major life activities; has a record of such impairment; or is regarded as having such an impairment. Physical or mental impairments can include:

Hearing Mobility Visual impairments Chronic alcoholism Chronic mental illness AIDS AIDS Related Complex Intellectual disabilities

Fair Housing Exemptions

Homeowners who are selling their own property without the help of a license holder may be exempt from some fair housing laws, but all fair housing laws apply to transactions involving a real estate agent.

Fair Housing Act

How does this all directly relate to real estate? Title VIII of this act, also known as the Fair Housing Act, prohibits discrimination in real estate practices.

Bank of America v. Miami, cont.,

However, the court ruled that the city of Miami was indeed injured. The banks' alleged discrimination caused widespread foreclosures and vacancies in the city's minority communities, which decreased the value of both the foreclosed homes and the affected neighborhoods. This decline in property values did a lot to hurt the city: it decreased property-tax revenues, hurting the city's bottom line. In addition, the foreclosures forced the city to spend more on municipal services to remedy blight and unsafe conditions.

When Is It Okay to Say No? While many are protected under the laws we've just discussed, there are two groups that a real estate license holder has the legal right to turn down in certain situations:

People too young to enter a legal contract People who don't have the means to obtain a home loan

The Fair Housing Act

The Fair Housing Act does not cover non-dwelling buildings.

Making a Property Accessible As the definition is concerned, major life activities include:

Walking Talking Hearing Seeing Breathing Learning Performing manual tasks Caring for oneself

Test Q- You are working with a Black buyer, Tom, and you decide to show him homes in a neighborhood with a high Black population. This illegal act is known as:

coding blockbusting steering * redlining

Test Q?-Protected classes in the Fair Housing Act of 1968 include race, color, religion, national origin, sex, disability, and what other category?

income gender presentation sexual orientation familial status * Answer Income is not listed in the Fair Housing Act of 1968, but race, color, religion, national origin, sex, disability, and familial status are. These are important factors to remember when working with clients.

The Civil Rights Act of 1866 was essentially the first law to

introduce a protected class (in this case, race) and prevent housing discrimination based on this class.

Steering

is the illegal act of channeling buyers or tenants to certain areas, either to keep the area demographically the same or to change the demography of the area. The real estate agent may do this based on assumptions about the client's race, religion, familial status, or membership in any of the protected classes.

Exemption #3: Dwellings Belonging to Religious Organizations or Private Clubs

Nothing in the law prohibits a religious organization or private club from limiting the sale, rental, or occupancy of a dwelling that it owns or operates for other than commercial purposes to persons of the same religion or club. Private clubs may show preference to club members under similar circumstances.

A person is to be considered in the business of selling or renting if:

That person has within the preceding 12 months participated as principal in three or more transactions involving the sale or rental of any dwelling or any interest therein. That person has within the preceding 12 months participated as agent, other than in the sale of their own personal residence in providing sales or rental facilities or sales or rental services in two or more transactions involving the sale or rental of any dwelling or any interest therein. That person is the owner of any dwelling that is designed for or intended for occupancy by or occupied by five or more families.

Housing discrimination

"Fair Housing Trends Report: The Case for Fair Housing", more than 4 million instances of housing discrimination occur every year in the rental market alone. (The report looked at residential segregation, initially brought about by "deliberate discriminatory policies and practices" by a range of factors, from the federal government to local communities.)

Making a Property Accessible There are certain exceptions that property managers should be aware of. For example, someone who is currently using illegal drugs is not protected under the Fair Housing Act. The act also exempts actions taken (such as eviction) against someone who has proven to be a danger to the health, safety, and property of others.

A few legal cases have decided that a recovering drug addict or alcoholic is protected. And, of course, as mentioned earlier in this course, someone with AIDS or HIV is protected under this law.

Steering As I mentioned earlier, license holders could get in trouble for violating the Act through steering.

Again, steering is the illegal act of channeling buyers or tenants to certain areas based on demographics. Typically, steering is premised on the notion that the potential buyer will be either incompatible or unacceptable to the residents of a housing area due to their membership in a certain protected class, or that the existing residents of an area will be unacceptable to that buyer due to cultural differences, etc.

Property Management- Fair Housing law

Don't get locked into the idea that fair housing laws are only for sales agents. Property managers need to consider these laws just as much as anyone else does, perhaps even more so. If a tenant is experiencing harassment, the property manager needs to do everything possible to end the harassment if they have the power to do so. A property manager should be vigilant in making sure no harassment is occurring.

Even in the case of dwellings, however, the federal Fair Housing Act does not cover all transactions. There are four general circumstances under which a dwelling is exempt from the federal Fair Housing Act.

F License holders should remember that even though the federal law allows these exemptions, the laws of their state may not. In most states, including Texas, these exemptions do not apply if a real estate license holder is involved in the transaction, so license holders should also be aware that their participation in the process may negate the exemption.

Exemption #4: Housing for Older Persons

Housing for older persons is also exempt from the familial status requirements of the Fair Housing Act if one or more of the following three conditions apply: The housing is occupied only by persons who are 62 years of age or older. 80% of the housing units have at least one occupant who is 55 years old or older. The housing is provided under any state or federal program that the Secretary of Housing and Urban Development determines is designed and operated to provide assistance to the elderly.

Familial Status Protections

If a child is living with a person who has parental or legal custody designated in writing, then that household is also protected against familial status discrimination. (And as far as familial status protection goes, FHA says it doesn't matter if the adult members of the family are married, divorced, single, widowed, or separated. It doesn't make a difference! A single mother with one child is offered the same protections as a married couple with five children.)

A tenant comes to a property manager asking to put in shower bars to accommodate their disability. When they property manager informs the landlord, the landlord balks, because the tenant is not a wheelchair user. What should the property manager do? Choose the BEST option.

Inform the landlord that not all disabilities are visible, and warn them they could be violating the Americans With Disabilities Act by refusing the accommodation. Tell the tenant the landlord said no, because they are not a wheelchair user. Tell the tenant that if they want to make alterations to the property, their rent will go up $150 a month. Inform the landlord that not all disabilities are visible, and warn them they could be violating the Fair Housing Act by refusing the accommodation.* Answer The landlord is in danger of violating the Fair Housing Act (the ADA does not generally apply to residential property). A good property manager would inform them of that and push back on refusing to provide the accommodation.

Fair Housing Act - Landlord-Tenants and Modifications

Landlord Responsibility: Landlords must allow tenants to make reasonable modifications so that people with disabilities can enjoy their properties. Tenant Responsibility: Landlords may require tenants to pay for modifications and may require tenants to return the property to its unmodified condition at the end of the lease.

Outlawed by the Act The Fair Housing Act introduced some pretty meaningful federal regulations and enforcements. Here's what the act outlaws:

Refusal to sell or rent a dwelling to any person because of race, color, religion, sex, disability, familial status, or national origin Discrimination based on race, color, religion, sex, disability, familial status, or national origin in the terms, conditions, or privileges of sale or rental of a dwelling Advertising the sale or rental of a dwelling indicating preference, limitation, or discrimination based on race, color, religion, sex, disability, familial status, or national origin Coercing, threatening, intimidating, or interfering with a person's enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights

Fair Housing - person with a disability.

Suppose, for instance, that the license holder was practicing as a property manager. If a tenant of theirs acquires a disability and needs a wheelchair ramp put in their home, but the license holder refuses to allow the ramp, that could be a violation of the Act. If a property manager decides to not make accommodations for a person with a disability, it could be one of the biggest danger zones for a violation. 🚫 Additionally, it's not always obvious that a person needs special accommodations. So, when a request is made for an adjustment to be made to a property, the property manager should be very careful if they plan on denying it. The license holder should seriously weigh whether the denial of this request could be considered a violation of the Fair Housing Act.

HUD Enforces

The Department of Housing and Urban Development, commonly referred to as HUD, enforces the Fair Housing Act. The law applies to most, if not all, activities in which real estate license holders may engage, including selling, appraising, managing, and renting real property. Real estate license holders are in violation of the law if their actions or words are discriminatory, even if they have no intention to discriminate.

Exemption #2: Rental of Rooms or Units in Owner-Occupied Property

The Fair Housing Act does not apply to the rental of rooms or units in a dwelling containing living quarters occupied or intended to be occupied by no more than four families living independently of each other if the owner actually occupies one of the living units as their residence. (Whew! What a sentence!) Example: If there was a fourplex (four units) where the owner lived in one of the units, they are allowed to turn down potential tenants with children. Although that would normally be discrimination under the law, they are permitted to rule out certain groups as long as it is not about race. (The owner is never allowed to discriminate because of race.)

Fair Housing Act

The Fair Housing Act is a federal act designed to protect buyers and renters from seller or landlord discrimination. Simply, the Fair Housing Act says that it is unlawful to refuse to sell, rent to, or negotiate with any person because of that person's inclusion in a protected class. The goal of the Fair Housing Act is a unitary housing market where a person's identity does not restrict their access to good, fair housing.

On May 1, 2017, in the case of Bank of America v. Miami, the city of Miami filed a lawsuit against Wells Fargo and Bank of America.

The city claimed that these banks targeted minorities for extremely risky mortgages with high interest rates and exorbitant fees. Miami said that despite the fact that the banks knew many of these borrowers had bad credit and little cash, they offered loans anyway. Then, when borrowers asked to refinance or modify their original loans, the banks refused, resulting in foreclosure.Miami provided data indicating that banks were significantly more likely to offer these predatory loans to minorities than to white people. Thus, the city sued under the Fair Housing Act, alleging that the banks engaged in racially discriminatory lending practices. Wells Fargo and Bank of America argued that because the FHA permits only an "aggrieved person" to sue violators of the statute ("any person who ... claims to have been injured by a discriminatory housing practice"), the city did not have grounds to stand on.

Civil Rights Act of 1866: Fair Housing Act: Disability: Steering:

The first law that began to promise equal rights for all citizens regardless of race or color ✏️️ A federal law that prohibits discrimination in housing based upon race, color, religion, or national origin and was amended to include sex, disability, and familial status, a.k.a. the Fair Housing Act of 1968 ✏️️ A physical or mental impairment that limits at least one major activity in someone's life ✏️️An illegal act of channeling buyers or tenants to certain areas, either to keep the area demographically the same or to change the demography of the area

In Case of Emergency

There is a passage in the Texas Property Code that states a landlord may not prohibit or penalize a tenant for summoning police, fire, or EMS when there has been family violence.

Further, while not grounds for a complaint to HUD, there may be terms that have fallen out of use regionally, or which may be distasteful to some people. Check with your broker regarding terms that may put some people off. Some of these include terms like:

🚫 "Desirable neighborhood" 🚫 "Mother-in-law suite" 🚫 "Master bedroom" or "master suite"

According to HUD, there are certain terms and phrases that should be avoided altogether in advertising. 🚫 Some of these phrases include:

🚫 "Exclusive neighborhood" or "family neighborhood" 🚫 "Bachelor pad" 🚫 "Man cave" 🚫 "No kids allowed"

Fair Housing Act Violations (cont.) A more common violation of the Fair Housing Act occurs when a sales agent does something that eliminates a group of people or limits the type of people who could take advantage of a property.

For example, if an agent advertised a home as "perfect for a young couple," they have effectively stated that a family shouldn't have this home. Agents should always seek to be inclusive rather than exclusive in their promotion of properties. (This is why brokers often prefer to look at a sales agent's ad copy before it is published.)

An elderly couple is going to rent their vacant basement for extra income. The couple does not want a family with children. The couple asks their granddaughter, who is a real estate agent, to help them with finding tenants. Is this legal? Why or why not?

No, the couple is not allowed to discriminate against families with children if they are helped by their granddaughter because she is a license holder. * No, it is never legal to discriminate against families with children. Yes, since the couple is renting their own space, they are exempt from discriminating against families with children. Yes, but the couple will only be allowed to discriminate against families with children if they do not pay their granddaughter any type of commission. Answer The couple is NOT exempt from the Fair Housing Act if they use the facilities or services of a real estate license holder (broker or agent) or anyone else engaged in the business of selling or renting dwellings.

The Americans with Disabilities Act (ADA)

Prohibits discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities. The ADA also establishes requirements for telecommunications relay services.

Protected Classes The Fair Housing Act includes seven protected classes:

Race Color Religion National origin Sex Disability Familial status

Civil Rights Act of 1968

Shortly after the assassination of civil rights leader Dr. Martin Luther King Jr., Congress, with the help of Texan Lyndon B. Johnson, passed the Civil Rights Act of 1968. The Civil Rights Act of 1968 did a lot for the cause of equality, but it did not make things totally equal. Luckily, these laws and the ethics real estate license holders operate under go a long way toward fighting discrimination.

The Mrs. Murphy Exemption applies on a federal level to every state in the country.

Some states, however, have their own fair housing laws that give more stringent protections than those set by the FHA. In Texas, the exemption mirrors the federal exemption.

W.W.A.A.D.? So what would an Aceable Agent do? The Aceable Agent will find neutral, inclusive terms to use in property descriptions and ads. This shows that you have no preference for any certain group of people based on a protected class. So what kind of words CAN be used in advertisements?

"Great view" "Walk-in closets" "Jogging trails" "Bus stop" "Non-smoking" "Two bedroom" "Bicycles allowed" "Wheelchair ramp"

Americans with Disabilities Act:, Equal Opportunity in Housing:

A federal law enacted to remove barriers for individuals with disabilities ✏️️ The concept that everyone will have equal access to housing with no discriminatory actions taking place

Familial Status Protections While the Fair Housing Act's familial status protection is rather broad, here are some things you should know:

Families with children are protected even if the children aren't living with their biological parents. So, children can live with a: Biological parent Step-parent Foster parent Grandparent Any other adult who has legal custody of the child

The U.S. Constitution guarantees everyone certain basic rights and freedoms.

So, unfair discrimination in the letting and sale of residential real estate is not just unethical, it also, by extension, undermines the U.S. Constitution.

The Americans with Disabilities Act (ADA)

The landlord cannot rohibit a tenant from making their own reasonable renovations. The illustration that is used most often to designate a parking spot for people with disabilities is a wheelchair ramp. In this case, the tenant would put in the ramp and then return the property to its previous condition after the lease is up. In some cases, the landlord will ask that the ramp be left on the property so that future tenants may have use of it.

Religious Laws

The law allows a religious group to sell or rent to people only of their same beliefs. There are some subdivisions in Texas in which this occurs. The deed restrictions specifically only let in certain people with similar beliefs to live in the area. Keep in mind that this would have to be a real estate development that has been established to include people of that particular religion and to exclude others who do not have the same beliefs. It couldn't be, on the other hand, a whole side of town that is full of people of a particular religion.

Exemption #1: Single-Family Residences Sold by Owner The sale or rental of a single family residence is not bound by the Act, provided that:

The property owner does not own or own any interest in more than three single-family residences at one time. In cases where the owner is not the most recent resident of the property being sold, that owner is only granted one exempt sale in any 24-month period.

Civil Rights Act of 1866

was passed by Congress on April 9, 1866, over the veto of President Andrew Johnson. It granted all citizens of the United States — without exception - a set of basic rights regardless of their race, color, or previous condition of servitude. Among the rights granted by this act are the rights to "make and enforce contracts, to sue, be parties, and give evidence, to inherit, purchase, lease, sell, hold, and convey real and personal property."