Unit 4
After receiving a fair housing complaint, HUD initiates an investigation and attempts A) conciliation. B) mediation. C) arbitration. D) reconciliation.
The answer is conciliation. Conciliation is the resolution of a complaint by obtaining assurance that the person against whom the complaint was filed (the respondent) will remedy any violation that may have occurred.
The Americans with Disabilities Act (ADA) has the greatest impact on A) single family homes. B) office buildings. C) industrial sites. D) apartment dwellers.
The answer is office buildings. The ADA requires reasonable accommodations in employment and access to goods, services, and public buildings; Fair Housing laws apply to rental units. Building owners and managers of commercial spaces must be constantly alert to ensure that obstacles are removed.
A creditor is permitted to refuse to make a loan to an applicant who is A) the recipient of a public assistant program. B) too young to legally sign a contract. C) not married. D) over the age of 70.
The answer is too young to legally sign a contract. A creditor may not consider age unless the applicant is too young to legally sign a contract (usually younger than 18), although the creditor may consider age in determining whether income will drop because of retirement.
The fine for a first violation of the federal Fair Housing Act could be as much as A) $500. B) $16,000. C) $1,000. D) $10,000.
The answer is $16,000. An administrative law judge (ALJ) may impose monetary penalties for violations of the federal Fair Housing Act. The penalty for a first offense can be a fine of up to $16,000.
After a completed application is submitted, the application must be accepted or rejected within A) 30 days. B) 60 days. C) seven days. D) two weeks.
The answer is 30 days. Applications for credit must be accepted or rejected within 30 days of completing the application. If the application is denied, the creditor must provide the specific reason for rejection.
A woman owns a two-unit apartment building and lives in the downstairs apartment. She wants to rent the second floor. She refused the first applicant, an African American male, stating that she did not want to rent to men. A few days later, this man noticed that a white male was moving into the building. The African American male may allege that the woman was discriminating against him under the A) Civil Rights Act of 1866. B) Fair Housing Amendments Act. C) Housing and Community Development Act. D) Title VIII of the Civil Rights Act of 1968.
The answer is Civil Rights Act of 1866. The federal Fair Housing Act covers most housing, but both federal law and Pennsylvania state law exempt owner-occupied two-unit buildings. But the Civil Rights Act of 1866 prohibits all racial discrimination without exception in the sale or rental of publicly or privately held property, whether facilitated by a real estate agent or sold or rented by the owner. Where race is involved, no exceptions apply.
A broker employs several salespeople, one of whom is a member of a protected class. The broker tells this salesperson to work only with buyers of the same protected class and to solicit listings in only predominately minority neighborhoods. Which of the following is TRUE? A) The broker is violating the salesperson's rights. B) The fair housing laws do not apply to the broker's practices. C) The broker is entitled to direct the activities of this salesperson. D) The salesperson should be satisfied with the broker's policy.
The answer is the broker is violating the salesperson's rights. Brokers and licensees must examine their activities and policies carefully to determine whether they have unintentional discriminatory effects. Whenever policies or practices result in unequal treatment of people in the protected classes, they are considered discriminatory, regardless of any innocent intent.
A minority real estate broker's practice of offering a special discount to minority clients is A) not important. B) illegal. C) legal but ill advised. D) satisfactory.
The answer is illegal. Differentiating in terms, conditions, or services because a person is a member of a protected class is a violation of the federal Fair Housing Act. A broker who is a member of a minority group who offers special discounts to clients who are also minorities is violating the law.
The National Association of REALTORS® Code of Ethics is binding on A) broker owners but not their affiliate salespeople. B) only salespeople but not broker owners. C) its members. D) all real estate licensees.
The answer is its members. Although all members of the National Association of REALTORS® (NAR) must hold a real estate license, there is no requirement that licensees join the largest trade association in the country. If the broker owner joins NAR, then generally all affiliated licensees must also join.
What duty, if any, do real estate licensees have regarding the Megan's Law registry? A) Must search the registry when taking a listing B) Must advise buyers to search the registry before making an offer C) No duty D) Obligated to report known predators to the MLS
The answer is no duty. Pennsylvania real estate licensees are not required to research or disclose information about sex offenders, although buyer agents often provide their buyer clients the Megan's Law registry website.
Which of the following is an illegal reason for a lending institution to refuse to make a residential real estate loan in a particular area? A) Physical location of the property B) Questionable economic situation of the applicant C) Deteriorated condition of the premises D) Applicant not being of legal age
The answer is physical location of the property. Redlining is the illegal practice of refusing to make mortgage loans or issue insurance policies in specific areas for reasons other than the economic qualifications of the application.
A lender's refusal to lend money to potential homeowners attempting to purchase property located in predominantly minority neighborhoods is A) qualifying. B) redlining. C) blockbusting. D) steering.
The answer is redlining. Redlining refers to a refusal to make loans or write insurance policies in a particular area as a result of policy decisions that properties in that area are not suitable collateral or insurable, regardless of the individual's qualifications.
A prospective homebuyer who is black inquires about the availability of a home in a predominately white residential neighborhood. What should the broker say to this prospect? A) "You wouldn't want to live in this area because the neighbors are trying to protect the integrity of the area." B) "I'd be happy to show you homes in other areas where black people are welcome." C) "I'd be pleased to show you any houses that you're interested in." D) "The residents here have expressed a desire to keep the area homogeneous with no minorities."
The answer is "I'd be pleased to show you any houses that you're interested in." The real estate industry is largely responsible for creating and maintaining an open housing market. With the privilege of profiting from real estate transactions comes social and legal responsibility to ensure protection of everyone's civil rights, and that includes showing properties based on client desire and financial ability.
Age as a protected class in Pennsylvania is defined as persons A) 65 and older. B) 62 and older. C) 55 and older. D) 40 and older.
The answer is 40 and older. The Pennsylvania Human Relations Act (PHRA) is deemed to be "substantially equivalent" to the federal Fair Housing Act, but is more restrictive. The PHRA adds religious creed and ancestry. As a protected class, age is a person 40 years and older.
Under federal law, families with children may be refused rental or purchase in a building where occupancy is reserved exclusively for those whose age is at LEAST A) 40. B) 65. C) 60. D) 62.
The answer is 62. Housing intended solely for persons age 62 or older is exempt from protections afforded to families with children; occupancy may be restricted to persons over the age of 62.
If a mortgage lender discriminates against a loan applicant on the basis of marital status, what law is violated? A) ECOA B) Civil Rights Act of 1866 C) ADA D) Fair Housing Act
The answer is ECOA. The Equal Credit Opportunity Act (ECOA) prohibits discrimination during the lending process based on race, color, religion, national origin, marital status, age, and receipt of public assistance.
Which of the following has formulated a Code of Ethics for real estate licensees? A) National Association of REALTORS® B) Fair Housing Counsel of Pennsylvania C) Pennsylvania Real Estate Commission D) Philadelphia Housing Office
The answer is National Association of REALTORS®. The National Association of REALTORS® (NAR), the largest trade association in the country, adopted a Code of Ethics for its members in 1913 which is updated and revised annually.
In Pennsylvania, what document must real estate licensees present to all prospective sellers? A) Equal housing poster B) Copy of the Pennsylvania Human Relations Act C) Lead-based paint hazard disclosure D) Official Notice
The answer is Official Notice. All real estate licensees are required by the Pennsylvania Human Relations Commission to furnish an Official Notice to any person contemplating listing a property for sale; the purpose is to inform the property owner of both the owner's and the licensee's obligations under the fair housing laws. The lead-based paint hazard disclosure is required only for residential properties built before 1978.
Which of these meets the HUD definition of family as a protected class? A) Two middle-aged brothers B) A 62-year-old man with his 55-year-old wife C) A single parent with a foster child age 12 and a son age 19 D) A married couple and an elderly parent over the age of 65
The answer is a single parent with a foster child age 12 and a son age 19. Familial status is defined as one or more individuals younger than 18 living with a parent or guardian. It also includes pregnant women and anyone who is in the process of assuming custody of a child younger than 18.
The resident manager of a large rental community tries to place families with children into an apartment building where other families with children reside? This is an example of A) a legal practice that helps children find playmates. B) a legal practice to ensure that children will not bother mature renters. C) an illegal practice called steering. D) an illegal practice called blockbusting.
The answer is an illegal practice called steering. Steering is the illegal practice of channeling of homeseekers to particular neighborhoods or by discouraging potential buyers from considering some areas. In the rental process, steering occurs when the landlord puts members of a protected class on a certain floor or in a certain building.
"I hear they're moving in. There goes the neighborhood! Better put your house on the market before values drop!" This is an example of what illegal practice? A) Fraudulent advertising B) Blockbusting C) Steering D) Redlining
The answer is blockbusting. Blockbusting is the unlawful act of inducing or attempting to induce people to sell their homes on the basis that the entry, or prospective entry, of members of a protected class will adversely affect property values in the area. Pennsylvania law refers to this activity as panic selling.
Policies or procedures that appear to be neutral but which negatively affect people in the protected classes are called A) steering. B) disparate impact. C) dissimilar controls. D) redlining.
The answer is disparate impact. Disparate impact refers to policies or procedures that appear to be neutral but which negatively affects people in the protected classes; an example might be placing any family with children only on the ground floor of an apartment building. Other apartments might be more suitable.
A system of rules and standards that goes beyond the letter of the law is called A) moral thinking. B) morality. C) ethics. D) principled behavior.
The answer is ethics. Ethics refers to a system of moral principles, rules, and standards of conduct that guide a person's actions. Standards of professional ethics establish conduct that goes beyond merely complying with the letter of the law.
After a broker takes a listing agreement for a residence, the owner specifies that he will not sell his home to any Asian family. Which action should the broker take? A) Advertise the property exclusively in Asian-language newspapers. B) Abide by the principal's directions, despite the fact that they conflict with the fair housing laws. C) Require that the owner sign a separate legal document stating the additional instruction as an amendment to the listing agreement. D) Explain to the owner that the instruction violates federal law and that the broker cannot comply with it.
The answer is explain to the owner that the instruction violates federal law and that the broker cannot comply with it. A broker who accepts a listing with the understanding that illegal discrimination will be practiced is in violation of the federal Fair Housing Act. Both the broker and the owner could be prosecuted. The broker must explain that the instruction violates the law and that the broker cannot accept the listing under that condition.
The Pennsylvania Human Relations Act applies to A) only single family dwellings and two- to four-family dwellings. B) any transaction for the transfer of real property located in Pennsylvania. C) only housing, but including large apartment communities. D) housing accommodations and commercial property.
The answer is housing accommodations and commercial property. Although federal law covers most housing, in some circumstances it provides certain exemptions. Because Pennsylvania's Human Relations Act is more restrictive, most of the federal exemptions do not apply. For example, the federal law exempts owner-occupied buildings of one to four family dwellings. Pennsylvania only recognizes an exemption in the rental of an owner-occupied two-unit dwelling. The Pennsylvania law also applies to commercial property in addition to housing.
Under what situation, if any, may a lender consider age when making a lending decision? A) When the applicant's source of income is public assistance B) Never C) If the applicant's income will drop due to retirement D) When the lender determines that the family income will drop when the wife has a baby
The answer is if the applicant's income will drop due to retirement. A creditor may not consider age unless the applicant is too young to legally sign a contract, which is usually 18, although the creditor may consider age if the borrower's income will drop because of retirement. Lenders may not discriminate on source of income or assume that a woman will leave the workforce to raise children.
Which statement describes the Supreme Court's decision in Jones v. Alfred H. Mayer Company? A) Laws against discrimination apply only to federally related transactions. B) Persons with disabilities are a protected class. C) Racial discrimination is prohibited by any party in the sale or rental of real estate. D) Sales by individual residential homeowners are exempted, provided the owners do not use brokers.
The answer is racial discrimination is prohibited by any party in the sale or rental of real estate. In the 1968 Supreme Court case of Jones v. Alfred H. Mayer Company, the court upheld the Civil Rights Act of 1866 and clearly established that racial discrimination is illegal without exception.
Who is responsible for creating and maintaining an open housing market? A) Fair housing groups B) State attorney general C) Real estate industry D) Bureau of social services
The answer is real estate industry. The real estate industry is largely responsible for creating and maintaining an open housing market. Licensees are a community's real estate experts.
What action is required by the Americans with Disabilities Act? A) Reasonable accommodations must be provided to people with disabilities. B) All employers should adopt nondiscriminatory employment practices. C) Real estate must be free of barriers to people with disabilities. D) Any existing premise must be remodeled, if requested by a person with a disability, regardless of the cost involved.
The answer is reasonable accommodations must be provided to people with disabilities. The Americans with Disabilities Act (ADA) requires reasonable accommodations in employment and access to goods, services, and public buildings. The key word is reasonable.
A property manager has just entered into a management contract with the owner of a very large office building who asks the manager to verify that the building is in compliance with the Americans with Disabilities Act (ADA). What should the manager do? A) Do the research and make recommendations B) Ask the owner what the owner has done so far C) Recommend an environmental site assessment D) Recommend hiring an architect or consultant who specializes in ADA issues
The answer is recommend hiring an architect or consultant who specializes in ADA issues. Unless the agent is a qualified ADA expert, it is best to advise commercial clients to seek the services of an attorney, an architect, or a consultant who specializes in ADA issues.
Which act is permitted under the federal Fair Housing Act? A) Telling an individual that an apartment has been rented when in fact it has not B) Refusing to finance a home for an individual who has a poor credit history C) Advertising property for sale only to a specific nationality group D) Altering the terms of a loan because the borrower is a member of a minority group
The answer is refusing to finance a home for an individual who has a poor credit history. A person may legally be denied a loan because of poor credit history; there is no violation of either the federal Fair Housing Act or the Equal Credit Opportunity Act.
Which of the following actions would be considered legal? A) Refusing to sell a house to a person who has a history of mental illness B) Requiring a person with a disability to establish an escrow account for the costs to restore a property after it has been modified C) Picturing only white people in a brochure as the "happy residents" in a housing community D) Charging a family with children a higher security deposit than those with no children
The answer is requiring a person with a disability to establish an escrow account for the costs to restore a property after it has been modified. While persons with disabilities are permitted to make reasonable modifications to the premises at their own expense, some modifications might make a rental property undesirable to the general public; the landlord is allowed to require funds set aside to use to restore the property to its previous condition.
What agency, if any, in Pennsylvania is charged with maintaining the registry of sexual offenders? A) Department of Human Services B) State Police C) Real Estate Commission D) No one
The answer is state police. Pennsylvania's Megan's Law requires the State Police to create and maintain the registry of sexual offenders, sexually violent deviate children, and sexually violent predators.
Complaints relating to the Civil Rights Act of 1866 are A) handled by the Department of Housing and Urban Development (HUD). B) no longer reviewed in the courts. C) taken directly to a federal court. D) handled by state enforcement agencies.
The answer is taken directly to a federal court. Complaints brought under the Civil Rights Act of 1866 involving racial discrimination must be taken directly to federal court rather than to HUD or state enforcement agencies.
The following ad appeared in the newspaper: "For Sale: 4 BR brick home; Redwood School District; excellent Elm Street location; short walk to St. John's Church; and right on the bus line. Move-in condition; priced to sell." Which statement is TRUE? A) The ad describes the property for sale and is very appropriate. B) The fair housing laws do not apply to newspaper advertising. C) The ad should state that the property is available to families with children. D) The ad should not mention St. John's Church.
The answer is the ad should not mention St. John's Church. No religious preference is preferred; referencing a specific church can be viewed as available to only that particular religion, hence a subtle form of steering.
What is the underlying purpose of the civil rights laws that affect the real estate industry? A) To allow everyone the opportunity to live where they choose B) To provide more opportunity for home sellers and landlords C) To ensure that every neighborhood is integrated D) To place restrictions on real estate licensees and the way that they choose to do their business
The answer is to allow everyone the opportunity to live where they choose. The civil rights laws that affect the real estate industry ensure that everyone has the opportunity to live where they choose. Real estate licensees cannot allow their own prejudices to interfere with the ethical and legal conduct of their business.