Section 9: Encumbrances and Title Insurance & Section 10: Introduction to Federal Fair Housing Laws

Plessy vs. Ferguson (1890)

"Separate but equal" court case

Types of Discrimination + examples

, Blockbusting: For profit, persuading owners to sell or rent ex. convincing neighbors to sell because a minority group was moving in Steering: when an agent or broker attempts to steer a client toward or away from a specific location or neighborhood sometimes based on race, religious practices or to maximize the most profits ex. showing Mrs. Jones homes primarily in African-American neighborhoods Discrimination on Race: Advertising in only African-American-centric publications. It shows a preference based on the class of race. Advertisements that exclusively show pictures of certain nationalities show a preference based on race. Discrimination on Familial Status: ex. By limiting Mrs. Jones to viewing properties in good school districts, Nancy is discriminating based on familial status. "what determines a 'good' district". If Mrs. Jones had no children, Nancy would have shown her different listings. Nancy treated her differently based on her familial status. Even when this behavior is well-intended, it's still discriminatory. >>>Stop your process based on what you think someone would want, listen to what they ask for<<<

Federal Fair Housing Law Exemptions

- Owner-occupied dwellings with no more than four families living independently of each other - Single-family housing sold or rented without the use of a broker - Housing operated by religious organizations and private clubs that limit occupancy to members - Housing designated for senior use

Brown vs. Board of Education (1954)

- The primary issue was whether public schools should be allowed to be segregated. - The result overturned the Plessy vs. Ferguson precedent bc "separate but equal" was not really equal

Which of these scenarios is legal? 1. A homeowner makes a room available for rent in her residence, but only interviews female applicants. 2. A property manager refuses to show a property to a blind person with a guide dog because the property does not allow pets. 3. A selling agent does not respond to a request to view a listed property because the person's accent in the voicemail is very thick. 4. The sellers refuse to consider an offer from someone who looks like a man wearing women's clothing, because they don't think the neighbors would be happy if they sold their house to someone who might be transgender or gay

1. A homeowner makes a room available for rent in her residence, but only interviews female applicants.

Review each statement about mechanic's liens in California and determine if the statement is true or false. 1. In California, mechanic's liens have priority over all other liens on the property. 2. Lien rights do not survive foreclosure or sale of the property. 3. The right to lien extends to subcontractors and sub-subcontractors. 4. The right to lien does not extend to material suppliers. 5. In California, even if the owner has paid the general contractor in full, if the subcontractor were not paid in full, the subcontractor can establish a lien and eventually foreclose on the property.

1. F 2. F 3. T 4. F 5. T, This is one of the reasons why the property owner can require contractors to obtain a payment bond. If the contractors don't pay their subcontractors, the owner who has paid the contractor is off the hook. To summarize, in California, mechanic's liens are given priority based on the starting time of the project, not the filing date of the lien. In addition, lien rights survive foreclosure or the sale of the property. The right to lien extends to general contractors, subcontractors, and sub-subcontractors.

Which are classes protected in California? Federally Protected OR Protected in California 1. Race, color, religion 2. Source of income 3. Sexual orientation, gender identity, and gender expression 4. Disability and familial status 5. Marital status and age

1. Federally Protected 2. Protected in California 3. Protected in California 4. Federally Protected 5. Protected in California

Redlining, Blockbusting or Steering 1. A lending company denies all loans for properties south of the river because of the demographics of the area. 2. Nancy encourages residents to sell now and avoid declining house values that are likely to accompany an influx of minorities. 3. When working with an African-American client, Nancy makes an effort to show them homes in primarily African American communities.

1. Redlining 2. Blockbusting 3. Steering

T/F: 1. Sold at a public auction to the highest bidder 2. Foreclosed owner can still claim title to the property after the trustee's sale 3. Foreclosure process is judicial

1. T 2. F 3. F, California uses a non judicial process meaning there are no courts involved

A family of four, with children ages six and nine, is denied the opportunity to view an available unit in housing intended for older persons. Which of the following statements is true? 1. The federal Fair Housing Act allows an exemption for communities that are designed and operated for older persons. 2. The federal Fair Housing Act allows an exemption for communities that don't have playgrounds or play areas for children. 3. This is a violation of the federal Fair Housing Act because it discriminates on the basis of age. 4. This is a violation of the federal Fair Housing Act because it discriminates on the basis of familial status.

1. The federal Fair Housing Act allows an exemption for communities that are designed and operated for older persons. A familial status exemption is available for housing for older persons that meets HUD's requirements.

What is the purpose of the title search? 1. To collect evidence that the title is a marketable title, meaning it's clear and free of encumbrances 2. To ensure the current owner has the title to give to the buyer 3. To ensure the title is on the record 4. To insure the owner against any financial loss due to a defect in the title

1. To collect evidence that the title is a marketable title, meaning it's clear and free of encumbrances

Which one of these situations represents the illegal practice of redlining? 1. Arlo, a licensee, distributed a flyer in several neighborhoods warning of impending commercial developments that would negatively impact property values. 2. Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods. 3. Eunice refused to allow her agent to show her house to families with children. 4. Jaime was working with Korean clients, so he focused on showing them homes in Korean communities because he thought they would be more comfortable there.

2. Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods.

How does the Department of Fair Employment and Housing complaint process begin? 1. A pre-complaint questionnaire is completed by the complainant's lawyer. 2. Complainants fill out a pre-complaint inquiry form and then are contacted by the DFEH to arrange a telephone interview to gather more information. 3. Complainants fill out formal complaint forms on the DFEH website. 4. Someone who has a complaint calls the DFEH to schedule an interview. If the interviewer deems the complaint to be valid, they give the complainant a questionnaire to fill out.

2. Complainants fill out a pre-complaint inquiry form and then are contacted by the DFEH to arrange a telephone interview to gather more information.

victims of housing discrimination can file a complaint directly on HUD's website. Which four of these statements about filing a complaint are true? 1. A real estate licensee can file a complaint for a victim. 2. Complaints must be filed within one year from the time the suspected discrimination occurred. 3. The complaint form asks the consumer to describe the alleged discrimination. 4. The victim must describe how he would like the complaint to be resolved. 5. Complaints must specify the victim's protected class status, who perpetrated the discrimination, and exactly where the discrimination occurred. 6. A fair housing specialist is the first to review a victim's claim.

2. Complaints must be filed within one year from the time the suspected discrimination occurred. 3. The complaint form asks the consumer to describe the alleged discrimination. 5. Complaints must specify the victim's protected class status, who perpetrated the discrimination, and exactly where the discrimination occurred. 6. A fair housing specialist is the first to review a victim's claim.

What happens after a foreclosure if there isn't enough money from the sale to pay off all of the lien holders against a property? 1. All claims are void if there isn't enough money after the foreclosure sale of the property. 2. The former owner may owe a debt to lien holders who aren't fully paid. 3. The former owner's wages will be garnished for the remainder of what's owed. 4. The lien holders must refile on the former owner's next property.

2. The former owner may owe a debt to lien holders who aren't fully paid.

What can a property owner do to stop contractors performing unauthorized work from filing mechanic's liens later? 1. File a lien release 2. File a notice of completion 3. Post and file a notice of nonresponsibility 4. Require the contractor obtain a payment bond

3. Post and file a notice of nonresponsibility The property owner has 10 days after noticing the work to post and file a notice of nonresponsibility to avoid paying for unauthorized work and mechanic's liens.

Why is it important that all liens be paid in full before a property is sold to a new owner? 1. If the liens aren't paid before the property is transferred to the new owner, the claimants will not get paid. 2. If the liens aren't paid in full, the seller has to assume a loan to pay the claimants. 3. If the seller does not pay the liens in full before closing, the sale agreement is terminated. 4. If the property transfers to the new owner and the lien remains unpaid, the unpaid lien can trigger a foreclosure.

4. If the property transfers to the new owner and the lien remains unpaid, the unpaid lien can trigger a foreclosure.

As a licensee, you're helping a couple buy a new home when you come across issues that could mean there's a cloud on the title. What should you do? 1. Encourage the couple to move forward with the purchase and not worry about the clouded title. 2. File an affidavit with the court about the knowledge of the clouded title and tell the couple to move forward with the sale. 3. Keep moving forward with the sale but recommend the couple purchase title insurance to insure against any potential title problems. 4. Recommend the couple find another property to purchase, or ask the seller to settle the title through a quiet title action to clear any cloud before moving forward with the sale.

4. Recommend the couple find another property to purchase, or ask the seller to settle the title through a quiet title action to clear any cloud before moving forward with the sale.

Real estate licensees who want to uphold the Fair Housing Act should make a habit out of which of the following actions? 1. Disclose their protected status to all clients. 2. Present sellers with offers from people of the same class so they don't ask the licensee to discriminate. 3. Show buyers properties in neighborhoods where they are unlikely to experience discrimination. 4. Tell potential clients in their initial meeting that they are committed to upholding fair housing laws.

4. Tell potential clients in their initial meeting that they are committed to upholding fair housing laws.

What is the six-month rule for homestead exemptions? 1. No liens may be filed against homesteads unless at least six months' notice has been given to the homeowner. 2. The property owner has six months to sell the property after a lien is filed. 3. The property owner must live in the home for at least six months before they may qualify for a homestead exemption. 4. The property owner must reinvest the homestead exemption amount within six months in another homestead to protect it from creditors.

4. The property owner must reinvest the homestead exemption amount within six months in another homestead to protect it from creditors.

Why did the Civil Rights Act of 1866 fail to have an immediate impact on practice? 1. It was unconstitutional. 2. Nobody understood the Civil Rights Act. 3. The protected classes had to be approved. 4. There was no agency put in place to enforce the laws.

4. There was no agency put in place to enforce the laws. There was no agency put in place to enforce the Civil Rights Act of 1866. It would take another 100 years for real change to occur.

What is the purpose of the fair lending notice? 1. To disclose the demographic characteristics of approved mortgagors by the bank over the past five years. 2. To explain that financial institutions have the right to refuse to provide loans on homes in neighborhoods with historically high rates of foreclosure. 3. To notify mortgagors of their rights to equitable interest rates. 4. To notify mortgagors that it is illegal for financial institutions to discriminate on the basis of a protected class or on the basis of the characteristics of the neighborhood.

4. To notify mortgagors that it is illegal for financial institutions to discriminate on the basis of a protected class or on the basis of the characteristics of the neighborhood.

Which of the following defines the term 'lis pendens'? 1. A legal notice that a lawsuit is pending that affects the title of a property 2. A legal term that means "it depends" and requires a certain minimum sales price of the property. 3. A notice that notifies potential buyers of a pending lease 4. A public listing and notice of foreclosure of a property.

A legal notice that a lawsuit is pending that affects the title of a property

Lis Pendens

A legal notice that a lawsuit is pending that affects the title of a property -serves as warning to prospective buyers that a pending lawsuit could impact title.

Which of these is something that is NOT requested in the initial fair housing complaint form? A description of the alleged discrimination A notarized copy of the complaint description The applicable protected class of the complainant The physical location of the discrimination event

A notarized copy of the complaint description

A subordination agreement

A written agreement between holders of liens on a property that modifies the order of priority the liens will be paid

In addition to being properly executed (signed), what are other requirements for recording a document in California? 1. Acknowledged before a notary public 2. At least two witnesses present at the time of filing 3. Meet SEQRA standards 4. Sealed and mailed in a registered envelope to the county clerk's office

Acknowledged before a notary public

The Unruh Civil Rights Act requires: "Full and equal accommodations, advantages, facilities, privileges or services in ______ business establishments." All For-profit Non-profit Privately owned

All

Which of these property items does a general lien affect? Boat House Art Jewelry Land

All of the above! A general lien affects both real and personal property.

What makes an income tax lien different from a property tax lien? 1. An income tax lien has priority over a property tax lien and will be paid first upon foreclosure. 2. An income tax lien is a general lien and a property tax lien is a specific lien. 3. An income tax lien is placed by the federal government and a property tax lien is placed by the state. 4. An income tax lien is voluntary and a property tax lien is involuntary.

An income tax lien is a general lien and a property tax lien is a specific lien.

"Separate but equal" is not really equal. Segregation in public schools is unconstitutional. Buchanan vs. Warley Plessy vs. Ferguson Brown vs. Board of Education Jones vs. Mayer

Brown vs. Board of Education

Rules that ban certain races from living in certain areas are unconstitutional. Buchanan vs. Warley Plessy vs. Ferguson Brown vs. Board of Education Jones vs. Mayer

Buchanan vs. Warley

In case history regarding fair housing, which case involved an ordinance that prohibited blacks from living on a block where the majority of the residents were white? Brown vs. Board of Education Buchanan vs. Warley Jones vs. Mayer Plessy vs. Ferguson

Buchanan vs. Warley In Buchanan vs. Warley, the U.S. Supreme Court cited the Civil Rights Act of 1866 and the 14th Amendment to overturn the Louisville ordinance.

Which document establishes path and proof of ownership? Abstract of title Chain of title Deed Title insurance

Chain of title

Which act was the first to prohibit any exceptions for discrimination based on race or color? Civil Rights Act of 1866 Fair Housing Amendments Act of 1988 Federal Fair Housing Act of 1968 Housing for Older Persons Act of 1995

Civil Rights Act of 1866

Title VIII of which law prohibits discrimination in the sale, rental, and financing of housing? Civil Rights Act of 1866 Civil Rights Act of 1968 Equal Credit Opportunity Act of 1974 Housing and Community Development Act of 1974

Civil Rights Act of 1968

When a Department of Fair Employment and Housing complaint reaches litigation, the parties have the option to have the case heard before _____________________. A court-appointed mediator Civil court The Department of Fair Employment and Housing or in civil court The Housing and Urban Development Commission

Civil court

Jones vs. Alfred H. Mayer Co. (1968)

Court case: "It's my property. I have the right to choose who I sell it to, and that means I can discriminate against whomever I want." - state court honored mayer for having the right to sell his home to who he wants; since its not a state action they have no jurisdiction to tell him otherwise - federal court said no honey, and determined no discrimination of any property transaction w this case

What type of lien is defined as an involuntary lien placed on all of the property received by a deceased person's heirs? Estate/inheritance lien Income tax lien Judgment lien Mortgage lien

Estate/inheritance lien

Which act attempted to eliminate discrimination caused by blockbusting, steering, and redlining? Civil Rights Act of 1866 Fair Housing Act of 1968 Housing Discrimination Act of 1974 HUD Act of 1961

Fair Housing Act of 1968

Which protected class is protected against discriminatory practices, such as against placing limitations on the number or age of children in the residence? Familial status Marital status National origin Partnership status

Familial status

What type of liens fall into voluntary, involuntary specific and involuntary general

Following is a summary of the most common lien types by category: 1. Voluntary—specific a. Mortgage lien 2. Involuntary—general a. Estate and inheritance tax lien b. Deceased person's debt c. Income tax lien d. Judgment lien (Judgment liens have priority based on the date they were recorded in the county clerk's office) 3. Involuntary—specific a. Mechanic's lien b. Real property tax lien or mortage lien (if someone cant pay their monthly payments)

Blockbusting

For profit, persuading owners to sell or rent, known as _________. An illegal practice in which licensees or others encourage homeowners to sell because of an influx or expected influx of minorities into the area - prohibited - ex. convincing neighbors to sell because a minority group was moving in

Which of these classes may not be protected outside of California? Disability status Gender expression Race Sex

Gender expression

Prior to a certain act's existence, there was no legal protection for women who endured sexual harassment from landlords and sellers when they attempted to obtain housing. What's this act called? Civil Rights Act of 1866 Fair Housing Amendments Act of 1988 Federal Fair Housing Act of 1968 Housing and Community Development Act of 1974

Housing and Community Development Act of 1974

Which act states that communities and facilities that meet certain criteria for providing housing to older persons are legally exempt from familial status discrimination? Fair Housing Amendments Act of 1988 Federal Fair Housing Act of 1968 Housing and Community Development Act of 1974 Housing for Older Persons Act of 1995

Housing for Older Persons Act of 1995

More Housing Exemptions

If the complex is owned by a religious organization or private club, and the organization restricts the housing to its own members, this is an allowed exemption.

Which of the following defines an income tax lien? 1. Involuntary lien placed against a property owner's property due to a court decree resulting from a lawsuit. 2. Involuntary lien placed against a property owner's property for due and unpaid taxes 3. Involuntary lien placed on all property inherited by a deceased person's heirs. 4. Voluntary lien against a single property that uses the property as collateral for repayment of a loan.

Involuntary lien placed against a property owner's property for due and unpaid taxes

Discrimination is not allowed, even when you're selling your own property. Buchanan vs. Warley Plessy vs. Ferguson Brown vs. Board of Education Jones vs. Mayer

Jones vs. Mayer

Which fair housing case tested discrimination in a private sale? Brown vs. Board of Education Buchanan vs. Warley Jones vs. Mayer Plessy vs. Ferguson

Jones vs. Mayer

Which step of the DFEH complaint process takes place in civil court? Investigation Litigation Pursuit of resolution Remedies

Litigation

What criteria must be met before a document is eligible for recording in California? May be on any size and type of paper Must be filed electronically Must be filed in person Must be in writing, signed, and acknowledged before a notary public

Must be in writing, signed, and acknowledged before a notary public

What is the length of the statute of limitations to file a fair housing complaint with HUD? 10 years Five years One year Seven years

One year

Which type of property is exempt from the Fair Housing Act? Condominium with no more than eight units Condominium with no more than four units Owner-occupied with no more than eight units Owner-occupied with no more than four units

Owner-occupied with no more than four units

How can a foreclosure be stopped or prevented? Auction Fleeing the state Paying all outstanding liens against the property Refinancing

Paying all outstanding liens against the property

DFEH complaint

Persons who believe they have experienced discrimination may file a ________. - civil court hears the case

"Separate but equal" is sufficient. Segregation is allowable. Buchanan vs. Warley Plessy vs. Ferguson Brown vs. Board of Education Jones vs. Mayer

Plessy vs. Ferguson

During which step of the DFEH complaint process does the DFEH explore options to resolve a complaint after a violation of the law has been found? Investigation Litigation Pursuit of resolution Remedies

Pursuit of resolution The DFEH offers mediation as a free and time-saving way to pursue dispute resolution.

Recordation

Recordation and possession protect the owner's title against all claims of interest not recorded in any public record. -Until a deed is recorded, ownership can be legally challenged. In California recording these must be met: Must be in writing and clearly legible. Must be properly executed (signed). Must be acknowledged before a notary public. Must have the name and address of the requestor

Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded? 1. He can't legally make any improvements to the property until the deed is recorded. 2. He doesn't legally own the house until that occurs. 3. Recording provides actual notice that he owns the property. 4. Recording provides constructive notice that he owns the property.

Recording provides constructive notice that he owns the property.

What's the term for a lender refusing to lend in a specific area, often based on the area's minority make-up? Blockbusting Gerrymandering Redlining Steering

Redlining

The Millers moved to a small town and were interested in buying a house. At the first meeting with real estate sales professional Nora, she asked them where they went to church. They replied that they were atheists and didn't attend church. Nora then told them that she didn't know of any listings that met their needs, even though that wasn't true. Nora is discriminating based on _______. Familial status National origin Religion Sex

Religion

Senior Housing Exemptions

Senior housing can discriminate against families with children as long as the housing meets exemption requirements. Federal law allows an exemption on the basis of familial status only Senior housing must meet any of the following specific requirements to qualify for this exemption: - HUD has determined that the dwelling is specifically designed for and occupied by elderly persons under a federal, state, or local government program - It is occupied solely by persons who are 62 or older - It houses at least one person who is 55 or older in at least 80% of the occupied units, and adheres to a policy that demonstrates intent to house persons who are 55 or older.

Which option describes a real property tax lien? General and involuntary General and voluntary Specific and involuntary Specific and voluntary

Specific and involuntary

Office of Fair Housing and Equal Opportunity (FHEO)

The Office of Fair Housing and Equal Opportunity (FHEO) is part of the U.S. Department of Housing and Urban Development (HUD). The FHEO administrates and enforces federal fair housing laws; it also establishes policies to ensure equal access to housing choice and opportunity.

Who has the right to make the first bid during a trustee's sale in California? Anyone The beneficiary (lender) The trustee The trustors (borrowers)

The beneficiary (lender)

Steering

The illegal practice of nudging buyers away or toward a specific area based on the presence or absence of protected class members in the area relative to the buyers.

Which of these situations would be exempt from most provisions of the federal Fair Housing Act? 1. A homeowner engages a real estate professional to rent out his basement apartment. 2. An investor owns and rents out five duplexes. 3. A non-profit owns 20 properties that it only rents to Caucasian families. 4. The local Elks club owns a property that's rented only to Elks club members.

The local Elks club owns a property that's rented only to Elks club members. If the complex is owned by an organization or private club, and the organization restricts the housing to its own members, this is an allowed exemption.

The proceeds from a foreclosure sale are sent to the borrower to help pay off the loan. True or False

This is false. Proceeds from the sale go toward satisfying the lien. With mortgages, the property is the security against payment of the loan. If the borrower doesn't repay the debt, the lender can call in the mortgage lien to reclaim funds.

The collection of the monies for unpaid property taxes is by a foreclosure sale of the property. True or False

This is false. The collection of the monies for unpaid property taxes is by a forced sale of the property at a tax sale.

Jeff has filed a quiet title suit against Roger. What's the purpose of this suit? To clear up a cloud on title To clear up a property line dispute To exercise his right to quiet enjoyment of the property To prohibit the seller from releasing the buyer's name

To clear up a cloud on title

The ______ Civil Rights Act protects consumers of businesses from discrimination. American California Unruh U.S.

Unruh

How long does a homeowner have to pay off outstanding liens against his property? 30 days One week before the foreclosure sale is held Until the foreclosure sale is held Up to 10 years

Until the foreclosure sale is held

When does title officially change hands? 1. With the transfer of the deed from the seller to the buyer 2. When the deed is recorded 3. When actual notice of the deed is given to the mortgage company 4. After the final document is signed at closing

With the transfer of the deed from the seller to the buyer

How long after a project begins must a contractor give the owner preliminary notice of their right to file a mechanic's lien in California? Within 20 days Within 90 days Within one year Within six months

Within 20 days

How long after a notice of cessation or completion is filed can a contractor file a mechanics lien? Within 60 days Within 90 days Within six months Within two years

Within 60 days

Buchanan vs. Warley (1915)

a case where Warley had planned to buy Buchanan's house. When Warley learned that he wouldn't be allowed to live there because of a city ordinance banning blacks from moving to a block where the majority of residents were white, he backed out of the sale. The seller sued him for backing out, but Warley said the city ordinance was a valid reason to not complete the sale. Buchanan then fought the city ordinance, claiming it violated the 14th Amendment. The Supreme Court agreed with Buchanan. The city ordinance was not constitutional.

Redlining

a practice in which banks refuse to lend money to people living in certain geographic locations

Title Insurance or Quiet Title Action

buy title insurance bc there may be issues that arise like: They can make financing difficult. They put ownership in question. They can make it difficult to resell the property later. but never encourage your client to move forward with a purchase that involves a clouded title

payment bond

can be used to prevent subcontractors from putting a lien if the contractor was paid but didn't pay those the contractor hired (or at least prevents the property owner from paying twice for the same work)

Title insurance Policy

insures the policy owner against financial loss if the title to the real estate has defects beyond what is known in the public records.

general lien

is a claim against an individual and all of his property

specific lien

is a lien against a single property

statutory lien vs equitable line

is created by statute, or law. - created without any action by owner (say if they missed their payments, there will be a lien against the home) - at risk of possession vs created by a court of common law - when a court order requires a homeowner to pay a specific amount of money to an injured party - not at risk of possession; simply a charge on the property

lien release bond

is used to stop the foreclosure so that the owner can dispute the lien.

An involuntary lien

is when a creditor places a claim on real or personal property through legal means without the owner's consent in order to collect an unpaid debt.

A voluntary lien

is when an individual agrees to have a security placed against himself or his property.

Preliminary Report

issued after title insurance has been ordered and outlines the history of the title and what will be covered by the title insurance policy, if issued.

Housing and Community Development Act of 1974

protected people against discrimination of buying a home no matter your sex

Unruh Civil Rights Act

provides protection from discrimination by all business establishments in California, including housing and public accommodations. - specifically outlaws discrimination in housing and public accommodations based on sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation

Housing for Older Persons Act of 1995 (HOPA)

providing housing to older persons are legally exempt from familial status discrimination