Chapter 7 - Fair Housing Laws

Definition of Disability -1

The law states that a disability is any physical or mental impairment that limits one or more of a person's major life activities, such as walking, talking, hearing, seeing, breathing, learning, performing manual tasks, and caring for oneself. This definition thus includes a variety of conditions, such as having HIV or AIDS, being an alcoholic, having a drug addiction, and having a learning disability. In fact, according to the Pew Research Center, 12.6% of American have a disability. (It is worth noting here that while alcoholism is considered a disability, addiction caused by the current illegal use of a controlled substances is not.)

Discrimination/Exceptions to the Rule

Although you may not discriminate against people because of a disability, it is NOT illegal to refuse housing to prospective tenants or to evict current tenants who have a physical or mental impairment that poses a direct threat to other tenants. It would not be illegal, for example, to refuse to rent an apartment to an unmedicated schizophrenic with a history of violence against others, even though the person has a documented mental impairment.

Which of the following statements accurately describes the basic issues involved in the Jones v. Mayer Co. case?

An owner refused to rent out a home due to the lessee's sexual orientation and was found guilty of under Title VIII of the Civil Rights Act of 1968. A real estate agent refused to show a property due to the renter's religion and was found guilty of violating the Thirteenth Amendment. An owner refused to make an exception to a "no pets" policy and was found guilty of violating the federal Fair Housing Act. A real estate company refused to sell a home because of the prospective buyer's race and was found guilty of violating the Civil Rights Act of 1866. * Answer In the U.S. Supreme Court case Jones v. Mayer Co., the refusal to sell a home because of the prospective buyer's race was found to be a violation of the law. The court decided that the defendant had violated the Thirteenth Amendment as well as 42 U.S. Code 1982.

Civil Action

Both the complainant and the individual charged with the violation have the right to resolve the matter by a civil action, rather than an administrative proceeding. If the person being charged elects to have the matter resolved by a civil action, then HUD will request that the lawsuit be filed by the Attorney General. The court in such a civil action has the authority to assess sizable financial penalties, which can also include reparations and relief, court costs, and attorney's fees.

Fair Housing Complaints Complaints must be in writing and must contain the specific information that HUD requires, such as:

Date of the incident Location where it happened Name(s) of the party or parties involved Any other pertinent details

Criminal history

Felons are not in a protected class. Potential tenants may be rejected based upon their past history. That tenant may fit into one of the other protected classes, but the refusal is based on the criminal history and that is sufficient enough.

Discrimination/For example

For example, a tenant with Tourette's syndrome who cannot help making loud noises throughout the night may pose an indirect threat to other tenants through the long-term effects of sleep loss, but does not pose any immediate, direct threat. The courts have ruled that a landlord must also show that no reasonable accommodation could eliminate the direct threat posed by a tenant./

Chapter 7/3 Key Terms

Hey! Pay attention to these words during this chapter. ✏️️ Protected Classes: Groups that are illegal to discriminate against, as defined by the Fair Housing Act ✏️️ Housing and Community Development Act: A 1988 amendment to the Fair Housing Act that added familial status and disability to the list of protected classes ✏️️ Familial Status: Protected class that applies to any family with at least one person under 18 years of age with at least one parent or legal guardian ✏️️ Blockbusting: The illegal practice of causing owners to sell their homes by creating fear that minorities are moving into the area; also known as panic peddling

Fair Housing Act Exemptions (cont.)

Owner Transactions: An owner's sale of their home or rental of units in their personal dwelling is exempt. To qualify for this exemption, the owner cannot own more than three houses. Note: This exemption is not valid if the owner uses the facilities or services of a real estate license holder as license holders must always adhere to the Fair Housing Act. Exemption Caveat: There are never any permissible exemptions regarding the protected classes of race and color, which were established by the Civil Rights Act of 1866.

Protected Classes Under the federal Fair Housing Act, there are seven protected classes. Let's review them! It is illegal to discriminate against someone because of their:

Race Color National origin Sex Familial status Religion Disability Notice that age is not a protected class under the federal Fair Housing Act. As long as the prospect is of an age to legally contract, that is all that is required.

Definition of Disability-1

Real estate professionals and lessors must make reasonable accommodations for people with disabilities. A landlord or real estate professional must make any accommodation that helps a person with a disability acquire and enjoy their dwelling, though the parties providing accommodation(s) are not required to suffer undue hardship in doing so. For brokerages, this could mean providing Braille versions of pamphlets and handouts. For a lessor, this could mean allowing a person with an assistive animal to keep their animal indoors, even if tenants are generally forbidden to keep pets. Some offices have obtained teletypewriters to communicate with people who have a hearing impairment.

Fair Housing Complaints

The Secretary of the Department of Housing and Urban Development is in charge of enforcing federal fair housing laws and investigating complaints. HUD can initiate action against license holders who violate fair housing laws even if a member of the public does not make a complaint. Any person who believes that they have been injured by the discriminatory practices of a real estate license holder, or who believes that they are being or will be injured, may file a complaint with HUD. They have 1 year from the beginning or end of the incident to file a complaint.

Panic selling

Those wishing to foster this panic selling often cite effects such as a decline in the quality of education and an increased crime rate, even though there is no justification for making these claims. At its core, though, blockbusting is a profit-seeking practice that relies upon mistaken and discriminatory ideas about various protected classes, and uses these to induce people to engage in real estate transactions that are not in their best interests. As such, it violates the Fair Housing Act and encourages people in holding on to their discriminatory beliefs.

Test Q? Which of these tenants is protected by the Fair Housing Act?

a seeing-impaired woman who uses a service dog in a pet-free building * a woman with a heroin addiction a man with an unmedicated mental illness and a history of violence a man whose 18-year-old high school senior son lives at home with him Answer You can refuse a potential tenant if you feel they would put other tenants in danger, illegal drug addictions are not considered disabilities, and people 18 and over are legally adults, even if they live at home and are in high school. The seeing-impaired man must be allowed accommodations for his service dog even if the building does not allow pets.

How long does person who believes that they have been injured by the discriminatory practices of a real estate license holder have to file a complaint with HUD?

six months two years one year * Answer Any person who believes that they have been injured by the discriminatory practices of a real estate license holder has one year to file a complaint with HUD.

Exceptions to the Rule

Although you may not discriminate against people because of a disability, it is NOT illegal to refuse housing to prospective tenants or to evict current tenants who have a physical or mental impairment that poses a direct threat to other tenants. It would not be illegal, for example, to refuse to rent an apartment to an unmedicated schizophrenic with a history of violence against others, even though the person has a documented mental impairment.

Fair Housing Poster

Every real estate office should display a special fair housing poster in a prominent location so that all can see it as they come and go. This poster is a declaration from the broker that the personnel of the company will give equal treatment to all who enter the office. HUD has stated that if an office is being investigated and this poster is not up, then it could be used as an indication that this office does not concern itself with Fair Housing matters. Failure to display the poster can shift the burden of proof to the brokerage firm in an alleged discrimination complaint.

Complaints Requiring Immediate Action

For example: A tenant is scheduled to move out of her current apartment and into a new apartment. She has submitted her application paperwork electronically and has not yet met the landlord in person, although she has been approved for the apartment. One day she stops by the apartment building with a friend and meets the landlord of the building. The landlord decides that this new tenant looks to be of Middle Eastern descent and feels that he would prefer that there were no Middle Eastern individuals in his building. He revokes the tenant's lease contract. The tenant's old lease is up, and she must vacate her previous apartment. If the landlord does not let her move in, then the tenant may not have a residence. In this situation, time is of the essence. Consequently, HUD might pass the case on to the Attorney General for immediate attention while it files a complete investigatory report.

Fair Housing Act Exemptions (cont.)

Housing for Older Persons: "Housing for older persons" may legally have rules that prevent younger adults and families with children from joining their community. Drug Use Record: Landlords can decide not to lease to potential tenants who have been convicted of using or selling illegal drugs. This exemption exists so a landlord can attempt to keep tenants out who would be interested in producing and selling drugs out of the rental property.

Penalties and Civil Proceedings

If HUD determines that a discriminatory practice has occurred or is in the process of occurring, then it can order an administrative hearing on the charges. If an administrative hearing takes place and concludes that there has been a violation of fair housing law, then the person or group who violated the law can be ordered to: Compensate the complainant for actual damages, including humiliation, pain, and suffering. Provide injunctive or other equitable relief, for example, making the housing available to the complainant. Pay the Federal Government a civil penalty. The maximum penalties are $10,000 for a first violation and $50,000 for a subsequent violation within seven years. Pay reasonable attorney's fees and costs.

Complaint Referrals

If HUD determines that a state or local agency in the area of the complainant is "substantially equivalent" in powers to HUD, then it will refer the case to the agency for investigation, and notify the complainant of the referral. If the agency does not take action within a 30-day period, then HUD may take back the case.

Blockbusting

Refers to the practice of encouraging the panic selling of homes below market value, generally by raising fears that an influx of individuals belonging to a particular minority group will decrease property values in a neighborhood and affect the area negatively. Because it requires this kind of special effort, license holders are unlikely to engage in blockbusting accidentally and without malicious intent; nonetheless, they should remember that intent is not required for their actions to be a violation of the Fair Housing Act.

Transparency

The criteria that a property manager would use to decide who will or will not become a tenant not only has to be exact, it also has to be available for others to view. If anyone is turned down for a lease and they ask for the criteria, it must be given to them. Some of the most common causes of denial are: insufficient income, poor credit screening, and criminal history.

Definition of Familial Status

The federal Fair Housing Act also protects families with children under the age of 18 living with one or more parent or guardian, as well as pregnant women and those planning to adopt. In general, no one may deny housing to an individual simply because that person has or may soon have children.

Illegal Practices

The federal Fair Housing Act describes a number of illegal practices. We will cover these in greater detail in the next level, but we will touch them a bit in this chapter. They include the following actions when these are based on an individual's membership in a protected class: Refusals to sell or rent Discrimination in terms, conditions, or privileges of sale Discrimination in advertising Denying availability Blockbusting and steering Failure to make reasonable accommodations Lending discrimination and redlining

Discrimination Without Intent

There are times when license holders may find themselves discriminating even if they didn't intend to do so. One example: If an apartment manager decides not to show a single mother with rambunctious boys a second floor unit, because, as he claims, he fears "the boys might fall off the balcony," although the manager had the customer's best interests at heart, he was directing the family away from a unit that was open and available, and perhaps one that they might have preferred. Another example: There's an agent who has a customer who is in a wheelchair. The agent decides that two story homes would not be appropriate for someone in a wheelchair. There may not be ill will in this assumption, but it is not the license holder's responsibility to make that type of decision for their client.

Elderly Exemption

There is one exception to this familial status prohibition: what the Fair Housing Act calls "housing for older persons." A dwelling is exempt from the requirement to accommodate families if: That dwelling 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 That dwelling is intended for and occupied solely by people who are 62 years of age or older At least 80% of all occupied units in that dwelling house at least one person over the age of 55 and the landlord generally adheres to a policy with the demonstrable intent of housing persons over 55

No exceptions to the Civil Rights Act of 1866

.This means that you may never turn away a qualified tenant or purchaser because of race or color. Nor can you publish an advertisement that discriminates against someone on this basis.

Conciliation (cont.)

Conciliation is an attempt to resolve the issues raised by a complaint or an investigation through informal negotiations between the aggrieved person, the respondent, and the HUD Secretary. With the exception of actual, written agreements that may result from conciliation, nothing said during the course of informal conferences may be made public or used as evidence in subsequent proceedings without the written consent of all parties concerned.

Omnibus Appropriations Act,

Congress established "a privilege for lender-initiated self-tests of residential real estate related to lending transactions" as part of their efforts to ensure fair lending practices. If they find discriminatory practices in their business, then they are allowed to remedy these without federal lawsuits. This Act encourages lenders to be critical about their lending practices and to engage in self-testing, which will ideally lead to more equitable lending practices.

Jones v. Mayer

For example, in the U.S. Supreme Court case Jones v. Mayer Co. (392 U.S. 409 [1968]), the refusal to sell a home because of the prospective buyer's race was found to be a violation of the law. Joseph Lee Jones, an African American man, claimed that the Alfred H. Mayer Co., a real estate company in St. Louis County, Missouri, refused to sell him a house in a particular neighborhood because he was African American. The court decided that the defendant had violated the Thirteenth Amendment as well as 42 U.S. Code 1982, which provides that all citizens "shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property."

Civil Action (cont.)

In any civil action, the burden of proof is on the person making the complaint. In order to have a legal basis for a case, a complainant must show that: They are a member of a protected class. They applied for and were qualified to rent or purchase the property but were rejected. The property remained available after the rejection - i.e., the property was rented or sold to someone else after it was denied to the qualified person making the complaint.

Crowded House

In some cases, imposing limitations on the number of occupants allowed in a dwelling may constitute discrimination on the basis of familial status. To ensure that fair housing lawsuits regarding this issue remain reasonable, Congress passed the Quality Housing and Work Responsibility Act of 1998. This act required HUD to set reasonable limitations on the number of occupants allowed in a dwelling. HUD concluded that a "two occupants per bedroom" rule — taking other factors into consideration — constitutes a good basic model.

Test Q? - What is the best definition of blockbusting?

The practice of encouraging people to sell their homes due to beliefs about how the entry of a protected class will affect an area's property values * the practice of limiting the number of loans or the loan-to-value ratio in certain areas of a community or city the practice of advising a person seeking to buy or rent a dwelling in a manner that perpetuates segregated housing the practice of changing the financial terms of a loan because of an applicant's membership in a protected class Answer Panic selling or blockbusting is encouraging homeowners to sell before their homes will supposedly lose value because of the entry of a protected class in the area.

Keating Memo.

Crowded House (cont.) In 1991, HUD's then-General Counsel Frank Keating issued a memo that provided a guideline: "...the Department believes that an occupancy policy of two persons in a bedroom, as a general rule, is reasonable under the Fair Housing Act... However, the reasonableness of any occupancy policy is rebuttable..." and nothing "implies that the department will determine compliance with the Fair Housing Act based solely on the number of people permitted in each bedroom." This became known as the Keating Memo.

HUD Actions in a Complaint

In the situation of a complaint, HUD will consider the following items: Testing studies on the company completed by HUD using the testers, a.k.a. HUD's "secret shoppers" we just learned about Which properties were shown to the buyer or tenant? Which properties were the agent and client looking at? Is an equal opportunity poster displayed in the office? Are they following the most basic aspects of the law?

Conciliation (cont.)

The respondent and the complainant can reach agreement during conciliation. For any such conciliation agreement to be binding both parties must accept it; the agreement may also be subject to the HUD Secretary's approval. Such agreements must be made public unless there is an agreement to the contrary that is accepted by both the respondent and the complainant. If a complainant feels that their complaint has not been handled properly, then the complainant may seek civil proceedings to resolve the issue. The complainant has two years to file a civil suit directly with the federal court. They can also do this following conciliation. For example, if a conciliation process leads HUD to conclude that dismissal is the best way to handle a case, but the complainant still feels that discrimination occurred, then the complainant may take the issue to the civil courts.

Fair Housing Act Exemptions

There are exemptions to which the Fair Housing Act does not apply. Religious Organizations: A religious organization operating housing units for non-commercial purposes may restrict housing to people of the same faith, such as a seminary with dorms. Note: The religious org may not discriminate against people because of their race, color, or national origin. Private Clubs: If a private club owns rental units, the club may reserve the rental units for member-only use. This exception only applies to temporary dwellings.Note: The club cannot restrict club membership due to a protected class.

conciliation.

Within 100 days of receiving any complaint, HUD must notify a complainant as to whether it intends to act on the complaint. In addition to full legal proceedings, HUD may also use informal conferences to resolve complaints, as well as issues that arise over the course of an investigation. Sometimes complaints may be the result of a simple misunderstanding, or an investigation may reveal issues that require additional clarification. If HUD believes this is the case, then it can hold an informal meeting to help resolve the issue. In the federal Fair Housing Act, this type of informal conference is referred to as conciliation.