ethical practices of real estate
Prospective buyers discuss their housing needs with a sales agent. The agent discusses certain property, but avoids talking about houses located in a specific area that meet the buyers' criteria. Such action could be known as: A. Redlining B. Compromise C. Steering D. Blockbusting
steering x (fair housing laws) Of the choices, this is most likely steering. Steering is the act of directing people into or away from specific areas of a community, often based on racial or ethnic characteristics.
The 1988 Amendment to the Federal Fair Housing Act, Title VIII, declared it unlawful to discriminate: A. Against households with children under 18 years of age B. On the basis of age C. Because of sexual preference D. On the basis of gender
against households with children under 18 years of age x (fair housing laws) The 1988 Amendment extended protection to families. It was the 1968 law that addressed the issue of gender.
All of the following classes are protected under Federal Fair Housing Laws, EXCEPT: A. Race B. National Origin C. Color D. Elderliness
elderliness (fair housing laws) Elderliness is not a protected class under Federal Law. However, elderliness is protected under some state fair housing laws.
Consistent with Fair Housing Laws, an owner of an apartment building rents exclusively to the elderly. Currently, 70% of his units are occupied and 30% are vacant. To continue renting exclusively to the elderly (without violating Fair Housing Laws), the owner may rent the next unit to all of the following persons, EXCEPT: A. A couple who are expecting a baby B. A 65 year old handicapped person C. A retired 53 year old widow D. Both A and C
Both a and c (fair housing laws) Elderly housing is exempt from familial status protections if it falls into one of two categories: (i) all residents are 62 or older; or (ii) in at least 80% of units, at least one person is 55 or older. In this situation, because only 70% of the units are occupied, the landlord must rent the next unit to someone over age 55 if he hopes to retain the exemption. If the landlord rented to anyone younger, he would be further from satisfying either exemption category (all at 62yo, or 80% at 55yo). Therefore, the owner wouldn't want to rent to either an expecting couple or a retired 53 year old widow.
If included in an advertisement, which of the following statements would constitute a Fair Housing violation? A. Non-smokers preferred B. Military discount C. Catholics preferred D. Senior citizens welcome
Catholics preffered (fair housing laws) Specifying a preference for one religion or another sends the message that other religions are impermissible.
If a person has been discriminated against in a real estate transaction, they could file a complaint with the: A. Local Association of REALTORS B. National Association of REALTORS C. Department of Housing and Urban Development D. Department of Health, Education and Welfare
Department of Housing and Urban development x (fair housing laws) HUD is the best answer. An aggrieved person could file complaints elsewhere, including courts and real estate boards, but these were not offered as answer choices. The correct answer is: Department of Housing and Urban Development
Enforcement of the Fair Housing Law of 1968 is the primary responsibility of: A. The Federal Housing Administration B. The Federal Department of Housing and Urban Development C. The Federal National Mortgage Association D. The Government National Mortgage Association
The federal department of housing and urban development x (fair housing laws) The Department of Housing and Urban Development (HUD) has primary responsibility for enforcing the Fair Housing Law.
According to the 1988 Fair Housing Law, which of the following persons would NOT be considered as handicapped? A. A person addicted to alcohol B. A person addicted to an illegal drug C. A person who, by their actions, is believed to be insane D. Both A and B
a person addicted to an illegal activity x (fair housing laws) Persons addicted to illegal drugs are not handicapped under the Fair Housing Law. However, alcoholics and the mentally ill are protected.
The difference between an employee and an independent contractor depends on: A. Scope of work B. Degree of supervision C. Who pays insurance D. All of the above
all of the above (broker/salesperson agreements) An independent contractor is retained to do a particular job with little to no supervision. Independent contractors pay their own liability insurance, social security, and income taxes.
Encouraging a homeowner to sell his or her property because minority group families are moving into the neighborhood is: A. Redlining B. Steering C. Blockbusting D. Puffery
blockbusting x (fair housing laws) This is a textbook example of blockbusting.
Employees generally: A. Work under direct supervision B. Hold regular office hours C. Choose how best to accomplish a task D. Both A and B
both a and b their employer's direct supervision and hold regular office hours. Independent contractors, not employees, are free to choose how best to accomplish a task based on their individual expertise.
Destiny is selling her own home as a FSBO. On Sunday, a full price offer is made by an Asian couple. Destiny refuses the offer. On Monday, Destiny accepts an offer that is $4,000 below asking price from a Caucasian family. Destiny could be in violation of which of the following laws? Select one: A. Fair Housing Law of 1986 B. State license laws if Dixie is not licensed C. Civil Rights Act of 1866
civil rights act of 1866 x (fair housing laws) Destiny could only be in violation of the 1866 Civil Rights Act, and not current Fair Housing Laws. Strange as it may seem, the Fair Housing Law exempts owner sales so long as the owner does not use discriminatory advertising. However, NO ONE is exempt from the 1866 Civil Rights Act. Finally, most states permit an owner to sell her property without a license.
In Fair Housing discrimination cases, the burden of proof is on the complainant. The complainant must be able to prove: A. Discrimination occurred B. The act of discrimination was not provoked by the complainant C. Only that the accused party intended to discriminate D. Actual damages resulted from the acts of accused Feedback
discrimination occurred (fair housing laws) A complainant must only prove that prohibited discrimination (by the respondent) occurred.
How can a broker best demonstrate his compliance with Fair Housing Laws? A. Obtain the Equal Housing Opportunity Poster B. Document all transactions with all clients or customers C. Show all prospective buyers all listed properties D. All of the above
document all transactions with all clients or customers x (fair housing laws) Of the answer choices, documenting all transactions with all customers is the best way to demonstrate compliance with Fair Housing Laws. You must do more than obtain the equal opportunity poster; you must display it. The law does not require that you show all listed properties to all buyers. For example, you do not have to show listings that priced above the client's financial qualifications.
Which of the following actions is NOT a form of steering? A. Excluding Hispanic Americans from a Caucasian community B. Attempting to attract only Puerto Ricans into a Puerto Rican neighborhood C. Encouraging Caucasians to sell by saying that African Americans are moving into the neighborhood D. Efforts to keep Asian Americans out of a Caucasian neighborhood
encouraging caucasians to sell by saying that black people are moving into the neighborhood x (fair housing laws) Attempting to induce members of one race to sell their properties by saying that members of another race are moving into the neighborhood is BLOCKBUSTING, not steering. Blockbusting and steering are both violations of Fair Housing Law.
Who is required to comply with the Fair Housing Laws? A. Only real estate professionals B. Real estate professionals and lenders C. Real estate professionals, lenders, and insurance companies D. Everyone, unless specifically exempted by the law
everyone unless specifically exempted by the law (fair housing laws) Fair Housing Laws apply to ALL people. Real estate professionals, lenders, and insurance companies are just more directly involved by the nature of their business.
A broker takes a listing from a seller, who then says that the house must not be shown to a minority. The broker should: A. Note this on the MLS form B. Make written acknowledgement of the instruction C. Explain that he cannot comply because this violates federal law D. Avoid discussion of the request
explain that he cannot comply because this violated federal law (fair housing laws) The broker cannot take a listing under these circumstances. If the broker takes the listing and obeys the instructions (fiduciary duty), he would be in violation of Federal Fair Housing Laws.
A salesperson who engages in steering might be subject to all of the following results, EXCEPT: A. Suit in federal court by the Attorney General B. Immunity from suit due to broker's primary liability C. Investigation by HUD D. Private suit for money damages
immunity from suit due to broker's primary liability x (fair housing laws) A salesperson is not shielded from fair housing liability simply because he acts on behalf of his principal (the broker). The salesperson would still be liable if he carried out an illegal act, regardless of who he did it for.
A listing broker obtained a ready, willing, and able minority buyer to purchase at the listed price. However, the sellers refused the offer because of the buyer's race. The broker may legally take all of the following actions, EXCEPT: A. Sue the seller for his commission B. Advise the prospect of his right to complain to the HUD C. Warn the sellers that their refusal is a violation of the Fair Housing Laws D. Market the house only to non-minority customers
market the house only to non-minority customers x the broker should advise his clients that such conduct. violates the fair housing act. the broker is within his rights to sue for the commission. however, if the broker marketed the house according to the seller's wishes, he himself would be in violation of the fair housing act.
The Federal Fair Housing Act of 1968 did which of the following actions? A. Prohibits discrimination on the basis of race, color, religion, sex, or national origin B. Prohibits discrimination on the basis of race only C. Prohibits discrimination on the basis of race, color, religion, sex, national origin, familial status, or disability D. Prohibits discrimination on the basis of race, color, religion, sex, sexual orientation, or national origin
prohibits discrimination on the basis of race, color, religion, sex, or national origin (fair housing laws) The Federal Fair Housing Act of 1968 bans discrimination based on race, color, religion, sex or national origin. The Fair Housing Amendments Act of 1988 added the protection of disability and familial status. The Federal Fair Housing Laws do not protect against sexual orientation.
The Federal Civil Rights Act of 1866 prohibits discrimination on the basis of: A. Sex B. Race C. Religion D. Marital status
race x (fair housing laws) The Civil Rights Act of 1866 prohibited discrimination, but this was based upon race. The other restrictions followed in subsequent laws except for marital status, which is not protected by Federal Fair Housing Law.
Nice and Easy Loan Company has a policy of either restricting the availability or requiring lower LTV ratios for loans made in "high risk" areas of the community. This practice is known as: A. Steering B. Blockbusting C. Redlining
red lining (fair housing laws) The practice described is known as redlining. As long as the lending policy is uniformly applied to all loan applicants, it does not constitute a Fair Housing violation.
If a lending institution refuses to consider a property loan because of the religious make-up of that area, the lender is: A. In violation of Truth-in-Lending Regulations B. Redlining C. Violating RESPA regulations D. Practicing good fiscal management Feedback
red lining x (fair housing laws) This is an example of redlining, which violates Fair Housing Laws.
Which of the following practices would most likely deteriorate the economic status of a neighborhood? A. Redlining B. Steering C. Overdevelopment of property D. Bulk zoning
red lining x (fair housing law) The practice of redlining would most likely lead to an economic decline. Lenders refusing to make loans would greatly restrict the sale of the properties in the neighborhood; thus, tending to depress real estate value. The facts are insufficient to determine the effect of overdevelopment, as this may or may not deteriorate a neighborhood.
A couple has a good income and excellent credit. They want to buy and renovate a home in an economically distressed neighborhood, but have been turned down by 3 different lenders. This is most likely an example of: A. Good judgement on the part of the lenders B. Blockbusting C. Redlining D. Steering Feedback
redlining (fair housing laws) This action by the lenders is redlining. It appears that the banks will not loan money for property in THIS particular area of town.
A developer has been successful in the renovation and redevelopment of apartment projects. The developer has an excellent credit history, but has been denied a loan to renovate a project in a crime-ridden area of town. This is an example of: A. Redlining B. Blockbusting C. Steering D. Permissible business judgement
redlining x (fair housing laws) Based on the information given, this action by the lenders is redlining. It appears that the banks took the position that they will not loan money on property in THIS particular area of town. The decision was not based upon the borrower's creditworthiness.
Which of the following actions would constitute a violation of federal Fair Housing Laws? A. Advertising property to be rented only to single persons B. Refusing to show property to a financially unqualified buyer C. Refusing to sell to a person because of his or her national origin D. Providing special loan programs for minorities
refusing to sell to a person because of his or her national origin (fair housing laws) You can advertise for single persons only, but if a single person turns out to have a child, you cannot exclude them for that fact without violating Fair Housing Laws. Remember that familial status is protected under federal Fair Housing Laws, but marital status is not. In a similar fashion, being unable to pay for housing (financially unqualified) is not a protection under Fair Housing Law.
If a prospective minority buyer asks an agent to show her properties, the agent should: A. Show her properties in areas that are predominantly of the same minority group B. Refer her to an agent with the same race or ethnicity C. Advise her that the firm does not handle people of her minority group, and refer her to another brokerage D. Show her any property for which she is financially qualified
show her any property for which she is financially qualified (fair housing laws) All of these choices describe violations of Fair Housing Laws, except showing property that a person is financially qualified to purchase.
A broker has been approached by a minority, who requests to see properties in a specific section of a city. The broker refuses and indicates that the buyer would be better off in a part of the city where there is a greater concentration of that minority group. The broker's illegal conduct is known as: A. Blockbusting B. Redlining C. Panic selling D. Steering
steering x (fair housing laws) Directing buyers into or away from specific property based on their minority status is steering.
A Hispanic family asks to see homes in the $125,000 to $140,000 price range. The broker only showed them property in integrated areas of the community, though there were appropriately priced homes in all-white areas of town. The broker is guilty of: A. Steering B. Blockbusting C. Gentrification D. Nothing, because the family did not specifically request to see the homes in all-white areas
steering x (fair housing laws) This is a prime example of STEERING. The broker should show all properties that meet the needs and wants of the buyer client. However, if the broker offered to show property in a predominately Caucasian area and the buyers refused to look, that would be another story.
A broker is representing a buyer. When the broker is showing property, he must NOT disclose to his client: A. That the current owner as HIV B. Information the broker knows about the financial condition of the seller C. Deed restrictions that might affect the buyer's intended use of the property D. That the seller will not accept an offer based on VA financing
that the current owner has HIV x (fair housing laws) The broker is agent to the buyer and owes fiduciary duties to him. He must keep the buyer informed about all things he knows. BUT, if the broker discloses that the seller has HIV/AIDS, he would violate Fair Housing Laws and federal privacy laws.
It would NOT be considered commingling of funds, if: A. The broker holds an earnest money deposit check, at the request of the offeror, until acceptance by the offeree B. The broker holds an earnest money deposit check, at the request of the offeror, after acceptance by the offeree C. The broker holds an earnest money deposit in his personal account until the offer is accepted or rejected D. The broker holds an earnest money deposit in his brokerage account because the deal is going to be all cash
the broker holds an earnest money deposit check at the request of the offeror until acceptance by the offer (trust accounts) Holding a check at the request of the offeror (buyer) until acceptance by the offeree (seller) is a normal practice and is NOT commingling. Once the offer is accepted, the money must be immediately placed in the escrow account. The broker must NEVER put money that belongs to others in his personal or brokerage account.
If a person feels they were discriminated against in a real estate transaction, they would file a complaint with: A. The Federal Bureau of Investigation B. The Federal Trade Commission C. The Department of Housing and Urban Development D. The Department of Health, Education and Welfare Feedback
the department of housing and urban development x (fair housing laws) Fair housing complaints may be filed with HUD.
Which of the following groups was NOT protected by Title VIII of the 1968 Federal Fair Housing Law? A. National origin B. Handicapped C. Religion D. Race
handicapped x (fair housing laws) Protection of handicapped persons was not included until the Federal Fair Housing Law was amended in 1988.
A broker would be in violation of the Federal Fair Housing Act for all of the following actions, EXCEPT: A. Refusing to list a 4-unit apartment because it is owned and occupied by a minority couple B. Accepting a listing with the intention of changing the racial make-up of the neighborhood C. Hiring salespersons on the basis of sex, regardless of experience or qualifications D. Refusing to show a German couple property that is located in a mostly Italian neighborhood
hiring salespersons on the basis of sex, regardless of experience or qualifications (fair housing laws) Hiring people on the basis of sex is a gross violation of the law, but NOT the Fair Housing Law. Such a practice is a violation of the Equal Employment Opportunity Act.
A real estate broker wishes to deposit an earnest money check in his business operating account so the purchaser can earn a higher interest rate on her funds. Can he do this? A. Yes, if the purchaser receives a comparison of available interest rates B. Yes, if the broker promises to ensure such funds will be available at closing C. No, these funds must be placed in a separate escrow account D. No, the broker cannot guarantee a higher interest rate
no, these funds must be placed in a separate escrow agent (trust accounts) All funds held on behalf of others must be deposited in a separate escrow account, NOT in the business operating account.
The Federal Fair Housing Law is intended to protect the public from all of the following actions, EXCEPT: A. Blockbusting B. Price fixing C. Steering D. Redlining
price fixing x (fair housing laws; commission and fees) All of the listed choices are discriminatory practices which violate Federal Fair Housing, except price fixing. Price fixing is a violation of anti-trust laws, NOT the Fair Housing Act.
Federal Fair Housing Laws do NOT provide protection on the basis of: A. Gender B. Handicap C. Sexual preferance D. Single parenthood
sexual preference fair housing laws) Sexual orientation is not protected under Federal Fair Housing Laws. Note that it may be a protected class in some states, or in some counties or cities within states.
Adonis is trying to rent a bedroom in his house. A Latin American applies and is told by the owner (Adonis), "I will only rent to a Caucasian." Which law has Adonis violated, if any? A. 1968 Fair Housing Law B. Civil Rights Act of 1988 C. Civil Rights Act of 1964 D. None of the above
1968 fair housing law (fair housing laws) While owner/sellers are exempt from the 1968 Federal Fair Housing Law, they may not make, print, or publish a discriminatory statement which indicates any preference or limitation.
A private homeowner is selling his property, but refuses to enter into a contract because the offerors are a black couple. Has the homeowner violated the law and, if so, which law? A. Yes, Title VIII of the 1968 Federal Fair Housing Act B. Yes, the Civil Rights Act of 1964 C. Yes, the Civil Rights Act of 1866 D. No, the owner is exempt from the law because he is selling his own property in his own name
yes the civil rights act of 1866 x (fair housing laws) The 1968 Fair Housing Act grants an exemption to homeowners. However, no one is exempt from the 1866 Civil Rights Act, which prohibits racial discrimination. This is also supported by the 14th Amendment to the Constitution. Note than an action for this type of violation is filed in the Federal Courts, not with HUD.
How can you BEST demonstrate your compliance with Fair Housing Laws? A. Document transactions with any person who is protected by the Fair Housing Law B. Show minority buyers any property they ask to see C. Show minority buyers all properties they want to see D. Document all transactions with all clients or customers
document all transactions with all clients or customers (fair housing laws) Documentation of ALL transactions with ALL people is the BEST way to prove that you are complying with the law. If you only document the protected classes you deal with, you are not treating people the same. You are not required to show property to people that cannot afford to buy it, but make certain that you treat all persons alike.
A religious organization operates a hotel as a means to raise money and support themselves. Which of the following statements is true? A. They are exempt from the 1968 Fair Housing Laws B. They may limit room rentals to members of the organization C. They are exempt from the "religion" portion of the Fair Housing Act D. They must make rooms available to all persons
they must make rooms available to. all persons (fair housing laws) Religious groups CAN be exempt and exclude others, but not when they are operating a commercial establishment (like a hotel).
A blind person with a Seeing Eye dog wants to rent an apartment in a building that has a "no pets" rule. The landlord may: A. Refuse to rent on the basis of the "no pet" rule B. Require the dog to live outside the apartment C. Charge additional security deposit because of the dog D. Require that upon termination of the lease, the tenant must pay for any damage caused by the dog
Require that upon termination of the lease, the tenant must pay for any damage caused by the dog (fair housing laws) Refusing to reasonably accommodate this tenant's handicap would violate Fair Housing Laws. The requirement that the tenant be responsible for damages would apply to any tenant and is not a violation.
The Fair Housing Law protects several groups. Which of the following groups are not specifically protected? A. People of a particular religious group B. Pregnant women C. Illegal drug addicts D. AIDS victims
illegal drug addicts x (fair housing laws) Protected classes include: race, color, religion, sex, national origin, handicapped, and familial status. Handicap does not include illegal drug addiction.
Many Korean families have purchased homes in a specific neighborhood of your community. Now, local merchants are marketing to the Korean clientele. A Caucasian resident listed his house with your firm and you add the property to the MLS. You also place a bilingual ad in the newspaper and a bilingual "For Sale" sign on the property. Are your actions discriminatory? A. No, this is proper marketing practice B. No, because you are targeting the market most likely to purchase the property C. Yes, because national origin is protected by the 1968 Fair Housing Law D. Yes, because bilingual ads are a form of steering
no, this is proper marketing practice x (fair housing laws) The actions of the broker in this situation do not constitute a violation of the law. However, showing a preference or limiting the advertisements to one particular group would be a violation.
In an all elderly housing development, 90% of the units are occupied by persons over age 55. A single mother with 2 small children wants to rent one of the units. Which of the following statements is true according to the Fair Housing Law, as amended in 1988? A. The applicant can be denied a lease B. The applicant's right to rent is protected by familial status C. The landlord can deny rental because the applicant is a single mother, which is contrary to the composition of the community D. The landlord can refuse to lease on the
the applicant can be denied a lease (fair housing laws) Elderly housing is exempt from familial status protections if it falls into one of two categories: (i) all residents are 62 or older; or (ii) in at least 80% of units, one of the residents is 55 or older. In this situation, since 90% of the units are occupied by someone 55 or older, the landlord can exclude the renter without violating the Fair Housing Law. Therefore, answer A is the best choice.