Fair Housing Laws and Regulations – An Overview

BROKER RISK MANAGEMENT

WEEKLY PRACTICE TIP

This is the Part 1 of 4 Weekly Practice Tips on Fair Housing Laws and Regulations

Part 2 covers Assistance Animals

Part 3 covers use of Criminal Records in Leasing

Part 4 covers Advertising

1. Fair Housing Basics

Despite the fact that federal and state Fair Housing Laws have been in existence since the 1960s, the aftermath of such discrimination remains evident in unfair real estate practices.  Discriminatory lending, appraisal, and housing practices are primary sources of harm regarding discrimination in the real estate industry.

For a summary of Federal and State laws prohibiting discrimination against identified protected classes see CAR’s form “Fair Housing and Discrimination Advisory” (FHDA) paragraph 2.

All Fair Housing Laws and regulations are clear that illegal discrimination exists when there is bias for or against anyone based upon that person’s belonging to, association with, or a perceived membership in a protected status.  It does not matter if that bias was unconscious or that there was no intent to discriminate; what matters is whether the person was harmed by discriminatory behavior.

1. Federal Law

Summary of Prohibited Acts under Federal Law:

• Refusal to a seller or renter, refusal to negotiate on the basis of protected classes.
• Discrimination in “Terms, Conditions or Privileges” of sale or rental of a dwelling or providing services.
• Engaging in conduct which otherwise makes housing unavailable to anyone in a protected class.
• Make, print, or publish advertisements that indicate actual or intended to discriminate.
• State that because of their protected class status that a dwelling is not available when, in fact, it is available.
• Coerce, intimidate, threaten, or interfere with any person exercising a fair housing right.
• Engage in blockbusting, redlining, or steering?

What is Steering?  Steering is the unlawful practice of real estate agents using words and actions to influence the choice of which neighborhood to live in by a prospective buyer or tenant.  The result is residential segregation.

Two broad categories of steering:

• Advising buyers/tenants to choose homes in particular neighborhoods on the basis of the person’s protected status; and,
• Failing, on the basis of the person’s protected status, to inform buyers/tenants of residences that meet their specifications in other areas.

III.  Code of Ethics:  The NAR Code of Ethics Article 10, prohibits REALTORS® from denying equal professional service, nor discriminate against any person, “based on race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity.”

Further, Standard of Practice 10-5 prohibits REALTORS® from using “harassing speech, hate speech, epithets or slurs” based on the above categories or characteristics.

IV California Law and Regulations

The California Department of Fair Employment & Housing (“DFEH”) has issued regulations that are generally broader than federal law.  The California Fair Housing regulations are located in the California Code of Regulations which can be accessed at www.dfeh.ca.gov

In an effort to clarify existing laws, such as the Unruh Civil Rights Act (which applies to most housing accommodations in California), the DFEH has adopted the following expanded list of twenty-two “Housing Protected Bases.” This list is broader than in Federal Law.

Under the DFEH regulations, it is illegal to take any “adverse action” against anyone who is in any of the above-protected classes as well as people associated with members of those classes or perceived to be a member of those classes when providing any type of “housing accommodations.”

• “Adverse actions” means any action that harms or has a negative effect on an aggrieved person (e.g., refusing to sell, rent, evicting a tenant, rent increases). This definition includes conduct unrelated to housing such as contacting a tenant’s employer to file false allegations or even negative social media posts. Adverse actions can be a single act or a failure to act.
• “Housing accommodations” include, but are not limited to, shelters, structures, or portions thereof that are occupied by people, floating homes, mobile homes, and RVs.

Fair Housing and Discrimination Advisory – Form FHDA:

To assist REALTORS® and their clients in understanding these laws, CAR has published the Fair Housing and Discrimination Advisory (form FHDA”) which comes bundled with all CAR purchase agreements, listing agreements, and rental agreement forms on zipForms.

These forms should be delivered by agents to their clients in all real estate transactions along with the related purchase, listing, or rental forms.  Since the FHDA is an Advisory that does not contain any property-specific information, it is not necessary that both sides of the transaction sign the same form, nor is it necessary to collect a signed copy from the other party in a transaction.

1. CAR’s Recommended Practices for Fair Housing Compliance

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Review Examples of Unlawful or Improper Housing Conduct section of the FHDA (Paragraph 9).  Many of the listed examples detail the long-standing prohibited acts under federal law, such as blockbusting, redlining, steering, or having inconsistent requirements for tenant applicants based upon their protected class.

Review Paragraph 8, which identifies examples of conduct that may not be motivated by discriminatory intent but could, nonetheless, have a discriminatory effect.

Avoid Statements or Advertisements that indicate any Preference, Limitation, or Discrimination:  Specifying that a property is “perfect for” singles or families, or that a neighborhood is exclusive or private has been recognized by the National Association of REALTORS® as showing a preference for specific types of Buyers.

For more details, see Weekly Practice Tip “Fair Housing Laws and Regulations Part 5 – Advertising”

Avoid Support or “Love” Letters, especially with Photographs:  Providing a letter to sellers from potential buyers, especially one with a photograph, is designed to influence the Seller’s decision as to who will be chosen to buy the property. The mere fact that the seller is being influenced to choose the buyer based upon subjective factors such as who they are rather than the objective nature of the offer has the potential to create a discriminatory effect. Sellers who make a choice regarding which buyer they will sell to that is based upon protected status information will face potential liability for a Fair Housing claim from those buyers whose offers were rejected. (See, e.g., Paragraph 10 C of the Residential Listing Agreement where Sellers can choose to, or not to receive such letters and/or photographs.)

Avoid Inquiring about Protected Characteristics of Tenants or Buyers:  It may seem friendly and caring to ask if people are married or where they are from, but these inquiries may be offensive to prospective tenants or buyers and could create unconscious bias depending upon the answers.

PRACTICE TIPS

1. Become familiar with federal, state, and local fair housing laws so as to avoid claims of discrimination against you and your broker. Violating fair housing laws is not only wrong, but fair housing claims are also expensive to defend, there may not be E&O coverage, and there could be DRE violations as well.
2. Advise your clients that real estate licensees must abide by the federal and state Fair Housing laws and that you are committed to the principles of Fair Housing.
3. Do not personally discriminate against or show bias towards anyone who is in any of the Housing Protected Bases or who is associated with a protected basis or is perceived to be a member of a protected basis.
4. If, after receiving the Fair Housing & Discrimination Advisory, your clients have any additional questions or concerns, your clients should be referred to a “qualified California fair housing attorney, or, if applicable, a local landlord-tenant attorney” as specified in Paragraph 11F of the FHDA form.
5. Do not work with or facilitate a property owner’s attempt to discriminate against, or show bias towards, anyone in the Protected Bases or who is associated with a protected basis or is perceived to be a member of a protected basis.
6. If your seller or landlord clients ask any questions about the Fair Housing laws, including whether or not it would be illegal or safe to take any particular action with respect to a Tenant, potential Tenant, or Buyer, you should advise the Landlord in writing consult with a qualified local landlord-tenant attorney familiar with local, state and federal fair housing laws.
7. When representing Sellers or Landlords who let you know, or you have reason to suspect, that they will violate the Fair Housing Laws, Agents should immediately notify their Broker or Branch Manager and consider walking away from that client. Brokers face liability under the Fair Housing Laws if they silently allow their clients to discriminate.

DO NOT FORWARD TO SELLERS OR BUYERS.  This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents.  It may not be reproduced or distributed without the express written consent of Broker Risk Management.  The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.