BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Broker Risk Management (“BRM”) received a number of questions at and following its webinar regarding fair housing. The following are many of those questions and answers.
Question No. 1: I am a listing agent for leasing a property. Can I or the property owner decline Section 8 applicants?
Answer: No. Section 8 tenants are a protected class in the State of California. This also applies to tenant applicants using any type of federal, state, or local housing subsidy to assist with paying rent. Lack of familiarity with the terms, requirements or forms for that program is not an excuse for non-compliance. For more information on Section 8 requirements see CAR Legal Q&A at: https://www.car.org/riskmanagement/qa/fair-housing-folder/Mandatory-Section-8-and-Source-of-Income-Discrimination
Question No. 2: Can I advertise “Section 8 welcome”?
Answer: No. You may not call out a particular protected class in your advertising.
Question No. 3: Am I allowed to ask for a certain credit score when advertising a property for lease?
Answer: That is not recommended, as it could be alleged to be discriminatory toward Section 8 tenants, whose applications need to be evaluated based on their current ability to pay.
Housing providers have the right to screen all applicants according to their lawful tenant screening criteria. However, as of January 1, 2024, housing providers must give Section 8 and other applicants with housing subsidies the opportunity to present verifiable and lawful evidence that they can cover their portion of the rent. If the housing provider receives such evidence, they should consider this information instead of the applicant’s credit history. Such proof could include, but is not limited to, documentation of the receipt of public benefits, bank statements, or pay stubs. For more information, see CAR Legal Q&A at: https://www.car.org/riskmanagement/qa/fair-housing-folder/Mandatory-Section-8-and-Source-of-Income-Discrimination
Question No. 4: In my advertising, can I use the words prestigious, exclusive, exceptional, or prime location? For example, can I market at “exceptional amenities”?
Answer: It is recommended that you refrain from using the terms referenced. The terms “prestigious” or “exclusive” may indicate that certain protected classes may not be welcome. By using the terms prestigious, exceptional, or prime location, you are making representations about the property. A buyer may purchase a property and then disagree with your characterization. For example, if you advertise a prime location, what if the buyer discovers a nuisance in the neighborhood (i.e., school traffic or noise, loud neighbors, etc.)? The buyer could sue for misrepresentation as, arguably, the property may not be a prime location.
Question No. 5: Can I advertise a duplex or home with an accessory dwelling unit (“ADU”) or “junior suite downstairs” as “suitable for extended family”?
Answer: No. By referencing extended families, you are arguably referencing family, which is a protected class.
Question No. 6: In marketing a property, can I state that a neighborhood is safe?
Answer: That is not recommended. It is too hard to verify whether a neighborhood is safe and a buyer in the future may disagree. Moreover, if a crime has been committed in the neighborhood of which you are unaware, you could inadvertently be making a misrepresentation.
Question No. 7: Does the law have a limitation on the number of cats residing in a property?
Answer: Not specifically. The law prohibits properties from being inhabitable, unsafe or causing a nuisance. If the number of cats reaches a level where the property becomes unsafe or uninhabitable, it could become illegal.
Question No. 8: If a homeowner knows a neighbor is on Megan’s List (is a sex offender), is the homeowner required to disclose that fact to buyers or is a reference to Megan’s Law website sufficient?
Answer: Sellers are required to disclose all material facts affecting the value or desirability of the property.
Question No. 9: If I am listing a home and a neighbor tells me during an open house that another neighbor is a sex offender, do I need to disclose that fact?
Answer: Yes. It should be disclosed as follows: “Neighbor reports that a sex offender lives in the neighborhood. Agent has not verified that fact. Buyer to investigate the issue.”
Question No. 10: If you are offering a home for sale and your seller is a registered sex offender, is that required to be disclosed?
Answer: Arguably, yes. If a registered sex offender resides at the property, an argument could be made that the property is stigmatized. Further, it is possible that when a new buyer moves into a home previously occupied by a registered sex offender, other people not knowing that there is a new occupant could react. For example, protests or retaliation such as signs, egging, or other destruction of the property.
Question No. 11: At an open house, can we prohibit service or support animals?
Answer: No. You may not discriminate against an invitee with a service or support animal.
Question 12: If a tenant has a service or emotional support animal, can we request documentation of the disability or verification of the animal?
Answer: If the prospective tenant does not have an obvious disability, the property owner may ask for verification of that disability. Likewise, the property owner may ask for verification that the support animal is required in this instance. It is BRM’s recommendation that a property owner work with their attorney to address this issue and that the leasing agent refrain from making these requests. Recently, we have seen a dramatic increase in tenant claims against leasing agents (agents leasing of the property and not property management) because of an agent’s interaction with a tenant.
Question No. 13: How should a buyer’s agent respond if the buyers asked to be shown property in a neighborhood that is predominantly their ethnicity?
Answer: Show the property wherever the buyers request, but do not make specific references to their ethnicity or the ethnicity of the neighborhood. Also, ensure the request by the buyers is in writing and placed in the transaction file as you do not want an accusation based on steering.
Question No. 14: Can a male advertise for a male-only renter to share a house?
Answer: Yes. There are exceptions to fair housing laws when parties are advertising to share a home or rent a room.
Question No. 15: Must property managers be licensed?
Answer: Yes. Anyone who expects to receive compensation for managing rental property is required to have a Broker license or be associated with a licensed Broker.
Question No. 16: If a property owner requests that we prepare a three-day notice to pay or quit or serve such notice, can we do so?
Answer: It is strongly recommended that you refrain from preparing or delivering any notices to any tenants. The delivery of notices creates significant potential liability on the part of the agent. Property owners should do so in consultation with their own property owner/tenant attorney.
Question No. 17: Do I receive Department of Real Estate continuing education for attending this webinar?
Answer: The Department of Real Estate requires every real estate licensee to receive fair housing training on an annual basis. BRM’s webinar regarding fair housing does not specifically carry continuing education credit toward renewal of agents’ licenses. However, it does satisfy the DRE requirements that agents receive fair housing training on an annual basis.