Fair Housing, ADA, Equal Credit, and Community Reinvestment Condominiums, Cooperatives, PUD’s, and Timeshares

Nightly Trivia Q) What land did the U.S. Government buy for $7.2 million? A) In March, 1867 the U.S. bought all of Russian America (Alaska) from Russia.

Fair Housing, Etc. Legislation to expand ownership rights Equal credit regulations Protection of individual rights

Constitutional Law 5 th Amendment No person shall “…be deprived of life, liberty, or property without due process of law” 14 th Amendment No state can violate the 5 th Amendment 13 th Amendment Civil Rights Act of 1866 Congress is empowered to secure to all citizens the right to buy whatever a white man can buy and the right to live wherever a white man can live

Fair Housing Law Title VIII of the Civil Rights Act of 1968 Protected classes: Race, color, religion, sex, national origin, physical handicap, or familial status Handicapped – 1988 amendment Physical or mental impairment, recovering from such, or being perceived to have such

Allowances for Handicaps Helper animals in no-pet facilities Reasonable modifications are allowed New multifamily units of 4+ must allow for handicap access Rules do not apply to individuals whose residence would pose a threat to others

Familial Status Legal guardianship of one or more individuals under the age of 18 All resident associations must have facilities for children Penalties – max first fine of $50k, second $100k, plus civil damages and court costs Exemptions: Designed to assist the elderly Designed for residents 62+ Designed for at least 1 resident per unit 55+

1968 Protected Classes Refusing to sell or rent to, deal, or negotiate with any person Discriminating in the terms or conditions for buying or renting housing Discriminating by advertisement Falsely denying that housing is available

More Protected Class Info Denying or changing of lending terms Denying real estate services Steering – directing home seekers to particular neighborhoods based on protected class membership Block busting – panic selling in a neighborhood for financial gain

Protected Housing Types Single-family homes being sold by a broker, agent, or using unfair ads Single-family homes not owned by individuals Single-family homes owned by someone owning 3 or more or who sells more than one which they were not the primary resident in the past 2 years Multifamily units of 5 or more Multifamily units <5 if the owner does not reside on-site

What Isn’t in the 1968 Law? Sale or rental of single-family houses owned by a single individual owning 3 or fewer if: No broker No discriminatory advertising No more than one house in which the owner was not the most recent resident is sold during any two-year period Exemption is voided by 1866 act if discrimination based on race occurs

Enforcement File a complaint with HUD File a court action with the US District, state, or local court File a complaint with the US attorney general Burden of proof is on the complainant Remedies: Injunction to force availability Money for actual damages Punitive damages Court costs

Other Parties to Transactions An agent has a duty to uphold the 1968 and 1866 Acts Testers sometimes visit anonymously to check for compliance A court can convict if a discriminatory practice has occurred or IS ABOUT TO occur

Americans With Disabilities Act July 26, 1992 Primarily associated with commercial property Provides reasonable access and prohibits discrimination against people with disabilities

What Does ADA Cover? Places of public accommodation Commercial facilities Must be accessible to the maximum extent feasible whenever alterations are being performed Any change that affects the usability of a facility Added accessibility cannot be disproportionate – exceeding 20% of the original alteration

Equal Credit Opportunity Act Provides equal credit for borrowers by making it illegal to discriminate in lending practices Prohibited information: Spouse if not contractually obligated Marital status unless community property Alimony, child support, etc. unless intended for repayment Birth control practices or intention of having children Race, color, religion, national origin

Optional Disclosure Some information can be gathered to provide tracking data to the government Race or national origin Sex, relating to gender (not sexual preference) Marital status (married, unmarried, or separated)

Credit Evaluation All credit applicants must be evaluated on the same basic information as any other individual person Factors: Age – doesn’t apply to minors Children Part-time income – cannot be discriminated against for the source, but stability can be questioned

More Credit Factors Alimony and child support – can be considered if such payments are not likely to be made consistently Credit history – prohibited from considering the past record of a spouse or former spouse Immigration residency – can consider immigration status and residency

Reasons for Credit Denial Unable to verify credit references Temporary or irregular employment Insufficient length of employment Insufficient income Excessive obligations Inadequate collateral Too short a period of residency Delinquent credit obligation

Credit Violation Penalties Civil liability for damages limited to $10,000 in individual actions and the lesser or $500,000 or 1% of the creditor’s net worth in class actions

Community Reinvestment Act Financial institutions wishing federal recognition should: Provide a map showing the areas served by the lender Provide a list of types of credit offered Post notice in the lobby that performance is being evaluated by federal regulators

Mandatory CRA Statement Info A map of the lender’s definition of its community A list of credit services it offers Copy of the public notice A file of public comments received in the past two years that relate to the CRA statement

Optional CRA Statement Info How current efforts help meet community needs and standards Periodic report of the institution’s record in helping to meet community credit needs Description of efforts made to ascertain credit needs of the community

Condominiums, Cooperatives, PUD’s, and Timeshares Methods of dividing land Management concerns Advantages and disadvantages

History The Roman senate passed condominium laws that permitted Roman citizens to own individual dwelling units in multi-unit buildings

Why? Land scarcity Escalation in construction costs Disenchantment with the work of maintaining grounds The desire to own rather than rent One acre of condos can support homes, versus 4-5 individual structures

Condominium Laws are required to create a legal framework for condo ownership Laws subdivide airspace over a given parcel of land Commercial property is also using the condo model

Parts of a Condo Separate property – areas owned and used exclusively by the individual owners Common element – the land and shell of the building, owned by all Limited common element – common element with limited use, I.e. parking stalls

Paperwork Condominium subdivision: pages Converts a parcel of land on a single deed into individual separate property estates (condos) and an estate composed of all the common elements Owners’ association Legal framework so unit owners can govern themselves

More Paperwork Bylaws – provide rules by which the association’s board of directors is elected and their standards of operation Covenants, convictions, and restrictions (CC&R’s) – regulations for condo owners House rules – additional regulations

Condo Deeds Location of the unit Unit number Surveyed airspace Common elements % interest in common elements Recorded on closing just like the deed for a house

Condo Board of Directors Members elected by association members Annual meeting – opportunity for association members to vote on major community issues

Condo Management Often a management company takes care of day-to-day operations On-site managers are responsible for much more, including daily security checks

Expenses Maintenance fees/association dues – costs of maintaining common elements Property taxes – assessed by unit Insurance – splits between association and individual liability

Financing a Condo None of the bylaws, etc. in a complex limit financing options Loans are made much like single- family homes, 80% uninsured, 90-95% with PMI Deposits on unfinished units are best placed in an escrow account

Condo Conversions Remember rent control? Conversions are faster, simpler, and cheaper than new construction Converting used buildings can include serious maintenance issues

Condo Living Advantages Less expensive than traditional homes No yard work Community benefits (pool, etc.) Disadvantages LOTS of neighbors Lack of control Complexity of government (homeowners’ association, board of directors, etc.)

Before You Buy a Condo Look at the association’s budget – can they afford maintenance? Check for pending litigation What is the quality of construction? Owner or renter occupied?

Cooperatives Resident-owned development Financing is accomplished through a single mortgage in the name of the cooperative corporation Owners (shareholders) pay a % each month to the corp. to cover the mortgage

More About Cooperatives Default – if one resident fails to pay, the others must cover the difference Difficult for individual owners to sell – in some states they can now sell their units as shares of stock Cooperatives are becoming rare due to the prevalence of condos

Final Co-op details Like condos, co-op payments each month cover maintenance Must be carefully documented because co-op residents own stock, not property New co-ops can be financed entirely by a sale of stock If one shareholder defaults, it does not impact the entire corporation

Planned Unit Development (PUD) Individual homes Common area advantages (pool, gym, etc.) Some limitations on construction, modification, landscaping

Timeshares Dividing up and selling a living unit at a vacation facility for specified lengths of time each year Right-to-use – a buyer gains a week per year for years to use a property (30% of market) Fee simple – fee ownership in the property purchased – owned in perpituity (70% of market)

Costs and Benefits $6,000-$10,000 per week initial cost Maintenance fees of $140-$280 yearly Much more profitable for the developer Can be a good investment for the purchaser given appreciation of value