Principles of California Real Estate Lesson 14: Civil Rights and Fair Housing

Introduction Federal and state laws prohibit discrimination: based on race, religion, sex, and other characteristics and apply to most real estate transactions

Introduction Laws vary in terms of: catagories of groups protected, and types of activities and transactions that are covered

Federal Antidiscrimination Laws Civil Rights Act of 1866 prohibits discrimination on the basis of race or color applies to all types of real estate transactions: residential or commercial improved or unimproved

Federal Antidiscrimination Laws Civil Rights Act of 1866 The act was passed right after the Civil War, but not widely used until after 1968 Supreme Court decision Jones v. Mayer : Court held that the act prohibits “all racial discrimination, private or public, in the sale and rental of property.”

Civil Rights Act of 1866 Remedies Remedies available to a plaintiff who wins a lawsuit under the 1866 act include: injunction (an order to stop a violation) actual damages (to compensate plaintiff) punitive damages (an additional amount as a penalty)

Federal Antidiscrimination Laws Civil Rights Act of 1964 Civil Rights Act of 1964 prohibits discrimination: based on race, color, religion, or national origin in programs and activities that receive financial assistance from the federal government

Federal Antidiscrimination Laws Civil Rights Act of 1964 However, exclusions for the FHA and VA loan programs limited the impact of this law on housing discrimination.

Federal Antidiscrimination Laws Civil Rights Act of 1968 Title VIII of the Civil Rights Act of 1968 is better known as the Federal Fair Housing Act.

Federal Antidiscrimination Laws Civil Rights Act of 1968 Title VIII of the Civil Rights Act of 1968 is better known as the Federal Fair Housing Act. Applies to sale or lease of: residential property vacant land to be used for residential construction

Federal Fair Housing Act Scope of law In residential transactions, Fair Housing Act also prohibits discrimination in: advertising lending brokerage other services

Federal Fair Housing Act Scope of law Fair Housing Act prohibits discrimination based on: race color religion sex national origin disability familial status

Fair Housing Act Exemptions While the Federal Fair Housing Act applies to the majority of real estate transactions, four types of transactions are exempt from the law’s provisions: for sale by owner owner-occupied rental religious organizations private clubs

Fair Housing Act Exemptions: For sale by owner Law doesn’t apply to a single-family home rented or sold by a private individual if: she owns no more than 3 such homes no discriminatory advertising used no real estate broker used in transaction If owner isn’t the most recent occupant, she may use this exemption only once every 24 months

Fair Housing Act Exemptions: Owner-occupied rental Law doesn’t apply to rental of a room or unit in a dwelling with up to four units if: owner resides in one of the units no discriminatory advertising used no real estate broker used in transaction

Fair Housing Act Exemptions Religious organizations may limit occupancy to members when dealing with their own property.

Fair Housing Act Exemptions Religious organizations may limit occupancy to members when dealing with their own property. Lodgings belonging to private clubs may give preference to their own members, if the lodgings are not open to the general public.

Fair Housing Act Exemptions Fair Housing Act always applies to any transaction involving a real estate agent. Law’s exemptions aren’t permitted when an agent is involved. An agent may never discriminate.

Fair Housing Act Exemptions Fair Housing Act always applies to any transaction involving a real estate agent. Law’s exemptions aren’t permitted when an agent is involved. An agent may never discriminate. Also, the act’s exemptions almost never apply to transactions in California. State laws don’t include these exemptions.

Fair Housing Act Prohibited Actions Refusal to rent or sell residential property after receiving a good faith offer.

Fair Housing Act Prohibited Actions Refusal to rent or sell residential property after receiving a good faith offer. Refusal to negotiate for the sale or rent of residential property.

Fair Housing Act Prohibited Actions Refusal to rent or sell residential property after receiving a good faith offer. Refusal to negotiate for the sale or rent of residential property. Any other action that would make residential property unavailable.

Fair Housing Act Prohibited Actions Discriminating in terms or conditions of sale or rental of residential property.

Fair Housing Act Prohibited Actions Discriminating in terms or conditions of sale or rental of residential property. Discriminatory advertising that indicates a preference or limitation.

Fair Housing Act Prohibited Actions Discriminating in terms or conditions of sale or rental of residential property. Discriminatory advertising that indicates a preference or limitation. Representing that property is not available for inspection, rent, or sale when it is in fact available.

Fair Housing Act Prohibited Actions Federal Fair Housing Act also prohibits: steering blockbusting redlining

Prohibited Actions Steering Steering: Channeling prospective buyers or tenants to or away from particular neighborhoods based on their race, ethnicity, or other protected characteristics.

Prohibited Actions Blockbusting Blockbusting: When someone tries to induce homeowners to sell by predicting that: members of minority groups will be moving into the neighborhood property values and quality of life will suffer as a result Also known as panic selling.

Prohibited Actions Redlining Redlining: When a lender refuses to make mortgage loans in a particular neighborhood because of its racial or ethnic composition. The prohibition against redlining is enforced through the Home Mortgage Disclosure Act.

Fair Housing Act 1988 amendments to Federal Fair Housing Act added disability and familial status as additional protected categories covered by the law. “Disability” refers to: physical and mental impairments that substantially limit one or more major life activities, including HIV/AIDS, mental illness and alcoholism.

Disability Reasonable accommodations Under the law, a landlord must: make reasonable exceptions to rules for disabled tenants, and allow disabled tenants to make reasonable modifications at their own expense.

Disability Reasonable accommodations Under the law a landlord must: make reasonable exceptions to rules for disabled tenants, and allow disabled tenants to make reasonable modifications at their own expense Landlord isn’t required to modify property for tenant, and tenant can be required to restore property to original condition when tenancy ends.

Disability Wheelchair accessibility Law’s wheelchair access rules apply to new construction of residential buildings (built since 1988) with four or more units. Entryways, hallways, kitchens, and bathrooms must be designed to accommodate wheelchairs. If building has an elevator, units above ground floor must accommodate wheelchairs.

Fair Housing Act Familial status Familial status refers to adults who have, or will have, children under 18 living with them.

Fair Housing Act Familial status Familial status refers to adults who have, or will have, children under 18 living with them. It’s generally illegal to refuse to rent or sell to someone because: she is pregnant he or she has children he or she is about to adopt or gain custody of children

Familial Status Housing for older persons “Housing for older persons” is exempt from the prohibition against discrimination against families with children.

Familial Status Housing for older persons “Housing for older persons” is exempt from the prohibition against discrimination against families with children. Determining whether a property is intended for older persons involves consideration of: design, facilities, and advertising.

Fair Housing Act Housing for older persons To qualify as housing for older persons, a property must have been: Developed under a government program to assist the elderly. Intended for and solely occupied by people age 62 and older. Intended for older persons and at least 80% of the units are occupied by at least one person 55 years or older.

Fair Housing Act Enforcement A person who feels she has been discriminated against in violation of the Federal Fair Housing Act may: file a complaint with HUD’s Office of Fair Housing and Equal Opportunity, or file a lawsuit in court.

Fair Housing Act Enforcement Complaint must be filed within one year of the discrimination and lawsuit must be filed within two years. If a case is found to involve a “pattern or practice” U.S. Attorney General may file federal suit. HUD may also refer complaints to the California Department of Fair Employment and Housing, since state laws are similar.

Enforcement Administrative hearing If HUD is unable to negotiate an agreement between the parties in a dispute, an administrative hearing will be held. In a hearing, HUD attorneys act on behalf of the complainant, and an administrative law judge will decide the case.

Enforcement Penalties If violation found, an administrative law judge or the courts might order: an injunction against discriminatory activity, affirmative steps to correct a violation, compensatory and/or punitive damages, and/or a civil penalty paid to the federal government.

Summary Federal Antidiscrimination Laws Civil Rights Act of 1866 Civil Rights Act of 1964 Federal Fair Housing Act Steering Blockbusting Redlining Disability Familial status

Other Federal Laws Equal Credit Opportunity Act (ECOA) Home Mortgage Disclosure Act Americans with Disabilities Act

Other Federal Laws Equal Credit Opportunity Act ECOA applies to all consumer credit transactions, i.e. credit used for personal, family, or household purposes, including residential mortgage loans.

Other Federal Laws Equal Credit Opportunity Act The law prohibits lenders, brokers and others from discriminating against credit applicants on the basis of: race color religion national origin sex marital status age receipt of public assistance

Other Federal Laws Home Mortgage Disclosure Act HMDA is designed to detect redlining. Requires larger residential lenders to disclose: number and type of loans made loan amounts location of the properties

Other Federal Laws Home Mortgage Disclosure Act HMDA is aimed at detecting redlining. Requires larger residential lenders to disclose: number and type of loans made loan amounts location of the properties Government will investigate lenders who have made no loans or few loans in certain neighborhoods.

Other Federal Laws Americans with Disabilities Act ADA (1992) is intended to ensure that people with disabilities have equal access to all public accommodations. Disability: Any physical or mental impairment that substantially limits one or more major life activities. Public accommodation: A public or private entity with facilities open to the public. Examples: real estate offices, banks, stores

Americans with Disabilities Act Requirements If “readily achievable” a public accommodation must: remove architectural and communications barriers provide auxiliary aids and services New commercial construction must be accessible to the disabled, unless structurally impractical.

Summary Other Federal Laws Equal Credit Opportunity Act Home Mortgage Disclosure Act Americans with Disabilities Act Disability Public accommodation

State Antidiscrimination Laws California’s antidiscrimination laws include: the Unruh Civil Rights Act the Fair Employment and Housing Act the Housing Financial Discrimination Act the Real Estate Law and regulations

State Antidiscrimination Laws Unruh Civil Rights Act Unruh Act entitles everyone to full use of services provided by a business establishment, regardless of: race color religion ancestry national origin sex disability medical condition sexual orientation marital status age* familial status* *Additional categories for housing transactions

State Antidiscrimination Laws Unruh Civil Rights Act In addition to all the previous protected categories, housing-related transactions also include protections against discrimination on the basis of age or familial status (except for qualified senior citizen housing).

Unruh Act Business establishments All business establishments are subject to the Unruh Act.

Unruh Act Business establishments All business establishments are subject to the Unruh Act. This includes: real estate brokerages and licensees apartment buildings condominium and homeowner associations real estate developments

Unruh Act Senior citizen developments Although the Unruh Act generally prohibits “No children” rules, there are exceptions for qualified senior citizen developments. Exception: may require at least one member of each household to be 55 or older, with some exceptions, and may exclude anyone younger than 45.

Unruh Act Penalties Violators of the Unruh Act may have to pay: the injured party’s actual damages and attorney’s fees, and up to three times the amount of actual damages or $4,000, whichever is more.

State Antidiscrimination Laws Fair Employment and Housing Act Prohibits housing discrimination based on: national origin ancestry familial status source of income disability race color religion sex sexual orientation marital status Also called the Rumford Act.

Fair Employment and Housing Act Prohibitions Prohibits discrimination in sale, leasing, or financing of any type of housing. Applies to real estate agents and property managers as well as sellers and landlords.

Fair Employment and Housing Act Prohibitions Prohibits discrimination in sale, leasing, or financing of any type of housing. Applies to real estate agents and property managers as well as sellers and landlords. Unlawful for seller or landlord to ask about the race, religion, or other protected characteristic of a buyer or tenant, but they may verify identity and financial capacity.

Fair Employment and Housing Act Exemptions The act does not apply to accommodations operated by nonprofit religious, fraternal, or charitable organizations.

Fair Employment and Housing Act Exemptions The act does not apply to accommodations operated by nonprofit religious, fraternal, or charitable organizations. It also does not apply to rental of part of a single-family, owner-occupied home to a boarder.

Fair Employment and Housing Act Enforcement Housing discrimination complaints may be submitted to the Department of Fair Employment and Housing. The Department will investigate the complaint and issue an accusation and hold a hearing, as necessary. The case may also be heard in superior court.

Fair Employment and Housing Act Enforcement If found guilty, the violator may have to: sell or lease the property or similar property to the injured party, pay actual damages to the injured party, and/or pay a civil penalty to the state. The superior court may award punitive damages instead of civil penalties.

State Antidiscrimination Laws Housing Financial Discrimination Act Prohibits residential lenders from: discriminating on the basis of neighborhood characteristics considering neighborhood’s racial, ethnic, religious, or national origin composition discriminating based on borrower’s race, color, religion, sex, marital status, national origin, or ancestry. Also called the Holden Act.

State Antidiscrimination Laws Real Estate Law California’s Real Estate Law and the Commissioner’s regulations also prohibit discrimination by real estate licensees.

State Antidiscrimination Laws Real Estate Law California’s Real Estate Law and the Commissioner’s regulations also prohibit discrimination by real estate licensees. Any violation of federal or state fair housing or civil rights laws is grounds for disciplinary action under the Real Estate Law. Real Estate Commissioner could revoke or suspend the violator’s license.

Discriminatory Restrictive Covenants Covenants prohibiting sale or lease of a property to non-whites or non-Christians were once common. 1948 U.S. Supreme Court decision Shelley v. Kraemer : Unconstitutional for state or federal courts to enforce racially restrictive covenants.

Discriminatory Restrictive Covenants This type of covenant may still appear in the chain of title of some older properties. Such a covenant does not invalidate the deed, although the covenant itself is unenforceable. The conveyance can proceed, but the restriction has no effect.

Summary State Laws and Restrictive Covenants Unruh Civil Rights Act Fair Employment and Housing Act Housing Financial Discrimination Act Real Estate License Law Discriminatory restrictive covenants