© 2010 Rockwell Publishing
Lesson 14:Civil Rights andFair Housing
Principles of California Real Estate
© 2010 Rockwell Publishing
Introduction
Federal and state laws prohibit discrimination:based on race, religion, sex, and other
characteristicsapplies to most real estate transactions
Laws vary in:groups protectedactivities and transactions covered
© 2010 Rockwell Publishing
Federal Antidiscrimination LawsCivil Rights Act of 1866
Civil Rights Act of 1866:prohibits discrimination on
basis of race or colorapplies to all types of real estate
transactions:residential or commercialimproved or unimproved
© 2010 Rockwell Publishing
Federal Antidiscrimination LawsCivil Rights Act of 1866
Act was passed right after Civil War, but widely ignored until 1968 Supreme Court decision Jones v. Mayer:
Court held that act prohibits “all racial discrimination, private or public, in sale and rental of property.”
© 2010 Rockwell Publishing
Title VIII of Civil Rights Act of 1968 is known as federal Fair Housing Act.
Does not apply to nonresidential transactions (such as sale of commercial or industrial properties).
Applies to sale or lease of:residential propertyvacant land to be used for residential
construction
Federal Antidiscrimination LawsCivil Rights Act of 1968
© 2010 Rockwell Publishing
Fair Housing Act prohibits discrimination based on:
racecolorreligionsexnational origindisabilityfamilial status
Fair Housing ActProtected classes
© 2010 Rockwell Publishing
In residential transactions, Fair Housing Act prohibits discrimination in the following activities:
advertising (including real estate ads)lendingbrokerage (broker asked to violate act
should decline the listing)other services
Fair Housing ActScope of law
© 2010 Rockwell Publishing
Fair Housing Act always applies to any transaction involving real estate agent.
Exemptions aren’t permitted when agent is involved.
Agent may never discriminate.
CA fair housing laws are stricter and offer even fewer exemptions.
Fair Housing ActReal estate licensees
© 2010 Rockwell Publishing
Fair Housing ActExemptions: For sale by owner
Law doesn’t apply to single-family home rented or sold by its owner if:
owner owns no more than 3 such homes no real estate broker is employed no discriminatory advertising used
If owner isn’t most recent occupant, she may use this exemption only once every 24 months.
© 2010 Rockwell Publishing
Law doesn’t apply to rental of room or unit in dwelling with up to four units if:
owner resides in one of the units no real estate broker employed no discriminatory advertising used
Fair Housing ActExemptions: Residential rental
© 2010 Rockwell Publishing
Religious organizations may limit occupancy to members when dealing with their own property, so long as membership isn’t restricted based on race, color, or national origin.
Lodgings belonging to private clubs may give preference to their own members, if the lodgings are not open to the general public.
Fair Housing ActExemptions
© 2010 Rockwell Publishing
Fair Housing ActProhibited actions
Refusal to rent or sell residential property after receiving good faith offer.
Refusal to negotiate for sale or rental of residential property.
Any other action that would make residential property unavailable.
© 2010 Rockwell Publishing
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.
Using discriminatory loan criteria.
Fair Housing ActProhibited actions
© 2010 Rockwell Publishing
Fair Housing ActProhibited actions
Federal Fair Housing Act also prohibits:blockbustingsteeringredlining
© 2010 Rockwell Publishing
Prohibited ActionsBlockbusting
Blockbusting: When someone tries to induce homeowners to sell by predicting that:
members of minority groups will be moving into neighborhood
property values and quality of life will suffer as a result
Also known as panic selling.
© 2010 Rockwell Publishing
Prohibited ActionsSteering
Steering: Channeling prospective buyers or tenants to or away from particular neighborhoods based on their race, ethnicity, or other protected characteristic.
© 2010 Rockwell Publishing
Prohibited ActionsSteering
No affirmative duty to show non-minority buyers houses in minority neighborhoods if they don’t request it.
If non-minority buyers ask to be shown houses in minority neighborhoods, agent must comply.
© 2010 Rockwell Publishing
Prohibited ActionsRedlining
Redlining: When lender refuses to make mortgage loans in particular neighborhood because of its racial or ethnic composition.
© 2010 Rockwell Publishing
Fair Housing ActDisability
1988 amendments to Fair Housing Act added disability and familial status as protected categories.
Disability: Physical and mental impairments that substantially limit one or more major life activities, including HIV/AIDS, mental illness, and alcoholism.
© 2010 Rockwell Publishing
DisabilityReasonable accommodations
Under law, landlord must:make reasonable exceptions to rules for
disabled tenants, andallow 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.
© 2010 Rockwell Publishing
Fair Housing ActFamilial 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 pregnanthe/she has childrenhe/she is about to adopt or gain custody
of children
© 2010 Rockwell Publishing
Fair Housing ActEnforcement
Discrimination complaints may be pursued:with HUD’s Office of Fair Housing and
Equal Opportunityvia lawsuit in state or federal court
© 2010 Rockwell Publishing
Fair Housing ActEnforcement
HUD complaint must be filed within 1 year of discrimination and lawsuit must be filed within 2 years.
If a case is found to involve “pattern or practice,” U.S. Attorney General may file federal lawsuit.
HUD may also refer complaints to state for enforcement, as laws are similar.
© 2010 Rockwell Publishing
EnforcementAdministrative hearing
If no conciliation agreement is reached between parties, and neither party decides to have case heard in court, an administrative hearing will be held.
In hearing, HUD attorneys act on behalf of complainant, and administrative law judge will decide the case.
© 2010 Rockwell Publishing
EnforcementPenalties
If discrimination is found, administrative law judge or court might order:
injunction against discriminatory activityaffirmative steps to correct violationcompensatory and/or punitive damages,
including attorney’s feescivil penalty paid to federal government
© 2010 Rockwell Publishing
Federal Antidiscrimination LawsEqual Credit Opportunity Act
ECOA applies to all consumer credit: credit used for personal, family, or household purposes (e.g. residential mortgage loans)
© 2010 Rockwell Publishing
Federal Antidiscrimination LawsEqual Credit Opportunity Act
Prohibits lenders from discriminating against credit applicants on basis of:
racecolor religionnational originsexmarital statusage receipt of public assistance
© 2010 Rockwell Publishing
Federal Antidiscrimination LawsAmericans with Disabilities Act
ADA makes it illegal to discriminate against persons with disabilities in places of public accommodation.
Public accommodations include real estate offices, stores, law offices, etc.
© 2010 Rockwell Publishing
Federal Antidiscrimination LawsAmericans with Disabilities Act
The ADA seeks to protect rights of disabled to access places of public accommodation by requiring removal of architectural and communication barriers.
Accessibility features must be added if “readily achievable.” Example: adding wheelchair ramp.
© 2010 Rockwell Publishing
SummaryFederal Antidiscrimination Laws
• Civil Rights Act of 1866• Civil Rights Act of 1968• Fair Housing Act• Steering• Blockbusting• Redlining• Familial status• Equal Credit Opportunity Act• ADA
© 2010 Rockwell Publishing
State Antidiscrimination Laws
California’s antidiscrimination laws include:Unruh Civil Rights ActFair Employment and Housing ActHousing Financial Discrimination ActReal Estate Law and regulations
© 2010 Rockwell Publishing
State Antidiscrimination LawsUnruh Civil Rights Act
Law guarantees full use of services provided by business establishment, regardless of:
race disability
color medical condition
religion sexual orientation
ancestry marital status
national origin familial status*
sex age*
* Additional categories for housing transactions.
© 2010 Rockwell Publishing
Unruh ActBusiness establishments
All business establishments are subject to Unruh Act. This includes:
real estate brokerages (and licensees)apartment buildingscondominium and homeowner
associations
© 2010 Rockwell Publishing
Unruh ActPenalties
Violators of Unruh Act may have to pay:injured party’s actual damages and
attorney’s fees, andup to three times the amount of actual
damages or $4,000, whichever is more.
© 2010 Rockwell Publishing
State Antidiscrimination LawsFair Employment and Housing Act
Fair Employment and Housing Act prohibits housing discrimination based on:
race national origin color ancestryreligion familial statussex source of incomesexual orientation disabilitymarital status
Also called the Rumford Act.
© 2010 Rockwell Publishing
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 race, religion, or other protected characteristic of buyer or tenant, but may verify identity and financial capacity.
Fair Employment and Housing ActProhibitions
© 2010 Rockwell Publishing
The act also prohibits anyone from advertising housing for sale or rent in discriminatory terms.
Fair Employment and Housing ActProhibitions
© 2010 Rockwell Publishing
Fair Employment and Housing ActEnforcement
Discrimination complaints can be submitted to state’s Department of Fair Employment and Housing.
If warranted, Department will issue an accusation and hold a hearing.
Case may also be heard in superior court.
© 2010 Rockwell Publishing
If discrimination found, violator may have to:sell or lease property or similar property
to injured partypay actual damagespay civil penalty to state
Court may also award punitive damages.
Fair Employment and Housing ActEnforcement
© 2010 Rockwell Publishing
State Antidiscrimination LawsHousing Financial Discrimination Act
Prohibits residential lenders from discriminating based on:
neighborhood characteristics (racial, ethnic, religious, or national origin composition)
borrower’s race, color, religion, sex, marital status, national origin, or ancestry
This kind of discrimination is called redlining.
© 2010 Rockwell Publishing
State Antidiscrimination LawsReal Estate Law
California’s Real Estate Law and 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 Real Estate Law.
Real Estate Commissioner could revoke or suspend violator’s license.
© 2010 Rockwell Publishing
Discriminatory Restrictive Covenants
Covenants prohibiting sale or lease of 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.
© 2010 Rockwell Publishing
This type of covenant may still appear in chain of title of some older properties.
Such a covenant does not invalidate deed, although covenant itself is unenforceable.
Conveyance can proceed, but restriction has no effect.
Discriminatory Restrictive Covenants
© 2010 Rockwell Publishing
SummaryState Laws and Restrictive Covenants
• Unruh Civil Rights Act
• Fair Employment and Housing Act
• Housing Financial Discrimination Act
• Real Estate License Law
• Discriminatory restrictive covenants