© 2010 Rockwell Publishing Lesson 14: Civil Rights and Fair Housing Principles of California Real Estate

© 2010 Rockwell Publishing

Lesson 14:Civil Rights andFair Housing

Principles of California Real Estate


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


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



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.”


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



Fair Housing Act prohibits discrimination based on:

racecolorreligionsexnational origindisabilityfamilial status

Fair Housing ActProtected classes


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


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


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.


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


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


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.


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.




Federal Fair Housing Act also prohibits:blockbustingsteeringredlining


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.


Prohibited ActionsSteering

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


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.


Prohibited ActionsRedlining

Redlining: When lender refuses to make mortgage loans in particular neighborhood because of its racial or ethnic composition.


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.


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.


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


Fair Housing ActEnforcement

Discrimination complaints may be pursued:with HUD’s Office of Fair Housing and

Equal Opportunityvia lawsuit in state or federal court


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.


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.


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


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)


Federal Antidiscrimination LawsEqual Credit Opportunity Act

Prohibits lenders from discriminating against credit applicants on basis of:

racecolor religionnational originsexmarital statusage receipt of public assistance


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.


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.


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


State Antidiscrimination Laws

California’s antidiscrimination laws include:Unruh Civil Rights ActFair Employment and Housing ActHousing Financial Discrimination ActReal Estate Law and regulations


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.


Unruh ActBusiness establishments

All business establishments are subject to Unruh Act. This includes:

real estate brokerages (and licensees)apartment buildingscondominium and homeowner

associations


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.


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.


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


The act also prohibits anyone from advertising housing for sale or rent in discriminatory terms.

Fair Employment and Housing ActProhibitions


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.


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


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.


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.


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.


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


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

Documents

© 2010 Rockwell Publishing Lesson 14: Civil Rights and Fair Housing Principles of California Real Estate