lesson 14: civil rights and fair housing principles of california real estate

Lesson 14: Lesson 14:

Civil Rights and Civil Rights and

Fair Housing Fair Housing

Principles of California Real Estate

Introduction

Federal and state laws prohibit discrimination:based on race, religion, sex, and other

characteristicsand apply to most real estate transactions

Introduction

Laws vary in terms of:catagories of groups protected, andtypes of activities and transactions

that are covered

Federal Antidiscrimination LawsCivil Rights Act of 1866

Civil Rights Act of 1866:prohibits discrimination on the

basis of race or colorapplies to all types of real estate

transactions: residential or commercial improved or unimproved


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 1866Remedies

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)


Civil Rights Act of 1964 prohibits discrimination:based on race, color, religion, or national

originin programs and activities that receive

financial assistance from the federal government


However, exclusions for the FHA and VA loan programs limited the impact of this law on housing discrimination.

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


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 propertyvacant land to be used for residential

construction


In residential transactions, Fair Housing Act also prohibits discrimination in:advertisinglendingbrokerageother services

Federal Fair Housing ActScope of law

Fair Housing Act prohibits discrimination based on:

Federal Fair Housing ActScope of law

race color religion sex

national origin disability familial status

Fair Housing ActExemptions

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 ownerowner-occupied rentalreligious organizationsprivate clubs

Fair Housing ActExemptions: 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 homesno discriminatory advertising usedno real estate broker used in transaction

If owner isn’t the most recent occupant, she may use this exemption only once every 24 months

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 unitsno discriminatory advertising usedno real estate broker used in

transaction

Fair Housing ActExemptions: Owner-occupied rental

Religious organizations may limit occupancy to members when dealing with their own property.


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 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 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 ActProhibited 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.



Refusal to negotiate for the sale or rent 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.



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.



Federal Fair Housing Act also prohibits:steeringblockbustingredlining

Prohibited ActionsSteering

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

Prohibited ActionsBlockbusting

Blockbusting: When someone tries to induce homeowners to sell by predicting that:members of minority groups will be

moving into the neighborhoodproperty values and quality of life will

suffer as a result

Also known as panic selling.

Prohibited ActionsRedlining

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.

DisabilityReasonable accommodations

Under the law, a landlord must:make reasonable exceptions to rules for

disabled tenants, andallow disabled tenants to make reasonable

modifications at their own expense.

DisabilityReasonable accommodations

Under the law a 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.

DisabilityWheelchair 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 ActFamilial status

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

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 or she has childrenhe or she is about to adopt or gain custody

of children

Familial StatusHousing for older persons

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

Familial StatusHousing 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, andadvertising.

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 ActHousing for older persons

Fair Housing ActEnforcement

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, orfile a lawsuit in court.

Fair Housing ActEnforcement

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.

EnforcementAdministrative 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.

EnforcementPenalties

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/ora civil penalty paid to the federal

government.

SummaryFederal 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 LawsEqual 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 LawsEqual 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 LawsHome Mortgage Disclosure Act

HMDA is designed to detect redlining.

Requires larger residential lenders to disclose:number and type of loans madeloan amountslocation of the properties

Other Federal LawsHome Mortgage Disclosure Act

HMDA is aimed at detecting redlining.

Requires larger residential lenders to disclose:number and type of loans madeloan amountslocation of the properties

Government will investigate lenders who have made no loans or few loans in certain neighborhoods.

Other Federal LawsAmericans 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

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.

Americans with Disabilities ActRequirements

SummaryOther 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 Actthe Fair Employment and Housing Actthe Housing Financial Discrimination Actthe Real Estate Law and regulations

State Antidiscrimination LawsUnruh Civil Rights Act

Unruh Act entitles everyone to full use of services provided by a business establishment, regardless of:

racecolorreligionancestrynational originsexdisability

medical conditionsexual orientationmarital statusage*familial status*

*Additional categories for housing transactions

State Antidiscrimination LawsUnruh 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 ActBusiness establishments

All business establishments are subject to the Unruh Act.

Unruh ActBusiness establishments

All business establishments are subject to the Unruh Act.

This includes:real estate brokerages and licenseesapartment buildingscondominium and homeowner

associationsreal estate 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 ActSenior citizen developments

Unruh ActPenalties

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 LawsFair Employment and Housing Act

Prohibits housing discrimination based on:

race color religion sex sexual orientation marital status

national origin ancestry familial status source of income disability

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.

Fair Employment and Housing ActProhibitions

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 ActProhibitions

Fair Employment and Housing ActExemptions

The act does not apply to accommodations operated by nonprofit religious, fraternal, or charitable organizations.

Fair Employment and Housing ActExemptions

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 ActEnforcement

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.

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/orpay a civil penalty to the state.

The superior court may award punitive damages instead of civil penalties.

Fair Employment and Housing ActEnforcement

State Antidiscrimination LawsHousing Financial Discrimination Act

Prohibits residential lenders from:discriminating on the basis of

neighborhood characteristicsconsidering neighborhood’s racial, ethnic,

religious, or national origin compositiondiscriminating based on borrower’s race,

color, religion, sex, marital status, national origin, or ancestry.

Also called the Holden Act.

State Antidiscrimination LawsReal Estate Law

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

State Antidiscrimination LawsReal 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.

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.

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

lesson 14: civil rights and fair housing principles of california real estate

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