Principles of California Real Estate Lesson 14 Civil

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

Introduction Federal and state laws prohibit discrimination: l based on race, religion, sex, and other characteristics l applies to most real estate transactions Laws vary in: l groups protected l activities and transactions covered © 2010 Rockwell Publishing

Federal Antidiscrimination Laws Civil Rights Act of 1866: l prohibits discrimination on basis of race or color l applies to all types of real estate transactions: l residential or commercial l improved or unimproved © 2010 Rockwell Publishing

Federal Antidiscrimination Laws Civil Rights Act of 1866 Act was passed right after Civil War, but widely ignored until 1968 Supreme Court decision Jones v. Mayer: l Court held that act prohibits “all racial discrimination, private or public, in sale and rental of property. ” © 2010 Rockwell Publishing

Federal Antidiscrimination Laws Civil Rights Act of 1968 Title VIII of Civil Rights Act of 1968 is known as federal Fair Housing Act. l Does not apply to nonresidential transactions (such as sale of commercial or industrial properties). l Applies to sale or lease of: l residential property l vacant land to be used for residential construction © 2010 Rockwell Publishing

Fair Housing Act Protected classes Fair Housing Act prohibits discrimination based on: l race l color l religion l sex l national origin l disability l familial status © 2010 Rockwell Publishing

Fair Housing Act Scope of law In residential transactions, Fair Housing Act prohibits discrimination in the following activities: l advertising (including real estate ads) l lending l brokerage (broker asked to violate act should decline the listing) l other services © 2010 Rockwell Publishing

Fair Housing Act Real estate licensees Fair Housing Act always applies to any transaction involving real estate agent. l Exemptions aren’t permitted when agent is involved. l Agent may never discriminate. CA fair housing laws are stricter and offer even fewer exemptions. © 2010 Rockwell Publishing

Fair Housing Act Exemptions: For sale by owner Law doesn’t apply to single-family home rented or sold by its owner if: l owner owns no more than 3 such homes l no real estate broker is employed l no discriminatory advertising used If owner isn’t most recent occupant, she may use this exemption only once every 24 months. © 2010 Rockwell Publishing

Fair Housing Act Exemptions: Residential rental Law doesn’t apply to rental of room or unit in dwelling with up to four units if: l owner resides in one of the units l no real estate broker employed l no discriminatory advertising used © 2010 Rockwell Publishing

Fair Housing Act Exemptions l l 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. © 2010 Rockwell Publishing

Fair Housing Act Prohibited actions l Refusal to rent or sell residential property after receiving good faith offer. l Refusal to negotiate for sale or rental of residential property. l Any other action that would make residential property unavailable. © 2010 Rockwell Publishing

Fair Housing Act Prohibited actions l Discriminating in terms or conditions of sale or rental of residential property. l Discriminatory advertising that indicates a preference or limitation. l Representing that property is not available for inspection, rent, or sale when it is in fact available. l Using discriminatory loan criteria. © 2010 Rockwell Publishing

Fair Housing Act Prohibited actions Federal Fair Housing Act also prohibits: l blockbusting l steering l redlining © 2010 Rockwell Publishing

Prohibited Actions Blockbusting: When someone tries to induce homeowners to sell by predicting that: l members of minority groups will be moving into neighborhood l property values and quality of life will suffer as a result Also known as panic selling. © 2010 Rockwell Publishing

Prohibited Actions 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 Actions Steering No affirmative duty to show non-minority buyers houses in minority neighborhoods if they don’t request it. l If non-minority buyers ask to be shown houses in minority neighborhoods, agent must comply. © 2010 Rockwell Publishing

Prohibited Actions Redlining: When lender refuses to make mortgage loans in particular neighborhood because of its racial or ethnic composition. © 2010 Rockwell Publishing

Fair Housing Act Disability 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

Disability Reasonable accommodations Under law, landlord must: l make reasonable exceptions to rules for disabled tenants, and l 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. © 2010 Rockwell Publishing

Fair Housing Act 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: l she is pregnant l he/she has children l he/she is about to adopt or gain custody of children © 2010 Rockwell Publishing

Fair Housing Act Enforcement Discrimination complaints may be pursued: l with HUD’s Office of Fair Housing and Equal Opportunity l via lawsuit in state or federal court © 2010 Rockwell Publishing

Fair Housing Act Enforcement 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. l HUD may also refer complaints to state for enforcement, as laws are similar. l © 2010 Rockwell Publishing

Enforcement Administrative 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. l In hearing, HUD attorneys act on behalf of complainant, and administrative law judge will decide the case. © 2010 Rockwell Publishing

Enforcement Penalties If discrimination is found, administrative law judge or court might order: l injunction against discriminatory activity l affirmative steps to correct violation l compensatory and/or punitive damages, including attorney’s fees l civil penalty paid to federal government © 2010 Rockwell Publishing

Federal Antidiscrimination Laws Equal 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 Laws Equal Credit Opportunity Act Prohibits lenders from discriminating against credit applicants on basis of: l race l color l religion l national origin l sex l marital status l age l receipt of public assistance © 2010 Rockwell Publishing

Federal Antidiscrimination Laws Americans with Disabilities Act ADA makes it illegal to discriminate against persons with disabilities in places of public accommodation. l Public accommodations include real estate offices, stores, law offices, etc. © 2010 Rockwell Publishing

Federal Antidiscrimination Laws Americans 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. l Accessibility features must be added if “readily achievable. ” Example: adding wheelchair ramp. © 2010 Rockwell Publishing

Summary Federal 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: l Unruh Civil Rights Act l Fair Employment and Housing Act l Housing Financial Discrimination Act l Real Estate Law and regulations © 2010 Rockwell Publishing

State Antidiscrimination Laws Unruh 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 Act Business establishments All business establishments are subject to Unruh Act. This includes: l real estate brokerages (and licensees) l apartment buildings l condominium and homeowner associations © 2010 Rockwell Publishing

Unruh Act Penalties Violators of Unruh Act may have to pay: l injured party’s actual damages and attorney’s fees, and l up to three times the amount of actual damages or $4, 000, whichever is more. © 2010 Rockwell Publishing

State Antidiscrimination Laws Fair Employment and Housing Act prohibits housing discrimination based on: race national origin color ancestry religion familial status sex source of income sexual orientation disability marital status Also called the Rumford Act. © 2010 Rockwell Publishing

Fair Employment and Housing Act Prohibitions Prohibits discrimination in sale, leasing, or financing of any type of housing. l 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. © 2010 Rockwell Publishing

Fair Employment and Housing Act Prohibitions The act also prohibits anyone from advertising housing for sale or rent in discriminatory terms. © 2010 Rockwell Publishing

Fair Employment and Housing Act Enforcement Discrimination complaints can be submitted to state’s Department of Fair Employment and Housing. l If warranted, Department will issue an accusation and hold a hearing. Case may also be heard in superior court. © 2010 Rockwell Publishing

Fair Employment and Housing Act Enforcement If discrimination found, violator may have to: l sell or lease property or similar property to injured party l pay actual damages l pay civil penalty to state Court may also award punitive damages. © 2010 Rockwell Publishing

State Antidiscrimination Laws Housing Financial Discrimination Act Prohibits residential lenders from discriminating based on: l neighborhood characteristics (racial, ethnic, religious, or national origin composition) l borrower’s race, color, religion, sex, marital status, national origin, or ancestry This kind of discrimination is called redlining. © 2010 Rockwell Publishing

State Antidiscrimination Laws Real 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. l Real Estate Commissioner could revoke or suspend violator’s license. © 2010 Rockwell Publishing

Discriminatory Restrictive 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: l Unconstitutional for state or federal courts to enforce racially restrictive covenants. © 2010 Rockwell Publishing

Discriminatory 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. l Conveyance can proceed, but restriction has no effect. © 2010 Rockwell Publishing

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 © 2010 Rockwell Publishing