1. Washington Real Estate Fundamentals Lesson 15: Civil Rights and Fair Housing © 2011 Rockwell Publishing

2. Introduction Federal and state laws prohibit discrimination: based on race, religion, sex, and other characteristics in almost all real estate transactions Particular laws vary in terms of: protected groups types of activities and transactions covered © 2011 Rockwell Publishing

3. Federal Antidiscrimination Laws Civil Rights Act of 1866 Civil Rights Act of 1866: prohibits discrimination on basis of race or color applies to any type of property transaction personal or real property residential or commercial property improved or unimproved property © 2011 Rockwell Publishing

4. Federal Antidiscrimination Laws Civil Rights Act of 1866 Act was passed right after Civil War. Not widely used until after 1968 Supreme Court decision Jones v. Mayer: Court held act prohibits “all racial discrimination, private or public, in the sale and rental of property.” © 2011 Rockwell Publishing

5. Civil Rights Act of 1866 Remedies Remedies available to plaintiff who wins lawsuit under 1866 act: injunction (order to stop a violation) actual damages (to compensate plaintiff) punitive damages (additional amount as penalty) © 2011 Rockwell Publishing

6. 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 federal government Little impact on housing discrimination, because FHA and VA loans excluded from law. © 2011 Rockwell Publishing

7. Federal Antidiscrimination Laws Civil Rights Act of 1968 Title VIII of Civil Rights Act of 1968 is better known as the Fair Housing Act. Applies to: residential property vacant land to be used for residential construction © 2011 Rockwell Publishing

8. Fair Housing Act Scope of law In regard to residential property, Fair Housing Act prohibits discrimination in: sales leasing advertising lending brokerage other services © 2011 Rockwell Publishing

9. Fair Housing Act Scope of law Act prohibits discrimination based on: race color religion sex national origin handicap familial status © 2011 Rockwell Publishing

10. Fair Housing Act Exemptions Act applies to majority of residential transactions, but four types are exempt: single-family home for sale or rent by owner owner-occupied rental property owned by religious organization lodgings run by private club © 2011 Rockwell Publishing

11. Fair Housing Act Exemptions: single-family home Doesn’t apply to sale or rental of single-family home by private individual if: owns no more than 3 such homes no real estate agent employed no discriminatory advertising used If owner not most recent occupant, exemption may be used only once every 24 months. © 2011 Rockwell Publishing

12. Fair Housing Act Exemptions: owner-occupied rental Doesn’t apply to rental of room or unit in dwelling with up to four units if: owner resides in dwelling, or one of the units no real estate agent employed no discriminatory advertising used © 2011 Rockwell Publishing

13. Fair Housing Act Exemptions: religious organization Religious organization dealing with own property may limit occupancy to or give preference to members. Transactions must be noncommercial. Membership can’t be restricted based on race, color, or national origin. © 2011 Rockwell Publishing

14. Fair Housing Act Exemptions: private club lodgings Lodgings belonging to private club may limit occupancy to or give preference to members, as long as lodgings are not: operated for commercial purpose open to general public © 2011 Rockwell Publishing

15. Fair Housing Act Exemptions usually irrelevant Fair Housing Act exemptions don’t matter: If discrimination based on race. 1866 Act applies in all transactions. Whenever real estate licensee involved. Agents never allowed to discriminate. In Washington State. State law has narrower exemptions for real estate transactions. © 2011 Rockwell Publishing

16. Fair Housing Act Display of fair housing poster Poster must be displayed at any place of business involved in sale, rental, or financing of dwellings: real estate firms mortgage lenders apartment buildings condominiums model homes in subdivisions © 2011 Rockwell Publishing

17. Fair Housing Act Prohibited actions Refusing to rent or sell residential property after receiving good faith offer. Refusing to negotiate for sale or rental of residential property, or otherwise making it unavailable. Changing terms of sale or lease for different potential buyers or tenants. © 2011 Rockwell Publishing

18. Fair Housing Act Prohibited actions, continued Using advertising that indicates a preference or intent to discriminate. Representing that property is not available for inspection, sale, or rent when it is in fact available. Using discriminatory criteria when making a housing loan. © 2011 Rockwell Publishing

19. Fair Housing Act Prohibited actions, continued Limiting participation in an MLS or similar service. Coercing, intimidating, threatening, or interfering with anyone on account of enjoyment, attempt to enjoy, or encouragement or assistance of others in enjoying rights granted by Fair Housing Act. © 2011 Rockwell Publishing

20. Fair Housing Act Prohibited actions, continued Fair Housing Act also prohibits these discriminatory practices: blockbusting steering redlining © 2011 Rockwell Publishing

21. Discriminatory Practices Blockbusting 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 called panic selling. Blockbuster profits from commissions on sales or by purchasing homes cheaply. © 2011 Rockwell Publishing

22. Discriminatory Practices Steering Steering: Channeling prospective buyers or tenants to or away from particular neighborhoods: based on race, ethnicity, or another protected characteristic to maintain or change character of neighborhoods © 2011 Rockwell Publishing

23. Discriminatory Practices Redlining Redlining: When lender refuses to make mortgage loans in a particular neighborhood because of its racial or ethnic composition. © 2011 Rockwell Publishing

24. Fair Housing Act Protected classes added in 1988 1988 amendments to Fair Housing Act added two more protected classes: disability (handicap) familial status © 2011 Rockwell Publishing

25. Fair Housing Act Disability Disability (handicap): Fair Housing Act prohibits discrimination based on handicap, defined as: physical or mental impairment that substantially limits one or more major life activities © 2011 Rockwell Publishing

26. Disability Scope of protected class Included under disability protection (examples): chronic alcoholism mental illness HIV/AIDS Not included: direct threat to health or safety of others currently using controlled substances © 2011 Rockwell Publishing

27. Disability Reasonable accommodations For disabled tenants, landlord must: make reasonable exceptions to rules allow reasonable modifications to property: at tenant’s own expense if necessary for full use & enjoyment Tenant may be required to restore property to original condition at end of tenancy. © 2011 Rockwell Publishing

28. Disability Wheelchair accessibility Act’s wheelchair accessibility rules apply to residential buildings with four or more units built since 1991. Entryways, hallways, kitchens, and bathrooms must be designed to accommodate wheelchairs. But if building has no elevator, units above ground floor do not have to be wheelchair- accessible. © 2011 Rockwell Publishing

29. Fair Housing Act Familial status Familial status: Refers to adults who have one or more children under 18 living with them. 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 © 2011 Rockwell Publishing

30. Familial Status Exemption: housing for older persons Act allows discrimination based on familial status in “housing for older persons”: developed under government program to assist elderly, intended for and solely occupied by persons 62 or older, or adheres to policies demonstrating intent to house persons 55 or older, if 80% of units occupied by at least one person who is 55+. © 2011 Rockwell Publishing

31. Fair Housing Act Enforcement Within one year after discrimination, aggrieved party may file: lawsuit in state or federal court, or complaint with HUD’s Office of Fair Housing and Equal Opportunity. In states with similar fair housing laws, HUD may refer complaint to state agency (Washington Human Rights Commission). © 2011 Rockwell Publishing

32. Enforcement Procedures after complaint filed HUD investigates complaint, tries to negotiate conciliation agreement between parties. If no agreement: Either party may move case to federal court. Otherwise, administrative hearing held: HUD attorneys litigate for complainant administrative law judge decides case © 2011 Rockwell Publishing

33. Enforcement Remedies and penalties Injunction order to stop discriminatory activity order to take affirmative steps to correct violation Compensatory damages Punitive damages (court), or civil penalty (administrative law judge) Attorney’s fees © 2011 Rockwell Publishing

34. Enforcement Pattern or practice cases If case involves “pattern or practice” of discrimination, U.S. Attorney General may file suit in federal court. © 2011 Rockwell Publishing

35. Summary Federal Antidiscrimination Laws Civil Rights Act of 1866 Civil Rights Act of 1964 Fair Housing Act Steering Blockbusting Redlining Disability or handicap Familial status © 2011 Rockwell Publishing

36. Federal Antidiscrimination Laws In addition to laws covered so far, federal antidiscrimination laws include: Equal Credit Opportunity Act (ECOA) Home Mortgage Disclosure Act (HMDA) Americans with Disabilities Act (ADA) © 2011 Rockwell Publishing

37. Other Federal Laws Equal Credit Opportunity Act ECOA applies to all credit transactions and prohibits discrimination based on: race color religion national origin sex marital status age receipt of public assistance © 2011 Rockwell Publishing

38. Other Federal Laws Home Mortgage Disclosure Act HMDA helps detect redlining. Large lenders required to file annual report on residential mortgage lending: number of loans made or purchased type of loans (FHA, VA, other) loan amounts location of properties Government investigates lenders that made no loans or few loans in certain neighborhoods. © 2011 Rockwell Publishing

39. Other Federal Laws Americans with Disabilities Act ADA is 1992 law intended to ensure disabled people equal access to public accommodations. Disability: Physical or mental impairment that substantially limits one or more major life activities. Public accommodation: Private entity with facilities open to public. Examples: real estate office, bank, store © 2011 Rockwell Publishing

40. Americans with Disabilities Act Requirements If “readily achievable” in a public accommodation: architectural and communications barriers must be removed auxiliary aids and services must be provided New commercial construction must be accessible to the disabled, unless structurally impractical. © 2011 Rockwell Publishing

41. Summary Other Federal Laws Equal Credit Opportunity Act Home Mortgage Disclosure Act Americans with Disabilities Act Disability Public accommodation © 2011 Rockwell Publishing

42. State Antidiscrimination Laws Washington’s antidiscrimination laws include: Washington Law Against Discrimination Washington Fair Lending Act provisions of real estate license law © 2011 Rockwell Publishing

43. Washington Law Against Discrimination Protected classes Race Creed Color National origin Sex Marital status Familial status Sexual orientation Sensory, physical, or mental disability Use of trained guide dog or service dog Honorably discharged veteran or military status © 2011 Rockwell Publishing

44. Washington Law Against Discrimination Scope Prohibits discrimination in: employment insurance credit transactions public accommodations real estate transactions Applies to all real estate, not just housing. Sale, appraisal, exchange, purchase, rental or lease, financing, brokerage. © 2011 Rockwell Publishing

45. Washington Law Against Discrimination Prohibited actions Actions prohibited in regard to real estate transactions include: refusing to engage in a transaction discriminating in terms or conditions discriminating in providing services or facilities refusing to receive or failing to transmit a bona fide offer © 2011 Rockwell Publishing

46. Washington Law Against Discrimination Prohibited actions, continued refusing to negotiate representing that property is not available for inspection, sale, or lease when it is available failing to advise a prospect about or refusing to allow a prospect to inspect a listing discriminating in sale or rental of a dwelling, making a dwelling unavailable, or otherwise denying a dwelling © 2011 Rockwell Publishing

47. Washington Law Against Discrimination Prohibited actions, continued advertising or signs that directly or indirectly indicate an intent to discriminate application forms, records, or inquiries that directly or indirectly indicate an intent to discriminate offering, soliciting, accepting, or retaining a listing with the understanding that a person may be discriminated against expelling a person from occupancy © 2011 Rockwell Publishing

48. Washington Law Against Discrimination Prohibited actions, continued discriminating in negotiating, executing, or financing a transaction discriminating in negotiating or executing any services for a transaction blockbusting inserting discriminatory provisions in a document or attempting to honor them discriminating by denying credit, increasing fees, requiring collateral, or other credit terms © 2011 Rockwell Publishing

49. Washington Law Against Discrimination Exemptions Student housing: discrimination based on sex, marital status, or familial status allowed. Private club run by religious organization: discrimination based on religion allowed. Housing for older persons: discrimination based on familial status allowed. © 2011 Rockwell Publishing

50. Washington Law Against Discrimination Exemptions No exemptions for sellers or landlords in ordinary transactions. One exception: Person may discriminate when arranging to share dwelling unit he or she occupies: homeowner renting room in own house tenant seeking roommate © 2011 Rockwell Publishing

51. Washington Law Against Discrimination Enforcement Person who feels he or she has been discriminated against may file complaint with Human Rights Commission. Complaint related to real estate must be filed within one year after incident. © 2011 Rockwell Publishing

52. Washington Law Against Discrimination Enforcement Investigation followed by conference, conciliation, and persuasion. If unsuccessful, administrative hearing. Possible remedies: cease and desist order affirmative relief actual damages civil penalty © 2011 Rockwell Publishing

53. State Antidiscrimination Laws Washington Fairness in Lending Act Prohibits redlining: denying single-family home loans or varying loan terms based on neighborhood. Doesn’t prevent lender from using sound underwriting practices based on: borrower’s creditworthiness property’s value Does prohibit use of lending standards with no economic basis. © 2011 Rockwell Publishing

54. State Antidiscrimination Laws Real estate license law Licensee’s violation of any antidiscrimination law also violates license law and is grounds for disciplinary action. Possible sanctions: license suspension or revocation fines (up to $5,000 per violation) completion of course on civil rights gross misdemeanor charges © 2011 Rockwell Publishing

55. Summary State Antidiscrimination Laws Washington Law Against Discrimination Washington Fairness in Lending Act Real estate license law © 2011 Rockwell Publishing