Chapter 20

Georgia Real Estate An Introduction to the Profession Eighth Edition Chapter 20 Fair Housing, ADA, Equal Credit, and Community Reinvestment

Key Terms Americans with Disabilities Act (ADA) block busting Civil Rights Act of 1866 Community Reinvestment Act (CRA) Equal Credit Opportunity Act (ECOA) Fair Housing Act familial status handicapped protected class steering tester © 2015 OnCourse Learning

Fair Housing Constitutional Concepts No one can have their property taken from them without court proceedings. Racial discrimination in real estate transactions is prohibited. © 2015 OnCourse Learning

Fair Housing Constitutional Concepts The equal protection clause of the 14th amendment prohibits the judicial enforcement by state courts of restricted covenants based on race or color. © 2015 OnCourse Learning

Fair Housing Laws The Civil Rights Act of 1866 prohibits discrimination in housing. In 1968, the Supreme Court affirmed that the 1866 act prohibits “all racial discrimination, private as well as public, in the sale of real property”. © 2015 OnCourse Learning

Fair Housing Laws The Fair Housing Act creates protected classes of people, making it illegal to discriminate on the basis of race, color, religion, sex, national origin, physical handicap, or familial status in connection with the sale or rental housing and any vacant land. © 2015 OnCourse Learning

Fair Housing Laws There are three ways that a fair housing act violation can be proven: intentional discrimination against someone in a protected class regulation that results in a discriminatory impact if an owner fails to reasonably accommodate members of a protected class © 2015 OnCourse Learning

Fair Housing Laws If an occupant develops a disability, the owner or landlord must attempt to reasonably accommodate that occupants needs. © 2015 OnCourse Learning

1988 Amendment to Fair Housing Act In 1988, the Civil Rights Act of 1968 was expanded to provide for housing for the handicapped, as well as for people with children under the age of 18. © 2015 OnCourse Learning

1988 Amendment to Fair Housing Act Handicapped is defined in three ways: having a physical or mental impairment that substantially limits one or more major life activities having a record of having such an impairment being regarded as having such an impairment © 2015 OnCourse Learning

1988 Amendment to Fair Housing Act The handicapped are also allowed to make reasonable modifications to existing units, as long as it is at the handicapped person’s expense. © 2015 OnCourse Learning

1988 Amendment to Fair Housing Act The landlord may require the tenant to restore the unit to its original condition upon termination of occupancy if the changes to the unit would not be conducive to renting to another tenant. © 2015 OnCourse Learning

1988 Amendment to Fair Housing Act The law also makes it unlawful for a landlord or owner to refuse to make reasonable accommodations when it is necessary to afford a handicapped person an equal opportunity to use and enjoy the dwelling. © 2015 OnCourse Learning

1988 Amendment to Fair Housing Act All new multifamily dwellings with four or more units must be constructed to allow access and use by handicapped persons. Doors and hallways must be wide enough to accommodate wheelchairs. © 2015 OnCourse Learning

1988 Amendment to Fair Housing Act Handicapped does not include current illegal use of or addiction to a controlled substance but does include recovering drug addicts. © 2015 OnCourse Learning

1988 Amendment to Fair Housing Act Handicap status also does not include any person whose tenancy imposes a direct threat to the health, safety, and property of others. © 2015 OnCourse Learning

Familial Status Familial status is defined as one or more individuals being living with a parent or another person having legal custody of such individual or individuals. © 2015 OnCourse Learning

Familial Status These protections also apply to any person was pregnant or is in the process of securing legal custody of any individual who is under 18 years old. © 2015 OnCourse Learning

Familial Status One cannot discriminate against anyone on the basis of familial status when leasing, selling, renting property. © 2015 OnCourse Learning

Familial Status Exemptions There are specific exemptions to this act: A building can qualify for an exemption if it provides housing designed and operated to assist elderly persons © 2015 OnCourse Learning

Familial Status Exemptions There are specific exemptions to this act: A building can qualify for an exemption if it provides housing intended for and generally occupied only by person 62 years of age or older © 2015 OnCourse Learning

Familial Status Exemptions There are specific exemptions to this act: A building can qualify for an exemption if it provides housing of which at least 80% of the units are occupied by at least one person 55 years of age or older. © 2015 OnCourse Learning

Penalties The first violation of the act results in a fine of not more than $50,000; for subsequent violations, the fine is not more than $100,000. The fine is in addition to other civil damages, injunctions, reasonable attorneys fees and costs. © 2015 OnCourse Learning

Penalties It is unlawful to refuse to sell or rent, or to refused to negotiate the sale or rental of, any property based on familial status or handicapped status. © 2015 OnCourse Learning

Penalties Advertising cannot make any reference to preference based on handicapped or familial status. © 2015 OnCourse Learning

Penalties The landlord cannot deny the right of the handicapped tenant to make any changes in the building, provided that the tenant agrees to reinstate the building to its original state upon departure. © 2015 OnCourse Learning

Illegal Acts 1.Refusing to sell or rent to, deal with or negotiate with any person 2.Discriminating in the terms or conditions of buyer or renting housing 3.Discriminating by advertising that housing is available only to people of a certain race, color, religion, sex or national origin, those who are not handicapped or adults. © 2015 OnCourse Learning

Illegal Acts 4.Denying that housing is available for inspection, sale, or rent when it really is. 5.Denying or making different terms or conditions for home loans by commercial lenders 6.Denying anyone the use of real estate services related to selling or renting of housing 7.Steering or block busting © 2015 OnCourse Learning

Steering Steering is the practice of directing home seekers to particular neighborhoods based on race, color, religion, sex, national origin, nonhandicapped status, or adults-only status. © 2015 OnCourse Learning

Steering Examples include showing only certain neighborhoods, slanting property descriptions, and downgrading neighborhoods. © 2015 OnCourse Learning

Steering Steering is often subtle. Steering accounts for the bulk of the complaints filed against real estate licensees under the fair housing law. © 2015 OnCourse Learning

Block Busting Block busting is the illegal practice of inducing panic selling in the neighborhood for financial gain. Blockbusting starts when one person induces another to sell property cheaply by stating that an impending change in the racial or religious composition of the neighborhood will cause property values to fall. © 2015 OnCourse Learning

Block Busting The process snowballs as residents panic and sell at progressively lower prices. Homes are then re-sold to incoming residents at higher prices. © 2015 OnCourse Learning

Housing Covered by 1968 Fair Housing Law The 1968 Fair Housing Law applies to the following types of housing: Single-family houses owned by private individuals when a broker is used and or discriminatory advertising is used Single-family houses not owned by private individuals © 2015 OnCourse Learning

Housing Covered by 1968 Fair Housing Law The 1968 Fair Housing Law applies to the following types of housing: Single-family houses owned by a private individual who owns more than three houses Multifamily dwellings of five or more units Multifamily dwellings containing four or fewer units, if the owner does not reside in one of the units © 2015 OnCourse Learning

Acts Not Prohibited by 1968 Fair Housing Law The Fair Housing Law does NOT apply if: a broker is not used discriminatory advertising is not used no more than one house in which the owner was not the most recent resident is sold during any two-year period © 2015 OnCourse Learning

Acts Not Prohibited by 1968 Fair Housing Law Also exempt: religious organizations if membership is not restricted by race or national origin private clubs that limit occupancy to members housing for elderly with minimum age requirements © 2015 OnCourse Learning

Acts Not Prohibited by 1968 Fair Housing Law Those acts are prohibited when discrimination based on race occurs in connection with such acts. © 2015 OnCourse Learning

Fair Housing Enforcement The Fair Housing Act can be enforced by anyone who feels discriminated against. File a complaint with HUD File a complaint in district, state or local court File a complaint with the US attorney general © 2015 OnCourse Learning

Fair Housing Enforcement The burden of proving illegal discrimination is the responsibility of the person filing the complaint. © 2015 OnCourse Learning

Fair Housing Enforcement The following remedies are available: injunction to stop the sale or rental of property to someone else money for actual damages caused by the discrimination punitive damages court costs © 2015 OnCourse Learning

Fair Housing Enforcement There are criminal penalties for those who coerce, intimidate, threaten or interfere with a person’s buying, renting or selling of housing. © 2015 OnCourse Learning

Agent’s Duties If a property owner asks an agent to discriminate, the agent must refuse to accept the listing. An agent is in violation of fair housing laws by giving a minority buyer or seller less than favorable treatment or by ignoring him or referring him to an agent of the same minority. © 2015 OnCourse Learning

Agent’s Duties Violation also occurs when an agent fails to use best efforts or does not submit an offer because of race, color, religion, sex, national origin, handicap or familial status. © 2015 OnCourse Learning

Testers Testers respond to advertising and visit real estate offices to test for compliance with fair housing laws. The tester plays the role of a person looking for housing to buy or rent and observes whether fair housing laws are being followed. © 2015 OnCourse Learning

State Laws Georgia has a fair housing law that essentially mimics the federal legislation. © 2015 OnCourse Learning

Americans with Disabilities Act The Americans with Disabilities Act (ADA) deals primarily with commercial property. It provides access requirements and prohibits discrimination against people with disabilities in public accommodations. © 2015 OnCourse Learning

Americans with Disabilities Act Anyone who has had a physical or mental handicap, is covered by the Act. © 2015 OnCourse Learning

Scope Facilities need to be usable by those with disabilities. All commercial facilities must also be accessible to the maximum extent feasible whenever alterations are being performed on the facility. © 2015 OnCourse Learning

Equal Credit Opportunity Act The Equal Credit Opportunity Act (ECOA) provides for equal credit for borrowers by making it unlawful to discriminate against an applicant for credit based on sex or marital status. © 2015 OnCourse Learning

Equal Credit Opportunity Act The Act also prohibits discrimination in any credit transaction based on race, color, religion, national origin, sex, marital status, age and the receipt of public assistance. © 2015 OnCourse Learning

Prohibited Requests A creditor is prohibited from requiring certain information from the borrower: information concerning a spouse or former spouse except when they will be obligated for repayment information regarding the applicant’s marital status © 2015 OnCourse Learning

Prohibited Requests A creditor is prohibited from requiring certain information from the borrower: information concerning the source of an applicant’s income without disclosing that information regarding alimony, child support or separate maintenance © 2015 OnCourse Learning

Prohibited Requests A creditor is prohibited from requiring certain information from the borrower: information regarding an applicant’s birth control practices or any intentions regarding the bearing of children questions regarding race, color, religion or national origin of the applicant © 2015 OnCourse Learning

Evaluating Credit Applications The lender cannot use information obtained from an applicant that might be considered to be illegally discriminatory. The lender’s rules must be applied uniformly to all applicants. © 2015 OnCourse Learning

Evaluating Credit Applications Age A lender is prohibited from taking an applicant’s age into account in determining ability to repay. © 2015 OnCourse Learning

Evaluating Credit Applications Children There can be no assumptions or statistics relating to the likelihood that a group of people may bear children. © 2015 OnCourse Learning

Evaluating Credit Applications Part-Time Income Income from part-time employment or retirement income cannot be discounted because of the basis of its source. © 2015 OnCourse Learning

Evaluating Credit Applications Alimony and Child Support Alimony and child support cannot be considered in evaluating a loan application unless the creditor determines that such payments are not likely to be made consistently. © 2015 OnCourse Learning

Evaluating Credit Applications Credit History The Equal Credit Opportunity Act prohibits the lender from tying the applicant’s credit history to the past record of the spouse or former spouse. © 2015 OnCourse Learning

Evaluating Credit Applications Immigration Residency A creditor may consider an applicant’s immigration status and whether or not the applicant is a permanent resident of the United States. © 2015 OnCourse Learning

Evaluating Credit Applications Sex A lender may not ask about the sex of an applicant. © 2015 OnCourse Learning

Evaluating Credit Applications Marital Status A lender may not seek information about a spouse or former spouse unless a spouse will be permitted to use the account or the borrower is relying on the spouse’s income as a basis for repayment of the loan. © 2015 OnCourse Learning

Credit Denial If an applicant is denied credit, the lender must give a written notice of decline. © 2015 OnCourse Learning

Possible Reasons for Credit Denial Inability to verify credit references Temporary or irregular employment Insufficient length of employment Insufficient income Excessive obligations Inadequate collateral Too short a period of residency Delinquent credit obligation © 2015 OnCourse Learning

Penalties Failure to comply with the Equal Credit Opportunity Act makes a creditor subject to civil liability for damages, limited to $10,000 in individual actions and the lesser of $500,000 or 1% of the creditor’s net worth in class actions. © 2015 OnCourse Learning

Copies of Appraisal Reports A lender or loan officer must make available a copy of an appraisal report to an applicant for a loan to be secured by a lien on the property. © 2015 OnCourse Learning