Chapter 13
Fair Housing Laws in Brokerage Practice
INTRODUCTION
The basic fair housing laws (and terminology) include the Rules of the Commission, the 1866 Fair Housing law, the 1968 Fair Housing law, the 1978 Georgia Fair Housing Law, and various court decisions. Two companion documents that can help in understanding fair housing concepts and legislation are the Fair Housing Handbook and “What Everyone Should Know About Equal Opportunity in Housing” from the National Association of Realtors®, 430 North Michigan Avenue, Chicago, Illinois 60611.
THE PARTIES IDENTIFIED IN THE FAIR HOUSING LAW
A licensee who denies equal services to anyone because of race, color, religion, sex, handicap, familial status or national origin violates the law. Such conduct may result in loss of license; civil damages and penalties; and in some cases criminal prosecution, fine, and imprisonment. The Fair Housing Law amendments of March 12, 1988, added handicap and familial status to the definition of protected classes. The law defines those terms as follows:
| (a) | “Handicap” means, with respect to a person, | ||
| (1) | a physical or mental impairment that substantially limits one or more of such person’s life activities; | ||
| (2) | a record of having such an impairment; or | ||
| (3) | being regarded as having such an impairment, but such term does not include current, illegal use of or addiction to a controlled substance. | ||
| (b) | “Familial status” means one or more individuals who have not attained the age of 18 years being domiciled with | ||
| (1) | a parent or another person having legal custody of such individual or individuals or | ||
| (2) | the designee or such parent or other person having such custody, with the written permission of such parent or other person. | ||
The protections against discrimination on the basis of familial status apply to anyone who is pregnant or is in the process of securing legal custody of any individual who has not attained the age of 18 years.
UNDERSTANDING AND COMPLYING WITH FAIR HOUSING LAWS
Compliance with the fair housing laws as they govern real estate brokerage practice requires a thorough understanding of those laws. In addition to state and federal laws that relate to fair housing, the Commission regulates brokerage practice in the area of fair housing through subsection 43-40-25(b)(1) of the License Law and Rules 520-1-.09, 520-1- .13.
State and Federal officials look at the intent of a licensee’s conduct and at the effect of the licensee’s conduct when they enforce the fair housing laws. If the effect of a licensee’s actions or statements result in a violation the law, good intention can, at best, only mitigate the sanction. In an Alabama case, the court found that a broker violated the Federal Fair Housing Law by refusing to sell homes in a white neighborhood to blacks. The court stated that it was not necessary to show that the broker intended to deprive the prospective purchasers of their rights because his words had that effect.
When a licensee adopts a particular listing or selling practice, that decision must come after careful consideration of whether the practice complies with fair housing laws. For example, many licensees use door‑to‑door solicitation techniques to get listings. While such techniques may bring economic benefits, they can be clearly in violation of Commission Rule 520‑1‑.13. While there may be no intent to violate the law by door‑to‑door solicitation, the effect of the action and statements in soliciting such an individual may violate the law.
In day to day real estate practice, licensees must incorporate procedures and safeguards that will assure full compliance with fair housing laws. For example, a licensee might have to demonstrate that minority prospects receive the same number and range of listings as any other prospect of comparable financial means or that a minority prospect receives the same degree of “follow‑up” and the same level of quality of sales effort as any other prospect.
The Fair Housing Initiatives Program (FHIP) authorizes the secretary of HUD to provide funds for the purpose of testing fair housing violations. Under the program, HUD can hire private and public groups to test individual brokers, sales associates, and real estate firms for discriminatory practices. As the result of a complaint (bona fide allegation) of a fair housing violation, federally subsidized testers posing as purchasers or renters may visit the alleged offender to help determine whether the licensee or firm engages in discriminatory practices. The National Association of Realtors® and HUD have agreed on very specific guidelines for the selection and training of testers, recording of test results, and testing procedures. It is obvious that both groups take fair housing compliance seriously. In City of Chicago v. Matchmaker Real Estate Sales Center, the court imposed over $200,000 damages against several agents in a real estate firm who were found guilty of racial steering. Five sets of testers uncovered the agents’ discriminatory practices.
BLOCKBUSTING
Commission’s Rule 520‑1‑.13 covers the concept of blockbusting. Blockbusting charges usually occur in two circumstances. One would be if a licensee uses the fact that minorities are moving into the neighborhood as a reason to attempt to convince a homeowner to list his or her property for sale. In an actual case heard by the Commission, a licensee told to a property owner that a black family had purchased a house on the street. The licensee made the statement to encourage the property owner to list and sell his home and to purchase elsewhere. The licensee violated LICENSE LAW 43‑40‑25(b)(25) and COMMISSION RULE 520‑1‑.13(1)(a). The Commission suspended the licensee’s license for one year. This type of blockbusting activity could occur in a more subtle manner. For example, a hypothetical licensee had been working in a neighborhood composed of white persons for several weeks without getting any listings. One of the homeowners in the neighborhood commented that he had been having some trouble with a next door neighbor over his boundary lines and would like to sell to a black person. Not knowing if the owner was serious, the licensee mentions the comment to another homeowner. Within two weeks ten homeowners in the area call the licensee to list their homes for sale. Even though the licensee did not represent that a minority may be entering the area, the licensee is probably guilty of blockbusting and could have his license suspended or revoked under COMMISSION RULE (520‑1‑.13). The law looks to both the intent of a licensee’s conduct and to its effect. A licensee may not make representations that a change has occurred, will occur, or may occur in the racial, religious, or ethnic composition of any block, neighborhood, or area in order to induce an individual to sell.
In another case that came before the Commission, a black licensee was canvassing a neighborhood seeking to find a three-bedroom home for a prospective purchaser. After speaking to several homeowners who were working in their yards, the licensee went to the door of a home that did not have a for sale sign on it and asked the white homeowner whether she would be willing to sell. The homeowner responded that she intended to remain in the neighborhood and asked why so many real estate agents had been calling on the neighborhood. The licensee answered that it was because “the blacks are moving in.” The homeowner responded that she saw no reason to leave the neighborhood. The licensee ended the conversation by saying, “Now, listen little lady, if you want to stay here, that’s fine, we’re glad to have you. It’s nice to know that you’re not afraid.” The Commission found that the licensee violated LICENSE LAW 43‑40‑25(b)(25) and COMMISSION RULE (520‑1‑.13). The Commission suspended the licensee’s license for one year. A licensee may not make implicit representations that a change in the ethnic or racial composition of any neighborhood may result in criminal or antisocial behavior in that area.
IMPROPER LISTING ACTIVITY
Commission Rule 520‑1‑.13 covers the improper refusal of a listing. Improper listing activity can fall into two categories. First, although legitimate, legal reasons exist to refuse a listing, a licensee should not refuse a listing because of the owner’s minority status or other characteristics specifically stated in the fair housing laws. Legitimate reasons for refusing a listing include, among others: (a) the seller states an unreasonable list price for the property, (b) the property is not in the firm’s geographical service area, or (c) the property type is not handled by the firm. However, refusing a listing because of the owner’s minority status, religion, sex, family status, handicap, or national origin is discrimination.
Second, the licensee must not accept a listing from a property owner who attempts to restrict the people to whom the licensee can show the property. Restrictions based on race, color, religion, sex, handicap, familial status, or national origin violate fair housing laws.
REFUSING TO SHOW PROPERTY TO MINORITIES
A licensee may not refuse to show a property because of the prospect’s race, color, religion, sex, handicap, familial status, or national origin. Generally, any qualified prospect who asks a licensee to show property listed for sale, lease, or exchange should be able to see that property. Failure to show a listed property to a qualified prospect can result in severe consequences. A licensee may not deny fair housing opportunities to anyone even if the licensee believes it to be in the best interest of the prospective purchaser. Refusing to show property to minorities can violate LICENSE LAW 43‑40‑25(b)(1), COMMISSION RULE 520‑1‑.13, and LICENSE LAW 43‑40‑25(b)(25).
STEERING
Steering occurs when a licensee limits the listed properties shown to a minority prospect. The properties selected for showing may be suitable to the prospect in terms of quality, price, and need, but if they are located only in minority or changing neighborhoods, steering occurs. Licensee can seek to avoid charges of steering by showing minority customers the full range of listings available in all areas that the licensee and the firm serves. Steering may occur in either of two ways. First, a licensee might steer a minority prospect to only minority or mixed neighborhoods. Second, a licensee might steer a non‑minority individual to only non‑minority neighborhoods. Either type of steering violates fair housing laws.
DISCRIMINATION IN ADVERTISING
Commission Rule 520‑1‑.09(4) prohibits discrimination in advertising. Generally, this type of discrimination is the easiest for a licensee to avoid for two reasons. First, in written advertisements a licensee can take the necessary time to think about the wording of the ad to assure that it does not discriminate on the basis of race, color, religion, sex, handicap, familial status, or national origin. Second, the Commission requires that the broker review all advertising prepared by an affiliated licensee. The broker then provides a second check to eliminate this type of discrimination.
TREATMENT OF MINORITY PROSPECTS
Charges of less favorable treatment of minority prospects usually occur because a licensee:
| (a) | insults or ignores a member of a minority group; | |
| (b) | refers the minority person to a licensee of the same minority group, or even a different minority group; | |
| (c) | does not use his or her best efforts to close a sale involving a party from a minority group; | |
| (d) | fails to submit a minority person’s offer to the seller in favor of a non‑minority person’s offer; and/or | |
| (e) | treats people from a minority group differently respecting financial matters. |
PROVIDING INFORMATION ON THE MINORITY COMPOSITION OF NEIGHBORHOODS
Potential buyers often ask a licensee to supply information about the racial, ethnic, religious, or family composition of neighborhoods. Generally in dealing with such questions, a licensee must consider several things. First, such a question does not necessarily indicate an intent by the questioner to discriminate unlawfully. An elderly couple asking whether there are small children in a condominium development may be aware that federal law allows discrimination if the development is intended for, and solely occupied by, persons 62 years of age or older. On the other hand, suppose a customer has made disparaging remarks about or jokes at the expense of a racial, ethnic, or religious group in the presence of the licensee. If the customer then inquires about the presence of such groups in the neighborhood, that question may indicate an intention to discriminate. The licensee would then certainly be risking a fair housing violation by answering such a question.
Consequently licensees must take great care in the way in which they handle such questions. Some licensees may feel that they should answer the questions truthfully. That approach involves at least two pitfalls. First, rumor is not truth. What may have been true yesterday, or last week, or last month, may no longer be true today. Facts come from sources such as the Census publications, school district data, and/or data from the local government. The licensee may refer customers to such sources for information about a neighborhood. Second, even a truthful answer may produce a fair housing law violation if discrimination results. In fair housing law, the issue is not what the licensee intended, but what happened.
The most prudent response to a question regarding minority composition of a neighborhood is to explain first the requirements of the law and its effect on the actions of the licensee and the licensees customers or clients. The licensee may then say that state and federal laws do not allow the licensee to sell, buy, lease, rent, or exchange property based on discrimination toward protected classes and that he or she does not collect such information.
SEXUAL HARASSMENT IN HOUSING
Sexual harassment is a growing concern in the business community and can affect licensees in their contacts with other licensees and members of the public. Offensive behavior can be both obvious or subtle. One author has suggested four categories of questionable conduct:
| (a) | casual or sexually-oriented comments about a person’s clothing or physical characteristics, derogatory nicknames such as “babe,” or sexually-oriented humor; | |
| (b) | offers, demands, or unwanted requests for dates or social activities, including the hint that job advancement or housing benefits will result from sexual submission; | |
| (c) | nonverbal behavior such as excessive eye contact or attempts at inappropriate physical touching; and | |
| (d) | physical contact such as touching or grabbing. |
A case that has received much attention in the area of sexual harassment is Shellhammer v. Lewallen in which a male landlord approached a female tenant while she was cleaning an apartment for him and asked her to pose for nude pictures. The tenant refused. About a month later the landlord again approached the tenant while she was cleaning a vacant apartment for him and asked her to have sex with him. Again she refused. The landlord and tenant later had a dispute over the payment of rent. The tenant claimed that the landlord was responsible for providing a working refrigerator and tenant wanted to use that month’s rent to buy a refrigerator. The landlord claimed that he was not responsible for the refrigerator and he started eviction proceedings for nonpayment of rent. The tenant countered by filing a lawsuit claiming a violation of rights under the Fair Housing Act. A magistrate awarded tenant $7,410 for the claim that tenant had been evicted because she rebuffed the landlord’s sexual advances.
Sexual discrimination in housing is a very serious issue. A 1986 survey of 150 private and public housing center agencies and other organizations found 300 reports of sexual harassment in housing. Based on an estimate that only between two and 4.4 percent of all incidents are ever reported, the estimate of actual incidents is between 6,818 and 15,000.
STIGMATIZED PROPERTY
On July 1, 1989, Georgia’s “Stigmatized Property Law” (O.C.G.A. § 44-1-16) went into effect. This law prohibits suits against an owner of real property or an agent of the owner who fails to disclose the fact or suspicion that the property is or was inhabited by a person infected with a disease such as AIDS or that the property was the site of a homicide, suicide, or felony unless the owner or the owner’s agent is questioned about such issues. If an interested party questions the owner, broker, or sales associate about such issues, the law requires the owner or agent to “answer truthfully to the best of such owner’s or agent’s knowledge.” The pertinent part of the law states as follows:
| No cause of action shall arise against an owner of real property or the agent of such owner for the failure to disclose in any real estate transaction the fact or suspicion that such property: (1) Is or was occupied by a person who was infected with a virus or any other disease which has been determined by medical evidence as being highly unlikely to be transmitted through the occupancy of a dwelling place presently or previously occupied by such an infected person . . . ; provided, however, an owner or the agent of the owner shall answer truthfully to the best of such owner’s knowledge, any question concerning the provisions of paragraph (1) . . . of this Code Section. |
The subsequent adoption of state and federal fair housing laws prohibiting discrimination against the handicapped created a possible conflict with this law, and the Georgia Real Estate Commission sought an opinion from the Attorney General’s Office about the apparent conflict. The Attorney General advised the Commission that there is a conflict between the law as it relates to such diseases as AIDS. If asked about diseases as AIDS, a licensee “should respond by stating that he or she is unable to answer such an inquiry.” However when questioned whether a property “was the site of a homicide or other felony or a suicide,” a licensee should “answer truthfully to the best of such . . . agent’s knowledge.” According to the Attorney General’s Office, persons who have AIDS or who have tested positive for the Human Immunodeficiency Virus (HIV) are “handicapped” for the purposes of the Federal Fair Housing Act.
In 1998 the General Assembly adopted an amendment to O.C.G.A. § 44-1-16 which specifically relieves real property owners and their agents of the obligation of answering any question if doing so would violate the federal or state fair housing laws or any other federal or state law, rule, or regulation.
FAIR HOUSING POSTER REQUIRED
Federal law requires real estate firms to display the Department of Housing and Urban Development Fair Housing Poster indicating that the firm complies with fair housing laws. Brokers may obtain copies of the poster by contacting the HUD Regional Office in Atlanta at: Fair Housing and Equal Opportunity, Department of Housing and Urban Development, 75 Spring Street, S.W., Atlanta, GA 30303.
(c) Copyright 2006 Georgia Real Estate Commission and Appraisers Board. All rights reserved.