Title VIII of the Civil Rights Act of 1968 is more commonly known as the Federal Fair Housing Act. Its stated purpose is to provide fair housing throughout the United States, within Constitutional limitations. This of course does not mean that the federal government intends to provide housing for all citizens. Instead, its intent is to prohibit discrimination in housing-related transactions, whether sale, rental, lease or financing.
Protected Classes
Under the Federal Fair Housing Act, it is illegal to discriminate against anyone on the basis of that person's:
- race
- color
- religion
- sex
- handicap
- familial status, or
- national origin.
The essence of the law is that anyone who is financially able should be able to purchase, rent or finance real property under the same terms and conditions as anyone else. A person's race, religion, sex, physical handicap, familial status or national origin should not cause any difficulty in obtaining housing.
Prohibited Acts
The Federal Fair Housing Act prohibits the following acts:
(1) Upon receipt of a bona fide offer, it is illegal to refuse to sell or rent on the basis of the status of the person making the offer;
(2) Discriminatory terms relating to a sale or rental;
(3) Preferential advertising or statements;
(4) False representations as to availability;
(5) Blockbusting;
(6) Discrimination in financing.
Naturally, examples of these prohibitions might prove helpful.
Refusal to Sell or Rent
This prohibition is perhaps the most obvious of all. A property owner who receives a genuine offer from a qualified buyer or tenant cannot refuse to sell or rent the property based on the racial or other status of the buyer (or prospective tenant).
Mr. Adams owns a single-family residence and has listed the property for sale with Ms. Jones, a real estate broker. Ms. Jones brings an offer that meets the terms of the listing contract. The buyer is of a different race than the seller and is financially qualified. Mr. Adams rejects the offer based on the race of the buyer.
In this example, it is obvious that Mr. Adams has violated the Federal Fair Housing Act. As will be discussed later, the buyer would have the right to file a complaint or file a lawsuit against Mr. Adams. It is important for real estate licensees to know that Ms. Jones has obligations under the law as well, and may in fact be sued by the buyer for violating this same law. Ms. Jones has the legal obligation to inform the seller that he is in violation of the Federal Fair Housing Act and to inform the buyer that he or she has been discriminated against and to tell the buyer what rights he or she has under the law. If Ms. Jones does not take these actions, she is just as liable as Mr. Adams for the discriminatory act. (Under California real estate law, Ms. Jones would also have the right to sue for her commission, but that would be her decision.)
Discriminatory Terms
Owners cannot have discriminatory terms regarding the sale or rental of a dwelling.
Ms. Taylor owns a ten-unit apartment complex. She advertises each apartment for $700 rent per month. If a Caucasian applicant applies to rent a unit, she lowers the rent to $600 per month. Non-Caucasians may rent units, but they have to pay the full $700 monthly rental.
The fact that Ms. Taylor is willing to rent to non-Caucasians is not sufficient. She must do so on the same terms and conditions as she would for Caucasians. Similarly, a seller who charges a higher price to non-Caucasians than to Caucasians would be in violation of this act.
Preferential Advertising or Statements
Owners of dwellings cannot run any advertisements or make any statements which would discourage a prospective buyer or tenant based on that person's racial or other status.
Mr. Smith builds a new apartment complex. As a marketing strategy, he decides to make the units available only to single tenants. He runs an advertisement that includes the phrase "singles only."
This advertisement would discriminate on the basis of the marital status of the prospective tenants. The advertisement itself is a violation of the law. If Mr. Smith actually rents the units only to single persons that would be another violation of the law.
False Statements as to Availability
Perhaps the most common violation of the Federal Fair Housing Act is the making of false or misleading statements or actions relative to the availability of properties. Of course the easy example of a violation of this provision is someone who tells a minority prospect that a property is already sold or rented when that is not the case. This would be a clear violation of federal law.
Another practice that has much the same effect is what is called "steering," or "channeling." Steering is where a real estate licensee shows properties to minority persons only in areas that are already integrated, or in areas that are predominantly populated by minorities. In essence, the licensee tries to keep the minority prospect out of whites-only neighborhoods. Steering is often done on such a subtle basis that the client never knows that it has occurred.
Mr. Taylor is a licensed real estate salesperson. Mr. and Mrs. Simpson, a black couple, ask Mr. Taylor to help them find a home to purchase. Mr. Taylor helps the Simpsons analyze their resources and income, runs a credit check and finds that the Simpsons could qualify to purchase a home for up to $175,000. Mr. Taylor shows homes in this price range to the Simpsons. The homes are located only in areas which are already integrated. There are other homes in the community which are in their price range which are in predominantly white neighborhoods. Since the Simpsons did not specifically request to see those homes, Mr. Taylor feels justified in not showing those homes.
The basic rule is that real estate salespeople should show the same homes to minority prospects as they would to Caucasian prospects. In all probability, had the Simpsons been white, Taylor would have shown them homes in the white neighborhoods. Taylor is therefore guilty of steering the Simpsons toward the integrated neighborhoods. The fact that the Simpsons made no mention of those homes is irrelevant. Taylor should have shown the Simpsons the same homes he would have shown anyone else.
Blockbusting
"Blockbusting" is an illegal practice which is also called "panic peddling," or "panic selling." It is where people are encouraged to sell their property because the ethnic characteristics of the neighborhood are changing, often with the threat or implication that property values will fall and crime will increase.
Mr. Baker is a new real estate salesperson. After struggling to obtain listings, he finds success by reminding people that a minority couple has moved into the neighborhood. He says "You know what that means for the value of your property in a few years."
Notice that salespeople do not have to make outright statements that integration will hurt property values. The exploitation of existing prejudices can also constitute blockbusting.
Discrimination in Financing
The Federal Fair Housing Act also prohibits discrimination by lenders. This prohibition would cover both discriminatory lending terms (such as a higher down payment requirement for minority buyers) and "redlining." Redlining is a practice whereby lenders refuse to loan money on properties in certain neighborhoods. These neighborhoods are usually predominantly populated by minority owners.
Acme Home Loans receives a loan application from a black homeowner who lives in a predominantly black neighborhood. Acme instructs its staff appraiser to place great emphasis on two foreclosures which occurred eleven months ago. There have been five or six purchase transactions that have closed escrow in the neighborhood in the past several months. These purchases were at significantly higher values than the two foreclosures.
This lender is attempting to distort the appraised value of the property in order to avoid making the loan to the black owner. This would be a form of redlining.
Applicability
The Federal Fair Housing, in its initial phase, applied only to the following dwellings:
- dwellings owned or operated by the federal government;
- dwellings financed by the federal government;
- dwellings financed by loans which are insured or guaranteed by the federal government (such as FHA loans);
- dwellings developed or redeveloped by a state or local government or agency which received federal financial assistance;
- dwellings intended for occupancy by five or more families.
It should be noted that the term "dwelling" is defined as follows:
...any building, structure or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families, and any vacant land which is offered for sale or lease for the construction or location thereon of any such building, structure, or portion thereof.
Notice that this definition would include any vacant lot on which a residence will be built.
After the initial phase, which ended December 31, 1968, the Federal Fair Housing law applies to all dwellings except those which are specifically exempt. In general, the sale or rental of a single family residential property would not be subject to this law unless:
- the owner owns more than three such properties; or
- in the case of a sale, the owner sells more than one such property within any twenty-four month period; or
- the owner uses the services of a licensed real estate broker or salesperson (or someone else who is "in the business" of selling or renting dwellings).
A one-to-four family residential property would be exempt from this law if the owner occupies one of the units as his or her personal residence.
One final exemption should be noted. Private clubs or religious organizations which own properties which they operate for other than commercial purposes may give preference to members of their club or religion.
Enforcement
Persons who have been discriminated against may file a complaint with the Secretary of the Department of Housing and Urban Development (HUD), who may choose to resolve the complaint with informal methods of conference, conciliation, and persuasion. Nothing in this part of the process can be made public or used in other proceedings without the person's written consent. Complaints must be filed within one year after the alleged violation occurred.
If state or local governments provide substantially similar complaint resolution procedures, the Secretary will refer the complaint to such agencies and take no further action unless he believes that the state or local agency did not adequately protect the rights of the parties or if he believes that further action is required in the interest of justice.
If within 30 days, the Secretary takes no action regarding a complaint or is unable to obtain voluntary compliance, the aggrieved person may file a lawsuit in federal district court. (If state or local laws provide an equal judicial remedy, they would have jurisdiction.) In any court action, the burden of proof is on the complainant. Once the lawsuit comes to trial, the Secretary will cease any action to obtain voluntary compliance. The plaintiff may seek either an injunction ordering compliance or actual damages plus punitive damages of up to $1,000.
When the Secretary of HUD receives a complaint, the Secretary may choose to investigate the complaint. In such investigations, the Secretary has the power to issue subpoenas to compel a person's appearance and testimony at a hearing, and to compel the submission of relevant books and records. Those who fail to appear, or who make deliberately false statements or alter or destroy evidence may be subject to a fine of up to $1,000 and imprisonment for up to one year.
While the Federal Fair Housing Act is ordinarily enforced by private persons who file a complaint or a lawsuit, the U. S. Attorney General may bring civil action without any specific plaintiff's request if there is reasonable cause to believe that a person or group is engaged in a pattern of practice of resistance to this Act.
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