The Real Estate School

ETHICAL PRACTICES AND

FAIR HOUSING
UNIT 16

Page 271
ALLENTOWN, PA (2011-2012)

2
ALLENTOWN, PA (2011-2012)

• Conducted 33 tests (22 phone; 11 in-person)

• One with white buyer and one with minority buyer
• Identical on paper with same income level, employment history and number
of household residents
• Agents treated white and minority home buyers differently in 73% of cases

3
LONG ISLAND, NY (2016-2019)

4
LONG ISLAND, NY (2016-2019)

• Three-year investigation by NewsDay into real estate practices

• 25 undercover testers trained; 93 real estate agents tested; 249 hours of
meetings secretly recorded; 5,763 listings analyzed
• The RESULTS:
o Asians treated differently 19% of the time
o Hispanics treated differently 39% of the time
o Blacks treated differently 49% of the time

5
LONG ISLAND, NY (2016-2019)

Newsday.com/divided

6
FEDERAL & STATE CIVIL RIGHTS LAWS
• Federal, state, and local fair housing or equal opportunity laws
affect every phase of a real estate transaction
• Agents can’t allow
discriminatory attitudes
of property owners or
seekers to affect
compliance with fair
housing laws

Page 272
FEDERAL & STATE CIVIL RIGHTS LAWS
• Civil Rights Act of 1866 – Prohibits discrimination based on race
“All citizens of the United States shall
have the same right in every state and
territory as is enjoyed by white
citizens thereof to inherit, purchase,
lease, sell, hold, and convey real and
personal property.”

Page 272
FEDERAL & STATE CIVIL RIGHTS LAWS
• Jones vs. Mayer (Supreme Court Case 1968)
Racial discrimination is prohibited in the
sale or rental of publicly or privately held
property, whether facilitated by a real
estate agent or sold or rented by the owner
• Upheld the Civil Rights Act of 1866

Joseph & Barbara

Jones

Page 272
FEDERAL & STATE CIVIL RIGHTS LAWS
• Fair Housing Act
Group of laws prohibiting discrimination based on race, color,
religion, sex, disability, familial status, and national origin

Page 273
FEDERAL & STATE CIVIL RIGHTS LAWS
• Fair Housing Act (cont’d)

• Administered by the U.S.

Department of Housing and
Urban Development (HUD)
• Distributes an equal housing
opportunity poster to businesses

Figure 16.1
Page 273
FEDERAL & STATE CIVIL RIGHTS LAWS
• Title VIII of the Civil Rights Act
of 1968 Prohibits discrimination
in housing because of race,
color, religion, and national
origin

Page 273
FEDERAL & STATE CIVIL RIGHTS LAWS
• Fair Housing Amendments Act (1974) – Added sex to the protected
classes in the sale or rental of housing

Page 273
FEDERAL & STATE CIVIL RIGHTS LAWS
• Fair Housing Amendments Act (1988) – Included families with
children (familial status) and people with physical or mental
disabilities
• Also changed the
penalties, making
them more severe,
and added
damages

Page 273
FEDERAL & STATE CIVIL RIGHTS LAWS
• Housing for Older Persons Act (1995) – Repealed the requirement
that 55-and-older housing have significant facilities and services
designed for seniors
• Exemptions:
1. All units are occupied
by persons 62 and older
2. If 80% of the units are
occupied by at lease one
person 55 and older
Page 273
FEDERAL & STATE CIVIL RIGHTS LAWS
• Definitions
• Housing – Any building designed for occupancy as a residence
by one or more families

Page 275
FEDERAL & STATE CIVIL RIGHTS LAWS
• Definitions (cont’d)
• Familial Status – One or more individuals younger than age 18
living with a parent or guardian
• Also includes a woman who is pregnant
• Illegal to advertise properties as being for adults only or to
indicate a preference for a certain number of children

Page 275
FEDERAL & STATE CIVIL RIGHTS LAWS
• Definitions (cont’d)
• Disability – A physical or mental impairment that substantially
limits one or more major life activities

Page 275
FEDERAL & STATE CIVIL RIGHTS LAWS
• Definitions (cont’d)
• Persons who have HIV virus (AIDS) are protected

Page 275
FEDERAL & STATE CIVIL RIGHTS LAWS
• Definitions (cont’d)
• Renters with disabilities must be permitted to make reasonable
modifications at their own expense provided they restore the
property to its previous condition at the end of the lease

Grab Bars Wheelchair

Ramp

Lower Handicap
Kitchen Parking
Cabinets Space

Page 275-276
FEDERAL & STATE CIVIL RIGHTS LAWS
• Service Animals and Emotional Support Animals
• Landlords may not refuse to rent to a tenant with a disability who
requires an assistance animal, even if the property has a no pets
policy
• Assistance animals are not
pets and are a reasonable
accommodation

Page 276
FEDERAL & STATE CIVIL RIGHTS LAWS
• Service Animals and Emotional Support Animals (cont’d)
• HUD has two categories for assistance animals:
1. Service Animals – Trained to work, provide assistance or perform
tasks (dogs & miniature horses)
2. Emotional Support Animals – Alleviate symptoms of a person’s
mental disability (no species or breed restrictions)
NOTE: Animals that provide ‘affection’ do not necessarily qualify as service animals according to the
Americans with Disabilities Act (ADA)

Page 276-277
FEDERAL & STATE CIVIL RIGHTS LAWS
• Service Animals and Emotional Support Animals (cont’d)
• Landlords may not ask an individual to prove the need for an
assistance animal if the disability is readily apparent
• If the disability is apparent, a health professional may supply a
letter which is sufficient

Page 277
FEDERAL & STATE CIVIL RIGHTS LAWS
• Service Animals and Emotional Support Animals (cont’d)
• Landlords my not require a pet deposit or additional fee for an
assistance animal
• May require assistance animals to be vaccinated
• Tenants must follow rules regarding waste cleanup, noise levels,
and behavior problems

Page 277
FEDERAL & STATE CIVIL RIGHTS LAWS
• Exemptions to the Fair Housing Act
• Owner-occupied buildings of one to four family dwellings
• Pennsylvania only recognizes an exemption in the rental of:
• Owner-occupied two unit dwelling
• Owner-occupied rooming house with a common entrance and shared
bathroom facility
• The rental of housing accommodations in a single-sex dormitory

Page 278
FEDERAL & STATE CIVIL RIGHTS LAWS
• Exemptions to the Fair Housing Act (cont’d)
• Sale or rental of a single family home when:
• An individual owns not more than three homes
• Does not sell more than one home every two years
• Real estate licensee is not used
• Discriminatory advertising is not used
• This exemption does not apply in Pennsylvania

Page 278
FEDERAL & STATE CIVIL RIGHTS LAWS
• Exemptions to the Fair Housing Act (cont’d)
• Housing owned by religious organizations may be restricted to
people of the same religion if membership in the organization is
not restricted on the basis of race, color, or national origin

Page 278
FEDERAL & STATE CIVIL RIGHTS LAWS
• Exemptions to the Fair Housing Act (cont’d)
• A private club that is not open to the public may restrict the
rental or occupancy of lodgings that it owns to its members as
long as the lodgings are not operated commercially

Page 278
FEDERAL & STATE CIVIL RIGHTS LAWS
• Pennsylvania Human Relations Act (PHRA) – State law that is
substantially equivalent to the federal Fair Housing Act but more
restrictive
• In addition to the Federal protected classes, PHRA adds religious
creed, ancestry, and age (40 yrs.)

Page 278
FEDERAL & STATE CIVIL RIGHTS LAWS
• Housing Accommodations and Commercial Property – Unlike
Federal law, Pennsylvania law applies to not only housing
accommodations but also to commercial property

Page 279
FEDERAL & STATE CIVIL RIGHTS LAWS
• Exemptions – The Federal Housing Act exemptions have limited
application in Pennsylvania
• Pennsylvania Real Estate Licensing
and Registration Act - Violating any
provision of the Pennsylvania Human
Relations Act is also a violation of the
real estate licensing law

Page 279
FEDERAL & STATE CIVIL RIGHTS LAWS
• Official Notice and Poster – Fair Housing and Lending posters
must be prominently displayed in the place of business of those
individuals who are subject to the PHRA

Page 279-283
 OTHER LAWS
• Megan’s Law – Promotes the establishment of registration systems
to maintain information on persons who have kidnapped or
committed sexual crimes
against children or
committed sexually
violent crimes

Page 284
 OTHER LAWS
• Megan’s Law (cont’d)
• Licensees are not required to research or disclose information
about sex offenders (page 357, para.24)

www.PaMegansLaw.state.pa.us

Page 284
 OTHER LAWS
• Equal Credit Opportunity Act (ECOA) – Prohibits
discrimination in lending based on race, color, religion, national
origin, sex, marital status, age, or receipt of public assistance in the
granting of credit
• Enforced by the Federal
Trade Commission and
the Department of Justice

Page 284
 OTHER LAWS
• Americans with Disabilities Act (ADA) – Requires reasonable
accommodations in employment and access to goods, services,
and public buildings
• Title I requires that employers with 15 or
more employees make reasonable
accommodations that enable an individual
with a disability to perform essential job
functions
• Only 4 or more in Pennsylvania

Page 284-285
 OTHER LAWS
• Americans with Disabilities Act (ADA) (cont’d)

• Title III requires that individuals with disabilities have full

accessibility to businesses, goods, and public services
• Best to advise commercial
clients to seek the services
of vendors who specialize
in ADA issues

Page 285
 FAIR HOUSING ACT ENFORCEMENT
• Blockbusting (Panic Selling) – Unlawful act of encouraging
people to sell or rent their homes by claiming that the entry or
prospective entry of a protected class of people into a neighborhood
will have a negative impact on property values

Page 286
 FAIR HOUSING ACT ENFORCEMENT
• Steering – The channeling of home seekers to particular
neighborhoods or discouraging potential buyers from considering
some areas

Page 287
 FAIR HOUSING ACT ENFORCEMENT
• Steering (cont’d)
• Landlords may not put members of a protected class on a certain
floor or building

Page 287
 FAIR HOUSING ACT ENFORCEMENT
• Advertising – Advertisements of property for sale or rent may not
include language indicating a preference or limitation
• No exception
to this rule
no matter
how subtle

Page 287
 FAIR HOUSING ACT ENFORCEMENT
• Appraising – Race, color, religion, national origin, sex, disability
and familial status may not be used as factors when preparing
appraisals

Page 288
 FAIR HOUSING ACT ENFORCEMENT
• Redlining – The practice of refusing to make mortgage loans or
issue insurance policies in specific areas for
reasons other than
economic qualifications of the applicants

Page 288
 FAIR HOUSING ACT ENFORCEMENT
• Any aggrieved person who believes illegal discrimination has
occurred may file a complaint with HUD within one year of the
alleged act
• HUD has 100 days after receiving
the complaint to determine if there
is reasonable cause to bring a
charge of illegal discrimination or
dismiss the complaint

Page 289
 FAIR HOUSING ACT ENFORCEMENT
• An administrative law judge (AJL) may award actual damages or
impose monetary penalties:
• $21,039 for first offense
• $52,596 for a 2nd violation within
5 years
• $105,194 for a 3rd violation within
7 years
• May also issue an injunction
Page 289
 FAIR HOUSING ACT ENFORCEMENT
• Parties may elect civil (judicial) action in federal court at any time
with two years of the discriminatory act

• Unlimited punitive damages can be awarded in addition to actual

damages
Page 289
 FAIR HOUSING ACT ENFORCEMENT
• Real estate licensee’s Errors and Omissions (E&O) Insurance
normally does not pay on violations of the fair housing laws

Page 289
 FAIR HOUSING ACT ENFORCEMENT
• The attorney general may file a civil action in federal district court
upon finding reasonable cause of violation
• Up to $55,000 for
first violation
• Up to $110,000 for
second and
subsequent violations

Page 290
 FAIR HOUSING ACT ENFORCEMENT
• Complaints brought under the Civil Rights Act of 1866 are taken
directly to a federal court

Page 290
 IMPLICATIONS FOR BROKERS &
SALESPERSONS
• Intent and Effect
• Disparate Impact – Policies and procedures that appear to be
neutral but negatively affect
people in protected classes

Page 290
 IMPLICATIONS FOR BROKERS &
SALESPERSONS
• Response to Concerns of Terrorism – Landlords and property
managers need to ensure that their procedures do not infringe on
fair housing rights

• Asking applicants for citizenship documentation or

immigration status papers during the screening process does
not violate the Fair Housing Act
Page 290-291
 IMPLICATIONS FOR BROKERS &
SALESPERSONS
• Threats or Acts of Violence
• Fair Housing Act protects rights of those
who seek the benefits of the open
housing law, including property owners,
brokers and salespersons
• Threats, coercion, and intimidation
are punishable by criminal action

Page 291
 IMPLICATIONS FOR BROKERS &
SALESPERSONS
• Threats or Acts of Violence (cont’d)

• Ethnic Intimidation and

Vandalism Act prohibits
retaliation against those who
file complaints

Page 291
 IMPLICATIONS FOR BROKERS &
SALESPERSONS
• Standards of professional ethics address the two sides of a
profession:
1. Standards for integrity and competence in dealing with
consumers
2. Code of conduct for
relations with
professionals inside
an industry
Page 291
 IMPLICATIONS FOR BROKERS &
SALESPERSONS
• National Association of REALTORS® established a Code of
Ethics in 1913
• Practical applications of the
articles of the code are
known as the Standards
of Practice

Page 291-292
 IMPLICATIONS FOR BROKERS
AND SALESPERSONS
• The Pennsylvania Human Relations Commission and the
Pennsylvania Association of REALTORS® have jointly authored
the Fair Housing Guidelines
• Resource for developing nondiscriminatory policies and
procedures

Page 292
 IMPLICATIONS FOR BROKERS
AND SALESPERSONS
• Fair Housing Guidelines:
• Standardized inventory of properties for sale/rent
• Consistent practices
• Verifiable and measurable
criteria
• Written documentation of
interactions
Page 292