This is the second episode in our new video series covering state and federal fair housing laws. The first episode introduces the Civil Rights Act and the Federal Fair Housing Act (FFHA).

Qualifying and processing tenants

The Federal Fair Housing Act (FFHA) prohibits a seller, landlord or property manager from unlawfully discriminating against individuals during solicitations and negotiations for the sale or rental of a dwelling. [42 USC §3604(a)]

Thus, in the context of leasing, a landlord or property manager may not:

  • refuse to rent a dwelling or to negotiate the rental of a dwelling for prohibited discriminatory reasons;
  • impose different rental charges on a dwelling for prohibited discriminatory reasons;
  • use discriminatory qualification criteria or different procedures for processing applications in the rental of a dwelling; or
  • evict tenants or tenants’ guests for prohibited discriminatory reasons. [24 Code of Federal Regulations §100.60(b)]

Different terms, different privileges

Consider a broker who is hired by a residential apartment landlord to perform property management activities. One of the broker’s duties as a property manager is to locate tenants to fill vacancies.

A tenant from a religious minority group contacts the broker about the availability of an apartment.

The broker (or their agent) informs the prospective tenant of the monthly rent. However, the rate the broker communicates to the prospective tenant is higher than the rent nonminority tenants are asked to pay for similar apartments.

When the prospective minority tenant asks the broker for an application, the broker informs the tenant a nonrefundable screening fee is charged to process the application. The creditworthy minority tenant fills out the application, pays the fee and is told the processing will take several days.

In the meantime, a nonminority tenant inquires about the rental of the same or similar apartment. The monthly rent rate the broker quotes the nonminority is lower than the rent rate the minority tenant was quoted, even though the nonminority tenant is not as creditworthy as the minority tenant. Further, the nonminority tenant is not charged a screening fee with their application. The apartment is immediately rented to the nonminority tenant.

Here, the broker’s actions were racially or religiously motivated, a violation of the FFHA. The broker misrepresented the availability of the apartment based on the tenant’s religion by using different procedures and qualification standards in accepting and processing the tenant’s application. [United States v. Balistrieri (7th Cir. 1992) 981 F2d 916]

Selective reduction

Selective reduction of buyer or tenant privileges, conditions, services and facilities offered to protected individuals is prohibited. Selective reduction can take the form of:

  • using less favorable provisions in lease or purchase agreements, such as in rental charges and closing requirements;
  • delaying or failing to perform maintenance;
  • limiting use of privileges, services or facilities to different classes of individuals; or
  • refusing or failing to provide services or facilities due to an individual’s refusal to provide sexual favors. [24 CFR §100.65(b)]

Further, the landlord or property manager may not discriminate based on an individual’s status by representing that a dwelling is not available for rent in order to direct the individual to a particular Section 8 project or neighborhood, when the dwelling is available. This practice is called steering.

Steering involves the restriction of an individual seeking to rent or purchase a dwelling in a community, neighborhood or development, when the guidance  perpetuates segregated housing patterns. [42 USC §3604(d); 24 CFR §100.70]

A broker or their agent advertising a rental unit is barred from using any wording that indicates a discriminatory preference or limitation against individuals of protected classes of people. Again, protected status could be based on, say, religion, gender or family status.

Note, there are some limited exceptions. Housing qualified for older citizens which excludes children is not considered prohibited discrimination against tenants with children based on family status. However, for housing to exclude children it needs to first qualify as housing for the elderly.

A senior citizen housing project is housing:

  • intended for and solely occupied by persons 62 years of age or older; or
  • intended and operated for occupancy by persons of 55 years of age or older.

Blockbusting for exploitation

An attempt to influence sales or rentals of real estate by exploiting the prejudices of property owners in a neighborhood is known as blockbusting

.

Blockbusting occurs when an agent makes negative representations about a change in the ethnic makeup of a neighborhood and the negative economic consequences resulting from the change.

Examples of blockbusting activities include:

  • actions which portray the neighborhood as undergoing a change in the race of its residents in order to encourage an owner to offer a dwelling for sale or rent; or
  • encouraging an owner to sell or rent a dwelling by making the assertion the entry of persons of a particular race will result in undesirable consequences for the neighborhood or community, such as a lowering of property values. [24 CFR §100.85(c)]

Blockbusting is also known as panic selling when the agent is attempting to induce a seller to list and sell their property due changes in the ethnic makeup of an area.

You’ll also notice this concept that is very similar to that of steering. Remember, steering concerns providing guidance or behaving in such a way that perpetuates segregated housing patterns. For instance, only showing clients properties the agent deems appropriate, not those the client asks to see.

Alternatively, blockbusting concerns an attempt to influence sales or rentals of real estate by exploiting the prejudices of property owners in a neighborhood. For example, a licensee attempting to secure a listing to sell a residential property by telling the seller the neighborhood demographics are changing, and they need to sell now before the change occurs.

To help keep these concepts separate, keep the parties in mind.

Blockbusting  and panic selling relate to sellers; steering refers to buyers or tenants –  both are strictly prohibited under the Federal Fair Housing Act.