Office Hours with Professor Bill is a multimedia learning experience covering fundamental real estate concepts.

In Episode 7, Professor Bill responds to questions about:

  • fair housing laws and the Federal Fair Housing Act (FFHA);
  • blockbusting;
  • steering; and
  • California’s Unruh Civil Rights Act.
Read the transcript of Episode 7

Student: How critical are fair housing laws?

State and federal fair housing laws are critical to ensure an equitable and balanced housing market here in California.

All citizens of the United States have the right to acquire, lease, sell, hold and encumber real estate and personal property, regardless of race.

Further, all adults within the United States have the same rights to make and enforce contracts and enjoy the full benefits of the law, regardless of race.

This protection against race discrimination is given under The Civil Rights Act of 1866 and The Civil Rights Act of 1870 and applies to discrimination generally.

The Civil Rights Acts of 1866 and 1870 apply to race discrimination on all types of real estate, not just residential real estate.

Federal protection against racial discrimination given under the Civil Rights Act is a broad protection which applies to types of discrimination prohibited in all activities between individuals present in the country.

While the federal Civil Rights Act provides general protection against all prohibited discriminatory activity, the Federal Fair Housing Act (FFHA) protections are specifically limited to dwellings, including rental housing.

Student: What exactly is a dwelling?

A dwelling includes any building or structure that is occupied, or designed to be occupied, as a residence by one or more families.

A dwelling also includes vacant land offered for lease for residential dwelling purposes, such as a lot or space made available to hold a mobilehome unit.

So, to put it very simply, a dwelling is a place where you live.

It is not a commercial space used for work or for retail purposes.

Student: What exactly does the Federal Fair Housing Act prohibit?

The Federal Fair Housing Act prohibits discrimination in the following situations:

  • the sale, rental or advertisement of a residence.
  • offering and performing broker services.
  • making loans to buy, build, repair or improve a residence.
  • the purchase of real estate loans; or
  • appraising real estate.

Discriminatory actions of a broker or sales agent covered under the Federal Fair Housing Act are actions taken against individuals based on that individual’s:

  • race or color.
  • national origin.
  • religion
  • sex
  • sexual orientation
  • family status; or
  • handicap

You’re likely familiar with most of these terms. But some may require an explanation.

Family status refers to whether a household includes individuals under the age of 18 in the legal custody of a parent or legally designated guardian.

Handicapped persons are individuals who have a physical or mental impairment which substantially limits the individual’s life activities.

Student: Does the Federal Fair Housing Act extend to leases as well?

The Federal Fair Housing Act prohibits a landlord or property manager from unlawfully discriminating against individuals during solicitations and negotiations for the rental of a dwelling.

Thus, 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.

Selective reduction of tenant privileges, conditions, services and facilities offered to protected individuals is prohibited.

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 neighborhood, when the dwelling is available.

This practice is called steering.

Steering is also prohibited in the context of sales.

Steering involves the restriction of an individual seeking to rent or buy a dwelling in a community or neighborhood when the guidance perpetuates segregated housing patterns.

In other words, it is an unlawful housing practice that includes words or actions by a real estate sales licensee intended to influence the choice of a prospective buyer or tenant.

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.

Student: What exactly is blockbusting?

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.

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.

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.

Student: What if I encounter a client or individual who claims they’ve been discriminated against?

Any individual who claims they have been injured by a prohibited discriminatory housing practice under the Federal Fair Housing Act or believes they will be injured by such a practice is considered an aggrieved individual.

An aggrieved individual may file a complaint with the Secretary of Housing and Urban Development (HUD).

The complaint must be filed within one year of the alleged discriminatory housing practice.

HUD then attempts to resolve the dispute by having the parties enter into informal negotiations, called mediation.

If mediation is not successful, a judicial action may be initiated by HUD as a complaint to resolve the issue of discrimination.

The dispute will then be resolved by an administrative law judge.

Alternatively, any party to the complaint may elect to have the claims decided in a civil action before a court of law in lieu of using an administrative law judge.

When a real estate broker subjected to a judicial action is found guilty of discriminatory housing practices, HUD is to notify the DRE and recommend disciplinary action.

When a court determines discriminatory housing practices have taken place, actual and punitive amounts of money awards may be granted.

This means the aggrieved individuals may recover their actual losses, as well as additional damages from the licensee as a penalty.

Student: How does California’s Unruh Civil Rights Act differ from the Federal Fair Housing Act?

California’s Unruh Civil Rights Act is another anti-discrimination law which prohibits discrimination by a business establishment based on many of the status classifications previously noted.

This includes:

  • retail establishments.
  • restaurants
  • hotels and motels.
  • theaters
  • doctor’s offices and hospitals; and
  • barber and beauty shops.

The Unruh Civil Rights Act also applies to anyone in the business of providing housing.

Brokers, developers, apartment owners, condominium owners and single-family residential owners renting or selling are all considered to be in the business of providing housing.

The DRE also has regulations prohibiting discriminatory practices by real estate brokers acting on behalf of a client.

A broker or their agent engaging in discriminatory business practices may be disciplined by the DRE.

A broker has a duty to advise their agents and employees of anti-discrimination rules, including DRE regulations, the Unruh Civil Rights Act, and the FFHA.

The broker, in addition to being responsible for their own conduct, owes the public a duty to ensure their employees follow anti-discrimination regulations when acting as agents on the broker’s behalf.