What is the Civil Rights Act?

Regardless of race, all citizens of the United States have the right to purchase or rent real estate under the federal Civil Rights Act. [42 United States Code §1982]

Further, all individuals within the United States are given the same rights to make and enforce contracts , sue, be sued, enjoy the full benefits of the law and be subject to the same punishments, penalties, taxes and licenses, regardless of race or legal status. [42 USC §1981]

The federal Civil Rights Act applies to race discrimination on the sale or rental of all types of real estate, both residential and commercial. Racially motivated activities in any real estate leasing transaction are prohibited.

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.

Anti-discrimination in residential property

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. [42 USC §3601 et seq.]

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 sale or lease for residential dwelling units, such as a lot or space made available to hold a mobilehome unit. [42 USC §3602(b)]

The FFHA bars the use of any discriminatory actions a seller, landlord or property manager might take against a prospective buyer or tenant based on an individual’s:

  • race or color;
  • natural origin;
  • religion;
  • sex;
  • familial status; or
  • handicap. [42 USC §3602]

Familial status refers to whether a household includes individuals under the age of 18 in the legal custody of a parent or legally designated guardian. [42 USC §3602(k)]

Handicapped persons are individuals who have:

  • a physical or mental impairment which substantially limits the individual’s life activities; or
  • a record of, or are regarded as having, a physical or mental impairment. [42 USC §3602(h)]

The term “handicap” excludes individuals who illegally use a controlled substance. However, alcoholics and individuals who are considered “recovering or recovered addicts” are protected as handicapped individuals. [United States v. Southern Management Corporation (4th Cir. 1992) 955 F2d 914]

Qualifying and processing tenants

The 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 quoted rate the broker communicates to the prospective tenant is higher than the rent non-minority tenants are asked to pay for similar apartments.

When the prospective minority 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 non-minority tenant inquires about the rental of the same or similar apartment.

The monthly rent rate the broker quotes the non-minority is lower than the rent rate the minority tenant was quoted, even though the non-minority tenant is not as creditworthy as the minority tenant. Further, the non-minority tenant is not charged a screening fee with their application. The apartment is immediately rented to the non-minority 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 minority status 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 §100.80]

Discrimination in advertisement

A broker or their agent making a notice, statement or advertisement when handling the sale or rental of a dwelling is barred from using any wording that indicates a discriminatory preference or limitation against individuals of protected classes of people. [42 USC §3604(c)]

The prohibition against prohibited discriminatory advertisement applies to all oral and written statements.

Notices and statements include any applications, flyers, brochures, deeds, signs, banners, posters and billboards used to advertise the availability of a dwelling for rent.

Related video: Advertising Guidelines for Sales and Rentals 

Blockbusting for exploitation

An agent, residential landlord or property manager may not induce or attempt to induce an individual to offer or abstain from offering a dwelling to prevent the entry of certain classes of people into the neighborhood. [42 USC §3604(e)]

Further, a landlord’s or agent’s actual financial gain is not necessary to establish a blockbusting conduct. The mere profit motivation is sufficient to establish blockbusting activity. [24 CFR §100.85(b)]

Examples of blockbusting activities by an agent, landlord or property manager include:

  • encouraging an owner-occupant to offer their home for sale or rent by insinuating that a neighborhood is undergoing or is about to undergo a change in the race, color, religion, sex, handicap, familial status or national origin of its residents; or
  • discouraging an owner-occupant from offering their home for sale or rent by claiming the entry of individuals of a particular race, color, religion, sex, familial status, handicap or national origin will result in undesirable consequences for the neighborhood or community, such as an increase in criminal activity or a decline in schools and other facilities. [24 CFR §100.85(c)]

Related Video: Blockbusting for Exploitation

Exemptions from prohibited discrimination

 There are exemptions to the FFHA prohibitions. A landlord who rents out a single family residence (SFR) is exempt from FFHA discrimination prohibitions if they:

  • own three or fewer SFRs;
  • do not use a real estate licensee to negotiate or handle the tenancy; and
  • do not use a publication, posting or mailing for any discriminatory advertisement. [42 USC §3603(b)(1)]

Also exempt from FFHA discrimination rules is the sale or rental of a residence in a one-to-four unit residential rental property which is occupied in part by the owner. [42 USC §3603(b)(2)]

Religious organizations who limit the sale, rental or occupancy of dwellings to individuals of the same religion are also exempt, provided the dwelling is owned for noncommercial reasons. No religious exemption exists if the religion is restricted to individuals of a particular race, color or national origin. [42 USC §3607(a)]

Private clubs which provide their members with residential dwelling space for noncommercial purposes may limit rental or occupancy of the dwellings to members.

Finally, housing qualified for older citizens which excludes children is not considered prohibited discrimination against buyers or tenants with children based on familial status. However, for housing to exclude children it needs to first qualify as housing for the elderly. [42 USC §3607(b)]

A provision in a written instrument which refers to qualified senior citizen housing is enforceable as allowable age discrimination.

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. [42 United States Code §3607(b)]

Failure to comply with the FFHA

Any individual who claims they have been injured by a prohibited discriminatory housing practice under the FFHA or believes they will be injured by such a practice is considered an aggrieved individual. [42 USC §3602(i)]

An aggrieved individual may file a complaint with the Secretary of Housing and Urban Development (HUD), within one year of the alleged discriminatory housing practice [42 USC §3610(a)]

HUD then attempts to resolve the dispute by having the parties enter into informal negotiations, called mediation. [42 USC §3610(b)]

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.

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. [42 USC §3612(a)]

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. [42 USC §3612(g)(5)]

When a court determines discriminatory housing practices have taken place, actual and punitive amounts of money awards may be granted. Also, an order may be issued preventing the landlord or broker from engaging in any future discriminating housing practices. [42 USC §3613(c)(1)]

How real estate professionals avoid discrimination

Ways to avoid discrimination in your practice include:

  • Ask all potential buyers and renters the same questions.For example, property managers can and should ask prospective renters about factors that impact their building (e.g., if the applicant has pets or a waterbed). Never ask if a prospect belongs to a protected class, such as religion or sexual orientation.
  • Keep records of client interactions. These records may help you recognize any prejudices you might hold and prove your innocence in the event of a lawsuit.
  • Never assume what the client wants. No matter what protected class a client belongs to, agents need to treat all their clients with the same high standard of due diligence. For example, if an agent has a religious client, they should not refer them only to neighborhoods with a high religious population. The client may not prefer that, and even if the agent’s actions are well intended, they are still treating the client differently based on what the agent erroneously believes the client wants.