What Real Estate Professionals Should Know About Fair Housing Laws

By Charles P. Castellon, Esq.

All real estate professionals should be very much aware of certain legal issues regarding housing discrimination and the federal and state laws that cover them.  Some very important issues involve fair housing laws designed to protect the public from the discriminatory practices that once flourished in the real estate industry.

There are many examples of practices known as “steering,”  “block-busting” and “redlining,” among  others, that prevented racial minorities and other disadvantaged members of the public from buying homes.  The Civil Rights movement that gained momentum in the 50’s and 60’s was the catalyst for the passage of a series of legal reforms to change this history and prohibit housing discrimination.

The long history of discrimination led to the passage of the Fair Housing Act.  Also known as Title VIII of the Civil Rights Act of 1968, the law prohibited discrimination in the sale, rental and financing of home purchases and other housing transactions.

The law established protected classes of consumers and prevents discrimination based on race, color, national origin, religion, gender and familial status.  In later years, disability rights came along to require certain reasonable accommodations in limited circumstances.  Among other violations, it is illegal to refuse to rent or sell, refuse to negotiate, refuse to make housing available, falsely deny availability or set different terms and conditions based on a consumer’s membership in one of the protected classes.

In Florida, we have Chapter 760 of the state statutes, known as the Florida Fair Housing Act.  There is much overlap with the federal law.  Having a state version allows for greater enforcement opportunities by government overseers.  This also creates greater potential for liability to all real estate professionals dealing with the public, including investors, realtors, property managers and mortgage lenders.

It is noteworthy that members of the LGBT community to this day lack protected class status.  As a result, under both federal and Florida state law, it is still legal to discriminate in housing based on sexual orientation.  This may be the next legal battleground in the LGBT civil rights movement.

Why is all of this relevant to good real estate players with no intention to discriminate?  The answer is the penalties for violations may be severe, including fines of many thousands of dollars.  Legal violators may not realize they are engaging in prohibited discrimination.  With the most innocent intentions, many may violate the letter of the law and face serious consequences.

In 2015, the U.S. Supreme Court decided a case with serious consequences for anyone who may be on the receiving end of a Fair Housing discrimination claim.  In TX Dept. of Housing and Community Affairs vs. The Inclusive Communities Project, the high court ruled that indirect evidence, including the use of statistics, may be used to show the impact of discrimination.  This means the actual intent to discriminate need not be proven to make out a Fair Housing claim.  This decision will have a far-reaching  impact for all real estate professionals.

Some may believe the history of housing discrimination is a relic from the past and there is no longer a need for these legal protections.  You may be dry, but is it because it’s not raining or you have an umbrella?

This year,  the Department of Housing and Urban Development (the agency in charge of federal enforcement) reached a huge class action settlement with Associated Bank for its discriminatory lending practices from 2008–2010.  Among the terms of this deal was a requirement that Associated Bank give $200 million in mortgage loans to borrowers in minority areas, among other damages.

State and Federal agencies, including HUD and the Florida Commission on Human Relations, send undercover enforcement agents into the housing market to test many industry players as well as field complaints.  Everyone working with consumers in the real estate industry should be very familiar with Fair Housing laws and what it takes to violate them.  If you don’t want to end up somewhere, it’s useful to know the path to getting there so you can avoid it.