The Impact of the Fair Housing Act of 1968 on Real Estate

Instructor: Shawn Grimsley

Shawn has a masters of public administration, JD, and a BA in political science.

Federal fair housing laws prohibit certain types of discrimination in the sale or rental of housing. In this lesson, you'll learn about the Fair Housing Act of 1968 and its amendments and exemptions.

What is the Fair Housing Act?

Once upon a time in the not too distant past, people in the United States were routinely denied housing or financing for housing because of prejudice. Congress attempted to remedy this by passing the Civil Rights Act of 1968. Title VIII of this law is known as the Fair Housing Act. Title VIII makes discrimination based upon race, color, religion, sex or national origin in the sale, rental or financing of housing illegal. Title VIII was amended by the Fair Housing Amendments Act of 1988. The amendments made discrimination in housing based on disability illegal. It also made illegal any discrimination in housing based upon familial status, providing protection for pregnant women and families with minor children.

Impact on Real Estate

The U.S. Department of Housing and Urban Development (HUD) enforces the Fair Housing Act and its amendments. HUD delineates the ways in which the act works to provide fairness and opportunity to all parties involved in housing transactions including, but not limited to, sellers, buyers, renters, landlords, leasing agents, real estate agents or brokers, property appraisers and lenders.

Essentially, it is illegal to withhold, manipulate or deny fair housing or financing for housing to anyone who falls within on of the classes of people outlined in the Fair Housing Act and its amendments. For example, if you are disabled, you fall within the class of disabled people who are protected under the Fair Housing Act, as amended. We'll refer to people that fall within one of the classes of people protected under federal fair housing laws members of a protected class for the remainder of this lesson.

Prevention of Discrimination in Housing

The Fair Housing Acts covers a very broad range of transactions and activities related to housing. Let's discuss some examples.

It's illegal for a landlord to give different rental terms to a customer because he is a member of a protected class. A seller can't refuse to sell a dwelling, like a house or condo, or refuse to negotiate for the sale of a dwelling merely because the prospective buyer is a member of a protected class. Leasing agents can't set different conditions on a prospective renter merely because she is a member of a protected class. It's illegal to deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing based upon being a member of a protected class.

Discriminatory practices like blockbusting are illegal. Blockbusting involves conning people in a neighborhood into selling at below market price by claiming members of a minority group are moving in causing property values to plummet. These people then turn around and sell the properties above fair market value to the very minority groups used to scare the former owners into selling.

Additionally, it's a violation of fair housing laws to interfere with someone asserting her rights under the law or interfere with helping others exercise their rights, including threats, intimidation or application of coercion. For example, it's illegal for a real estate broker to threaten to terminate an employee for testifying on behalf of a client who was discriminated against by the brokerage firm.

Mortgage lenders are also affected by this legislation. They may not refuse to provide information on or make a mortgage loan to anyone based on the personal characteristics mentioned in the act or its amendments. Lenders may not impose different interest rates, points or fees on people merely because they are a member of a protected class.

Finally, the Fair Housing Act reaches advertising as well. It's a violation of federal law for any advertisement to state a limitation or preference in selling, leasing or lending in housing based upon race, color, national origin, religion, sex, familial status or disability. For example, advertising a residential subdivision as a Christian neighborhood would violate the Fair Housing Act. Importantly, this prohibition even applies to properties that are otherwise exempt from the act.

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