5.2 Federal Fair Housing Law and Protected Classes

The federal Fair Housing Act

The Fair Housing Act (Title VIII of the Civil Rights Act of 1968, amended 1974 and 1988) bars discrimination in residential housing on the basis of seven protected classes. Memorize them precisely:

Note what is NOT a federal protected class: age, marital status, sexual orientation, occupation, and source of income are common trap choices. Many states and localities add classes, but the federal list is these seven.

The 1866 Civil Rights Act

A separate, older law — the Civil Rights Act of 1866 — prohibits ALL racial discrimination in property transactions with no exemptions, as confirmed in Jones v. Mayer (1968). So even if a transaction qualifies for a Fair Housing Act exemption, racial discrimination is still illegal under the 1866 Act.

Prohibited practices

• Steering: directing buyers toward or away from neighborhoods based on a protected class.
• Blockbusting (panic peddling): inducing owners to sell by claiming people of a protected class are moving in.
• Redlining: a lender refusing or varying loans by the location/composition of a neighborhood.
• Discriminatory advertising: ads stating a preference or limitation based on a protected class.

These are violations even with no completed transaction and even if the licensee "meant well." Intent is not required; effect controls. A licensee who answers a buyer's question "Is this a good neighborhood for someone like me?" by describing the racial or religious makeup of an area is steering, even if trying to be helpful. The correct response redirects the client to objective resources (crime statistics, school data, census reports) the client can review independently.

Discriminatory advertising includes coded language. Phrases like "perfect for a mature couple," "ideal for a Christian family," "no children," "walking distance to synagogue," or "exclusive neighborhood" can signal a protected-class preference. Describe the property, not the desired occupant.

Disability: accommodations and modifications

Two distinct duties protect persons with disabilities:

A landlord cannot charge a pet deposit for a verified assistance animal, and refusing one is a violation. New multifamily construction (4+ units, first occupancy after March 1991) must meet accessibility design requirements such as accessible routes, usable doors, and reinforced bathroom walls.

Do not confuse the Fair Housing Act with the Americans with Disabilities Act (ADA). The ADA governs accessibility in public accommodations and commercial facilities (a brokerage office open to the public), while the Fair Housing Act governs residential housing. A familial-status note: "adults-only" rules are generally illegal except in qualified housing for older persons (e.g., 55-or-older communities meeting HUD criteria), which is the one lawful way to exclude children.

Exemptions (narrow, never for race)

Limited Fair Housing Act exemptions include: an owner-occupied building of 1-4 units (the "Mrs. Murphy" exemption), single-family home sold/rented by an owner without a broker and without discriminatory advertising, and certain religious organizations and private clubs.

Critical traps: NO exemption applies if a real estate licensee/broker is used, if discriminatory advertising is published, or if the discrimination is based on race (the 1866 Act overrides). An exemption that would otherwise apply is lost the moment a broker is involved.

Enforcement

A complaint may be filed with HUD within one year of the violation, or a federal lawsuit may be filed within two years. HUD investigates, may attempt conciliation, and an administrative law judge or court can impose civil penalties, actual and punitive damages, and injunctive relief.

Civil penalties escalate with repeat offenses: a substantial first-offense maximum rises sharply for a second violation within five years and again for further violations within seven years. Courts may also award the complainant's attorney fees. The lesson for risk management is that a single discriminatory act can produce damages far exceeding any commission.

Brokerage compliance practices

Fair housing is a daily operational duty, not a one-time disclosure. Brokers should apply uniform qualification standards to every applicant (same income, credit, and screening criteria for all), keep written records of objective reasons for any denial, and supervise affiliated licensees' advertising. A licensee must take all lawful instructions from a client but may never follow an unlawful instruction — a seller's demand to "not show the home to certain buyers" must be refused, and the licensee should withdraw rather than comply. Steering, even at a client's request, exposes both the licensee and the broker to liability.

Exam strategy for fair-housing questions

When a fair-housing question appears, first name the protected class involved and confirm it is one of the seven federal classes. Then ask whether the conduct is steering, blockbusting, redlining, or discriminatory advertising, and whether intent matters (it does not — effect controls). Finally, test any claimed exemption against the three deal-breakers: a broker is involved, discriminatory advertising was used, or the basis is race. If any deal-breaker is present, the exemption fails. The most-tested single fact is that the 1866 Civil Rights Act bans racial discrimination absolutely, with no exemptions whatsoever.