January 6, 2021
The Civil Rights Act of 1866, which was passed after the Civil War, said that we cannot discriminate based on race, only in the sale of real estate. The second act, the Civil Rights Act of 1968, applied to residential transactions only in real estate. Currently, there are now seven protected classes. Whereas the 1866 act only prohibited racial discrimination, the 1968 act added the following five protected classes: race, color, religion, national origin, and sex (gender). In 1988, we added the handicapped, a mental or physical handicap, as well as familial status, which means a family with children under the age of 18. One cannot refuse to sell or rent to someone based upon race, religion, national origin, or any other protected class. In addition, one cannot change terms for people based upon their protected class.
There are three main areas in fair housing: blockbusting, steering, and redlining. Blockbusting deals with the sellers. It basically prohibits real estate licensees from encouraging sellers to sell their property by saying persons of a protected class are moving into the neighborhood. In essence, the licensee is trying to “bust up the block”. This is illegal under fair housing laws, specifically the 1968 Act. Also, we have steering as a very important component. Steering deals with the buyers and directs people toward a certain area of town based upon their race or religion or national origin. That is also against the law. The 1968 Act also said that redlining is illegal. Redlining, which deals with lenders and insurance companies who refuse to make loans or refuse to issue insurance policies on the property because the company does not like the type of people who live in that particular area of town, is also illegal. Redlining gets its name from lenders years ago, using a red marker on a map and refusing to make loans in certain areas because of the type of people who lived in that area. Again, that is now illegal under the 1968 Civil Rights Act. There are a couple of exemptions to the fair housing laws. The first one is an owner selling their own single-family home themself. If they do not use a real estate agent, and they do not discriminate in advertising, then this person is simply for sale by the owner and would be exempt from the fair housing laws. A second exemption would be for religious organizations who can discriminate based on religion, as long as they are not for profit or a non-commercial entity. Even there are a couple of exemptions to the fair housing laws, there was a court case in 1968 called Jones vs. Mayer. The ruling basically said even if a person does fall on one of these exemptions to the fair housing laws, that person can never discriminate based on race under any circumstances whatsoever. So, if we have a person who falls under the exemption, maybe a for sale by owner, that person may be able to discriminate based upon national origin or may be based upon sex, but that person could never discriminate based on race under any circumstances whatsoever.
The fair housing Amendments Act of 1988 had two additional protected classes. The first one is a handicap, which by definition under this law is a mental or physical handicap. What is not a handicap? Congress specifically said that a person who is currently addicted to illegal substances, such as cocaine, does not qualify as a handicap under this law. A person can not change terms for someone based upon their handicap. A handicapped tenant, for example, can modify the space at their own expense to make living conditions easier. If we have multifamily units, which are four or more that were built after March 13th, 1991, they all must now be accessible to those with a handicap. If there is an elevator, all of the units must be accessible. If there is no elevator, then just the ground floor units only must be accessible. The second item under the 1988 act is familial status, which means we have a family with children under the age of 18. Prior to this, there used to be apartment complexes that would be for adults only. You don't see those anymore because people with children under the age of 18 are now a protected class. The one exception to that would be retirement communities. If everyone is 62 years of age or older, then those particular communities can say, “no children”.
Keep in mind age is not covered under our fair housing laws. So, if a person refuses to rent to someone because they are 19 years old or 70 years old, that actually is allowed. That's different from the retirement home community exemption. If someone feels that they have been discriminated against, that person must file a complaint with HUD, the Department of Housing and Urban Development, within one year. And finally, residential real estate offices must have a fair housing poster displayed to be in compliance with the fair housing laws. Residential licensees do not have to use the fair housing logo system in all advertising, which is a house with an equal sign inside of it. Although HUD does encourage this to be done, the fair housing logo in advertising is not required. The fair housing poster displayed inside the real estate office, however, is required.
Principles of Value
January 6, 2021
In this article, we discuss how a property's value is determined, the purpose of appraisals, and the different types of depreciation. Learn more by reading this short and focused article on property appraisal.
January 6, 2021
Since 1866, there have been several acts that protect certain classes and sects of US citizens. In this article we review what each of them did and who is protected under each act.
Approaches to Valuation
January 6, 2021
In this short article, we review the four main approaches for property valuation - Market Data, Cost, Income, and Appraisal. We've outlined these four different approaches in an easy-to-digest manner that will help you learn how properties are appraised and valued.