Fair Housing Act Insight

There is quite a buzz across the industry about the Fair Housing Act with many of my colleagues sharing stories of company meetings focused on fair housing law and practices to prevent liability issues in the industry.  A great idea to train and brief agents on how to abide by these laws, but in 15 years in the business, I’ve never seen such attention paid to this matter (just today a client of mine asked what kind of people lived in the building and the agent wisely responded, "I can’t tell you that.")

The following excerpt is directly from my companies weekly sales meeting.  An attorney from a very reputable law firm spoke to everyone in our office.  He discussed Fair Housing Discrimination.

Discrimination is the intentional policy or practice that results in unequal treatment of a person or persons in a protected class. He (the attorney) focused on co-ops. From his perspective it is not relevant what co-ops do. Neil is here to protect the broker.

What are the penalties for violating Fair Housing Laws?
$11,000; $27,500; $55,000; $111,000; $250,000. These are all prescribed penalties for violating fair housing laws. You can also be sued for actual damages and punitive damages. You cannot afford to be sued for a fair housing violation. You would be professional ruined, financially ruined and personally ruined. You can be sued and since Prudential Douglas Elliman is responsible for you they will be sued as well. To avoid these problems you need to follow equal professional services. You need to treat everyone equally and be professional at all times. He suggests that you develop a system of record keeping. You should document every visit and every phone call that you make. You should have a folder for each client, so that when you meet someone you ask the same questions every time. This is extremely important. He strongly recommends coming up with an intake form. It enhances professionalism, and you ask the same questions. You treat people the same way every time you meet them. 

This attorney also suggests that you listen. Some brokers listen to what someone has to say and then they immediately tell them all the things that they think they want to hear. The truth is that you need to listen to what your potential customers are asking you for. What areas are they looking for; what apartments are they looking for. You need to listen more. (Just Shut up)

Do you return all your phone calls? You should have procedures on how you answer all your phone calls. If you get a phone call – you should return it. Treat everyone equal and educate yourself. Educate yourself about the laws and about fair housing. He recommends that you use Fair Housing logo’s on all of your advertising. After you introduce yourself to your potential customer you should tell them that you are an advocate for all fair housing laws and you subscribe to fair housing. It gives you the ability down the road when you are asked a question that is clearly volatile of fair housing to turn around and say "remember we had that discussion about fair housing, the question you just asked me would be a violation of fair housing and I can’t answer that question. Your answer lets them know that you support fair housing.

Testers – You don’t always know when you are being tested but usually you have a sense when you are being tested. A lot of testers are going to new developments. The testers are here to make you fail. They will badger you. As members of REBNY you subscribe to a Code of Ethics and part of that Code of Ethics states that you agree to comply with all local, state and federal laws. NYC has the most comprehensive list of protective classes, even more than federal and state law.

Protective Class – A protective class is a group of people who share common characteristics and are protected from discrimination and harassment.

What you can and cannot do? Listed below are unlawful practices.
• You cannot refuse to sell, rent or negotiate with any person or otherwise make the dwelling unavailable based on a protective category. For example you can’t say you won’t sell to a person because they are a particular faith.
• You cannot change the terms, conditions or services for different individuals as a means of discrimination. For example, you cannot say families with children will have to pay higher rent.
• You cannot represent that a dwelling is not available when it is available.
• You cannot create print materials or advertisements in a matter that either directly or indirectly expresses a discriminatory preference or limitation. For example, you cannot say you specialize in a particular group of national origins.
• You cannot steer perspective purchasers or renters to or from an area based on the makeup of that particular area.
• You cannot block bust or create a perception that a neighborhood is changing.
• People cannot be denied membership in a multiple listing service or real estate broker’s organization based on a protective class.
• You cannot threaten, coerce or intimidate individuals because they exercise their fair housing rights or assist others in doing so.
• From a lender’s prospective the lender cannot alter the terms or conditions of a loan based on a protective category.
• Lenders cannot indicate a particular area where they will not lend in.

Who is liable? Any person who has the authority to rent, sell or deal with applicants who are a resident of a housing accommodation may be liable for unlawful practices. This includes landlords, superintendents, managing agents, co-op board members and real estate brokers. Similarly newspapers or other publications in media that print discriminatory advertising can also be held liable for the ads that convey discriminatory language.

What can you do? Housing providers do have the right to screen applicants. They can set financial and credit qualifications provided all inquiries are applied equally. This goes back to the intake form. You have to ask the same questions and the same criteria for everyone. If you are going to ask for income, W9’s, pay stubs – you ask this from everyone. You can run credit checks. You can ask for work and landlord references. You can conduct interviews. You have to require the same documentations for everyone that you meet. You cannot discriminate in any circumstance based on someone’s race or color.

Co-ops – You have to assume that when you deal with a co-op that all co-ops are required to follow all fair housing violations. They are not allowed to discriminate. Even if you think that they do, you have to assume that every co-op board subscribes to all fair housing laws and is doing the right thing. There are cases where co-op boards have been found guilty of fair housing violations and discrimination. Coop boards and their ability to reject is under scrutiny. Coops can reject because someone is eccentric but they cannot reject based on occupation. There are two bills pending in the state legislature. There are local bills pending that would require coop boards to give a reason why they rejected someone. Suppose you are suggesting that you heard that a co-op discriminates and in reality they don’t discriminate. You make a decision not to take your customer there. You may have hurt a potential seller, you may have hurt a potential purchaser and you probably hurt a co-op board as well. If you are telling people that a co-op board discriminates then you may be liable for slander. You need to think about what you are saying and what you are conveying to people.

The Co-op Application – Who lives in the building? Your response should be “There are lots of people who live in the building”. Why are you the best person to tell your perspective customer who lives in the building. Let them stand outside in the morning or sit in the lobby if the doorman will let them. Let them make the decision.

Citizenship – You cannot ask if you are a US citizen because citizen is a protective class. You can ask if they have a bank account in the United States and what is their financial make-up. If they don’t have any money in the US then they might not be able to afford to meet the financial criteria. A diplomat is a status (not a protective category) as long as all diplomats are treated the same way a coop board can say unless they are going to waive their diplomatic immunity, unless they are going to put a year’s maintenance into escrow they are not going to allow them in the building and they can do that. Coops can say that they will only permit people who this will be their primary residence. You can’t ask for a marriage license to see if they’re married. You can’t ask for a birth certificate to see where they were born.

Occupation is a protective category. A lot of applications ask what your occupation is. You cannot ask this question. You can ask if they are employed and what company they work for. Why is it relevant what your occupation is? What really matters is how much money you have in the bank.

How do you deal with the other broker who asks what your client’s occupation is? You should tell the other broker that you can’t answer that question. Why is it relevant what your client does for a living?

What if a client volunteers their occupation to you? What was the context and how did it come about? You should not share that information with another broker. You should be very careful about what information you are divulging.

Board applications- What should you do when they ask occupation and US citizenship – Should you leave it blank? There is a difference between typing the form and filling out the form. Do not go through every question of the application with your client. You should not be the facilitator. Have them fill it out. Keep a copy of the typed and the handwritten version so there is never a question about what was on there. If you have a customer who does not want to answer the occupation question. The attorney suggests having them star* it and write they are not comfortable answering the question and by law they don’t feel they have to. Everyone feels that they will be rejected by the board. Your argument would be that by doing this they are putting the board on notice and the board will be less inclined to reject based on that. Neil feels it will be the opposite and they will recognize that that is not the right question to ask.

Advertising Terms– Be very careful about what you say in your advertising. Always have a manager approve it before you send it out.

In conclusion, the Department of State will be cracking down on people who take listings from other sites and put them on their own sites. The attorney  believes this is a violation of the REBNY code of ethics and the Department of State. He is going to continue to pursue this and will keep us updated.

What’s so shocking about all of this is how many people in my industry violate these laws each and every day.  For those who do…study this and change your practices.