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Avoid Violation of the Fair Housing Act By Staying Up-to-Date on Discrimination Issues

The call may seem very innocent. A person calls about the availability of an 800-square-foot apartment advertised by your company in the local newspaper. When the caller asks about whether her companion Labrador retriever is allowed in the unit, you let her know that the owner does not allow pets, but that you have a great, large-dog-friendly single family home for the same monthly rent. She politely declines the invitation and the call ends.

Approximately two months later, you are served with a housing discrimination complaint from the U.S. Department of Housing and Urban Development (“HUD”). Upon reading the complaint, you discover that you are being sued for discrimination and anti-steering by the woman with Labrador retriever who contacted you a few months ago. However, this woman was not actually a prospective tenant. Rather, she was a tester working with a private company who is in the business of trying to entrap real estate licensees into committing violations of the Fair Housing Act. Not only are you now facing statutory penalties up to $10,000 for first time violators, but this private company is trying to negotiate a settlement with you in order to drop the complaint. Worse yet, HUD encourages such a settlement and attempts to facilitate settlement by acting as the “mediator.” This scenario is one that occurs on a regular basis in California.

Several years ago, Congress authorized HUD to cooperate with non-profit organizations in order to uncover discriminatory practices of real estate licensees. One of the ways that these companies discover such practices is by acting as “testers.” These tests can relate to any of the protected classes (i.e., race, color, religion, sex, national origin, familial status, ancestry, sexual orientation, and disability). Even though these companies have no intent to rent or purchase the home, they still have standing to bring a complaint against you for failing these tests, even if the alleged discriminatory conduct was unintentional. Remember, ignorance of the law is not a defense to a discrimination claim.

To help avoid a HUD complaint, which is not covered by most Errors and Omissions policies, it is crucial that all licensees are up-to-date on state and federal housing discrimination laws. One of the best ways to achieve this goal is to contact the California Department of Fair Employment and Housing or the local branch of the U.S. Department of Housing and Urban Development. Each of these entities has several resources available to the general public regarding fair housing, including the following: speakers that will appear at an office meeting (if your office is large enough) or at a seminar for a local organization to discuss these issues; recent articles on hot button issues; and webinars.

By keeping apprised of recent trends and developments in fair housing, most agents will be able to properly identify and handle discrimination issues. Take for example the situation discussed above with the Labrador retriever. With proper training, the agent would have known that, by using the term “companion,” the woman was seeking a reasonable accommodation of the owner’s no-pets policy due to a physical or mental impairment. At that point, the agent should have implemented the company’s reasonable accommodation policy (if a company does not have such a policy, please contact an attorney to prepare one) for the handling of this special request. While accommodation policies can vary, the following is an example of how to handle such a request:

  1. When an agent receives a request for a reasonable accommodation from a potential applicant, the agent should:

(a)            Request that the applicant complete a rental application;

(b)            Request that the applicant complete a Reasonable Accommodations form;

(c)             If the need for accommodation is not visually obvious, request that the applicant have the Reasonable Accommodations Verification Form completed by a third-party professional detailing the applicant’s need for the accommodation;

(d)            Inform the supervisor that a request for reasonable accommodation has been received; and

(e)            Enter the request into the CRPM Reasonable Accommodation Log Book.

  1. Once the above-referenced documents are provided by the applicant, the agent should forward the documents to his/her supervisor for review.
  1. Upon completion of review, the supervisor should submit the completed rental package to the owner of the property for their review and approval.
  1. When a final decision is made on the applicant’s request, supervisor should send a letter to the applicant outlining the decision of the owner.

By following a properly prepared reasonable accommodation policy and by staying apprised of the law and recent trends, agents can hopefully avoid the emotional and financial agony that comes with a housing discrimination complaint.

About the Author  

Attorney At Law

Due to his significant experience in the real estate industry and his dedication to the law, Chris is able to effectively and efficiently assist clients with both their simple and complex legal issues.  He continually strives to put the client’s goals and needs above his own in order to obtain a favorable result for the client.

Since graduating from Pepperdine University School of Law, Chris has specialized in real estate litigation, including but not limited to, the defense of real estate agents and brokers in professional negligence cases; real estate transaction disputes; and landlord-tenant matters.  Additionally, he has handled transactional matters, including the drafting and review of real estate documents (purchase agreements, leases, etc.), preparation of corporate documents, and preparations of responses to complaints with the Bureau of Real Estate (formerly Department of Real Estate).  As a practicing real estate broker, Chris has been able to combine his practical experience and extensive legal knowledge to assist thousands of real estate brokers and agents through the risk management programs for two of the largest errors and omissions insurance carriers in California.

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