Properties for seniors is a growing market in the real estate industry. According to Inman, one in 5 residents will be of retirement age by 2030. In 2013 alone, sales of seniors’ property (including assisted living and congregate care facilities) increased from $1.18 billion to $1.59 billion.
Moving into seniors-only property is an attractive option for “baby boomers” and older people. It can provide a sense of community, social connections, a neighborhood of like-minded and similarly aged residents, recreation activities and access to shared amenities or even medical services when required.
So how can you market only to seniors without contravening the law? It’s important to understand the risks and how to mitigate them when selling or renting seniors-only property, to avoid facing a lawsuit.
The Fair Housing Act
The Fair Housing Act prohibits discrimination in the course of selling or renting property (among other things), and it is illegal to make housing unavailable on the basis of:
Race or color
Country of origin
Discrimination on the Basis of Familial Status The Fair Housing Act prohibits any discrimination in relation to housing against families with children aged under 18. Imposing any special conditions or requirements for tenants who have children is also prohibited.
But seniors’ communities are an exemption to this. The Federal exemption allows some housing developments to be dedicated to seniors only, without contravening the Fair Housing Act. In these communities, households with children can be legally limited.
How the Exemption Works
To make sure you comply with the Fair Housing Act, it’s important to understand how the exemption for seniors’ housing works. You cannot simply advertise a property for seniors, prohibiting families with children, and claim an exemption.
First, the property needs to be qualified as seniors’ housing. In order to do this, the housing body or community must prove at least one of the following:
The housing has been determined by the US Department of Housing and Urban Development to be “specifically designed and operated to assist elderly persons”
The community is 100% occupied by persons aged 62 years or older
The community is intended for occupancy of people aged 55 years and older, and a minimum of 80% of the housing in the community has at least one resident aged 55 years or older.
The housing must also have a policy framework which demonstrates it’s a seniors’ housing development. Additionally, there must be a procedure in place to verify the age of residents before granting access to the community.
It should be noted that this exemption under the Fair Housing Act is only in relation to familial status. There are no such exemptions for any other class of discrimination mentioned in the Fair Housing Act. Therefore, any discrimination against race/color, religion, disability, gender, or national origin, is not protected.
Selling or Renting Seniors Only Property
There have been several cases in the past where properties have been marketed as seniors- only property, without actually meeting the criteria for the exemption under the Act. Click here for an example case.
As a real estate agent, it’s important that you understand what criteria needs to be met to qualify for the exemption, to help minimize risk to yourself and your business.
Determining Whether A Property Is Eligible for Exemption
If you’ll be nvolved in selling or renting a seniors-only property, you’ll need some things in writing. Obtain written confirmation from the housing association or community that confirms that it is, in fact, a seniors’ housing community, exempt from the Fair Housing Act familial discrimination provisions. This signed document will protect you against liability, if at some point in the future the property is found not to be exempt under the Fair Housing Act.
Keep in mind, however, your responsibility to disclose. You are required to disclose any material fact which would impact: a) the value of the property, or b) a buyer’s decision to purchase the property. So, if you know — through whatever means- – that the property does not belong to an eligible seniors’ only community, you are required by law to disclose this information.
Ordinarily, under the Fair Housing Act, any restrictions based on familial status in relation to access to services would be prohibited. However, in relation to seniors’ only housing, this is also an exemption under the act. That means it’s legal to advertise some restrictions to families or children, with regards to community facilities, for example, the pool, spa, or sauna. It is also fine for communities to prohibit families and children from living in their complex altogether.
As residents age, there may be a need for younger family members or caregivers to move in to assist and support them in their daily activities. This is allowed, and caregivers are not considered when determining the percentage of aged persons in a community, for the purposes of exemption. Furthermore, buyers or renters cannot be rejected on the basis of their caregiver’s age.
Getting Your Marketing Right
Once you’ve confirmed eligibility for exemption under the Fair Housing Act, you should ensure all of your marketing and promotions for the property make it very clear it’s a seniors-only property. Being honest about what it is and the eligibility requirements to purchase or rent will make it much easier to find the right buyer or tenant.
Protecting Your Business
Real estate can be risky business, and sometimes issues can arise when dealing with seniors-only property. Real Estate E&O Insurance is one of the best ways to achieve peace of mind, minimize your risk, and reduce the chance of liability in your real estate business. CRES has been helping real estate professionals like you for more than two decades. Call the friendly team today on 800-880-2747 to discuss your E&O insurance needs.
This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.
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