RE-CA-CE-Fair_Housing

Fair Housing
California
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VERSION 2023-02-16
CONTENTS
Module 1: INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Fair Housing Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Major Homeownership Inequality Persists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Fair Housing Law is Not Intuitive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Role of Real Estate Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Module 2: HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Discriminatory Exclusion and Terrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Valuation and Race . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Real Estate Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Law and Policy Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Court Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Work Continues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Module 3: FAIR HOUSING LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Fair Housing Act of 1968 (FHA) and Fair Employment and Housing Act (FEHA) . . . . . . . . . . 19
Prohibited Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Scenario 1: Yuna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Who Must Comply with FHA and FEHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Disclosure of Death or HIV Positive Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Disparate Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Voluntary Affirmative Marketing Agreements (VAMA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Steering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Unruh Civil Rights Act (Unruh Act) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Senior Citizen Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Ralph Civil Rights Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
The Civil Rights Act of 1866 & 1870 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
The 14th Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Disability Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Americans with Disabilities Act of 1990 (ADA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 504 of Rehabilitation Act of 1973 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
California Disabled Persons Act (CDPA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
I
Fair Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
The Home Mortgage Disclosure Act (HMDA) of 1975 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Equal Credit Opportunity Act (ECOA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
The Holden Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Holden Act Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Fair Appraisal Act (AB 948) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Scenario 2: Your Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Scenario 2: Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Scenario 3: Maya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Scenario 4: Hugh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
California Department of Real Estate Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
REALTOR® Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Fair Housing Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
US DOJ and HUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
CA DOJ and CRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Local Association of REALTORS® . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Private Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Penalties for Fair Housing Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Federal FHA & California FEHA Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
DRE Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
NAR® Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Common Fair Housing Property Management Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Familial Status (Occupancy Limit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Race (Criminal History Information) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Source of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Harassment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Marketing and Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Module 4: CONTINUING CHALLENGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Implicit Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Real Estate Agent Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Appraisal Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Scenario 6: Priyanka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Lender Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Scenario 7: Sketchy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Redlining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Predatory Lending and Reverse Redlining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Scenario 8: Jane and Sam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Module 5: RECOMMENDED BUSINESS PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
II
Buyer Intake Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Home Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Neutral Community Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Scenario 9: Pilar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Scenario 10: Sheree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Scenario 10: Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Marketing and Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Words to Use and/or Avoid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Permissible Phrases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Inclusive Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Other Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Scenario 11: Jamal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
C.A.R.'s Fair Housing and Discrimination Advisory Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Buyer Love Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Advice to Seller's Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Advice to Buyer's Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Lending and Appraisal Tips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Next Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
III
Module 1: INTRODUCTION
The California Association of REALTORS® has engaged in many campaigns and initiatives to expand
housing and homeownership opportunities to underserved communities, including lobbying to expand federal
Fair Housing Act protections to the LGBTQ+ community and sponsoring legislation to expand the fair
housing portions in the mandatory continuing education for real estate licensees. Despite these efforts, fair
housing challenges remain, racial homeownership disparities persist and may be increasing, and fair housing
education is as important as ever.
A highly publicized example of how common it is for real estate agents to engage in different treatment on
the basis of race was Newsday's Peabody Award-winning 2019 Long Island Divided investigation1 .
The Long Island newspaper's exposé of real estate agents exhibiting rampant bias in their interactions with
prospective clients sent major shock waves through the real estate industry and beyond. Fair housing testing
of 93 real estate agents found that 49% of the Black, 39% of the Latino, and 19% of the Asian testers were
treated differently than White testers who were otherwise very similar.
Some of the Newsday videos showed agents making coded statements that evoked racial stereotypes such
as, "I'm not going to send you anything in Wyandanch unless you don't want to start your car to buy your
crack, unless you just want to walk up the street" and "follow the school bus, see the moms that are hanging
out on the corners." Other videos showed agents blatantly referencing race to disparage neighborhoods: "in
East Hampton… the Hispanic community came in and they really took over Springs."
The Newsday investigation suggests that any real estate professional might inadvertently steer clients if they
have unchecked biases. Sure enough, University of New Mexico Sociology Professor Elizabeth Korver-
Glenn2 examined how many real estate professionals in Houston perceived segregation as natural. Professor
Korver-Glenn discovered that licensees advised (and sometimes selected) clients based on the clients' race
and the racial composition of communities, confirming that rampant bias in real estate extends to markets
well outside of the East Coast.
Here in California, The Mercury News3 scanned rental listings in the San Francisco Bay Area in 2020 and
found hundreds of postings stating that Section 8 voucher holders should not apply. These postings violated
a then-new California fair housing law that prohibits source of income discrimination. The National
Bureau of Economic Research4 recently released a study showing that people of color have a tougher
time securing rental housing in most U.S. markets. Los Angeles property managers were among those most
likely to discriminate against fictitious renters with stereotypically African American names.
1 https://projects.newsday.com/long-island/real-estate-agents-investigation/
2 http://www.elizabethkorverglenn.com/race-brokers
3 https://www.mercurynews.com/2020/01/16/why-are-so-many-landlords-violating-this-new-housing-law/
4 https://www.nber.org/system/files/working_papers/w29516/w29516.pdf
Spurred by these studies and other current events, real estate professionals began to reconsider customs that
might allow bias to impact the real estate transaction. For example, recommending buyer letters reveals
demographic data that might inadvertently influence the seller to accept or reject an offer. "Full service"
might traditionally mean offering school recommendations, taking the initiative to filter out homes that
might not be a "fit" or curating a search that avoids "bad areas."
These investigations and a greater commitment to addressing inequality in housing and homeownership have
inspired a movement within the real estate industry to do more about continued fair housing challenges.
REALTOR® Associations have new committees and have or are considering policy changes Real estate
agents are hosting events and creating forums to discuss fair housing with their colleagues, garnering national
attention. Shelterforce journalist Dan Reed wrote a thoughtful article5 that began with this statement:
"A new generation of real estate agents are aiming for meaningful change in an industry most famous for
championing and enforcing segregation."
Additional California laws have been passed that address discrimination, affordability challenges, and other
homeownership barriers likely to affect communities of color. These include Senate Bill (SB) 263, a rule that
requires greater fair housing, implicit bias training for real estate salespersons. If enacted, California Senate
Constitutional Amendment (SCA) 2 would repeal Article 34 of the California Constitution, which contained
provisions that required local voter approval for building public housing projects in the state.
These efforts are just the beginning. The legacy of and disparities caused by hundreds of years of legal and
over 50 years of continued different treatment won't be solved in a matter of months. As the real estate
community continues to learn more regarding current fair housing challenges and the causes of and possible
solutions for housing inequality, we will undoubtedly see more fair housing initiatives in the coming years.
Fair Housing Education
In the 1970s, government officials and private citizens began lamenting continued discrimination and criticized
the lack of fair housing law enforcement. California lawmakers strengthened State fair housing laws in
the mid-1970s by making them more explicit and giving the Department of Real Estate (DRE) greater
enforcement capacity. These new regulations gave the DRE standing to bring administrative hearings against
individual real estate professionals believed to be violating fair housing laws that could lead to license
suspension or revocation.
5 https://shelterforce.org/2021/09/17/realtors-reckon-with-race/
Fair Housing Education 2

Shortly after California strengthened its fair housing laws, the federal Department of Housing and Urban
Development (HUD) entered into Voluntary Affirmative Marketing Agreements with REALTOR® Asso
ciations at national, state, and local levels as well as with the California DRE to encourage fair housing
training for real estate professionals. The REALTOR® Association agreements envisioned that REALTOR®
would participate in training seminars and establish procedures to reduce steering of buyers of color. These
agreements will be discussed in more depth later in the course.
Major Homeownership Inequality Persists

Not only is there widespread evidence of different treatment
based on demographics like race in the real estate transac
tion, but after nearly 60 years of fair housing laws in Cali
fornia, lower homeownership rates persist for communities of
color and other historically underserved groups.
Black and Latino homeownership rates are well below Cali

fornia's overall 56% homeownership rate at 37% and 46%, re
spectively. The homeownership rate for the LGBTQ+ com
munity is approximately 41%. With a national homeowner
ship rate of 65.6%, California's homeownership rate is lower
than every state except New York. The expense of Califor
nia's homes only exacerbates pre-existing disparities attributable to past discrimination.
Although many factors may be to blame for these racial and other homeownership disparities, real estate
agent business practices can often be modified and therefore, should not contribute to these issues. Con
versely, this course will cover the business practices that real estate agents can adopt to promote equal access
to housing for all communities.
Fair Housing Law is Not Intuitive

In order to ensure that they are not inadvertently treating people from different demographic groups dif
ferently, real estate professionals can adopt systems that disrupt or circumvent the brain's natural and
unconscious tendency to stereotype. Disrupting this unconscious bias requires an understanding of how bias
works and the business practices that help reduce the chance of inadvertently treating individuals differently
based on their demographic characteristics.
According to a Vox article6 by Jenée Desmond-Harris, bias "influences the way we see and treat others,
even when we're absolutely determined to be, and believe we are being, fair and objective." Bias, conscious
and unconscious, has also been shown to be a significant cause of different treatment in the real estate
transaction, including real estate agent interactions with prospective buyers.
Additionally, California law mandates additional fair housing requirements than federal law, with approxi
mately 22 demographically protected categories that, under some or all circumstances, cannot legally be the
6 https://www.vox.com/2014/12/26/7443979/racism-implicit-racial-bias
3 Major Homeownership Inequality Persists

basis for different treatment in housing. Newer or lesser-known categories include source of income, familial
status, certain information regarding criminal history, citizenship/immigration status, medical condition,
veteran status, or "any arbitrary characteristic." The law is also constantly changing.
Role of Real Estate Agents
After studying Texas real estate professionals, Professor Korver-Glenn stated that they "are the gatekeepers of
the housing market. As such, the choices they make influence who has access to homes, under what conditions
that access is granted, and where such access is granted." In this primary role, imagine the damaging impact
that bias, ignorance of fair housing law, or market-based customs could have on historically underserved
communities.
By learning about tools for helping first-time buyers who don't have generational wealth, avoiding making
bias neighborhood or school recommendations, and fully informing clients about fair housing rights and
responsibilities, real estate agents can take extra steps to help address homeownership disparities. These
practices support greater neighborhood integration, inclusion, and expanded access to the full benefits of
homeownership for people of all backgrounds.
Fair Housing Law is Not Intuitive 4

Module 2: HISTORY
Although the details of fair housing history in the United States can be harsh and may depart from what
many of us learned in real estate classes or general history courses in school, this information is critical for
our understanding of fair housing law. Additionally, history shows us the impact of discriminatory practices,
segregation and housing policies on California communities.
Individuals who have an inaccurate understanding of the roots of inequality might not fully support fair
housing laws due to apathy about inequality. They may erroneously blame a community for the disparities
caused by government policy and real estate customs. Conversely, understanding this history may support
engaged and thoughtful fair housing law compliance and dispel myths and stereotypes about underserved
communities, particularly communities and neighborhoods of color.
Finally, understanding the reasons for racial wealth and homeownership gaps supports a proper diagnosis of
the cause of these issues and more accurate solutions.
Discriminatory Exclusion and Terrorism

Before American annexation, California's indigenous population had declined dramatically due to European
contact, from an estimated 310,000 to about 150,000. The Gold Rush nearly wiped-out California's remaining
indigenous people due to violence, enslavement, and disease. By 1870, only about 30,000 Native Californians
remained.
During California's first year of statehood, the California Legislature passed the Act for the Gov
ernment and Protection of Indians7 . This Act gave White settlers the right to take custody of Native
American children. It also authorized settlers to arrest Native American people for minor offenses and then
put them to work to pay off fines. Abuse of this law led to the widespread enslavement of Native Americans.
After 1850, an estimated 20,000 Native Americans were enslaved by white settlers.
Native Californians that attempted to defend themselves from attack and dispossession, and many who had
done nothing, were attacked by the new settlers and miners. California's first governor, Peter Hardeman
Burdett, ordered state militias to kill or attack Native Americans. In 1852 alone, California paid $1.1 million
to these militias. By 1870, only about 30,000 Native Californians remained.
Although California joined the Union as a "free state," some White people who migrated to California from
other states brought enslaved people to their new settlements. Additionally, California had a fugitive slave
law that entitled enslavers the right to return individuals who had escaped slavery in another state.
7 https://www.history.com/news/the-enslaved-native-americans-who-made-the-gold-rush-possible
Module 2: HISTORY
Migrants from across the country and worldwide came to the new state. In the 1850s, at least a quarter of
all Californians were people of color. By 1860, almost 40% were foreign-born.
To accommodate the newcomers' desire for land, the United States government entered into treaties with
the leaders of the California tribes that resulted in the surrender of a large part of California land. Even
though the tribes were encouraged to move to proposed reservation areas, the US Senate refused to ratify
the negotiated treaties. There was public outcry that potentially valuable land was being given to the
Native Californians. With the Gold Rush in full swing, newcomers set upon areas that had been set aside
as reservations.
When the Reconstruction era ended in the late 1870s, many towns and counties across the United States
instituted sundown town policies. Sundown towns8 excluded non-white people via law, violence, or
intimidation. There were at least 100 such communities in California.
Japanese, East Indian, and Filipino agricultural communities grew in rural California. Some White Cali
fornians saw them as a threat to their livelihood and racial identity. Several of California's sundown towns
thus focused on anti-Asian exclusion.
In 1851, a county law prohibited Chinese people from walking the streets in Antioch after dark. Chinese
residents created underground tunnels to travel between their jobs and homes at night. One day in 1876, a
mob of white people told the Chinese residents that they had until 3 p.m. to leave. The vacated Chinese-
owned homes and businesses were then destroyed.
Sadly, several other California cities9 , including Eureka, Redding, Chico, Truckee, Los Angeles, and
Pasadena, took similar action, expelling entire Chinese communities with violence or threats, forcing them
to leave behind businesses and homes.
The Chinese Exclusion Act of 1882 imposed an immigration moratorium on laborers from China and
restrictions upon Chinese citizens already in the United States.
By 1900, there were approximately 12,000 Japanese immigrants in the United States, many living in rural
California. Years of anti-Asian sentiment led to California's Alien Land Act10 in 1913, which restricted
property ownership and rights to "all aliens eligible to citizenship under the laws of the United States."
Under the law, Chinese and Japanese immigrants were prohibited from becoming naturalized citizens and,
therefore, could not buy real estate in California. Ulysses S. Webb, a co-author of the bill, explained that it
would limit the Japanese presence "by curtailing their privileges which they enjoy here."
The 1913 law did not have the impact intended. Many Japanese immigrants transferred title to their land
to their American-born children, who were US citizens. To close these "loopholes," California passed a
1920 law that prohibited these assignments. The 1920 California Voter's Guide explained: "[i]ts primary
purpose is to prohibit Orientals who cannot become American citizens from controlling our rich agricultural
lands... Orientals, and more particularly Japanese, [have] commenced to secure control of agricultural lands
in California."
George Shima11 , a hugely successful and wealthy Japanese American agricultural entrepreneur known as
the "Potato King" of California, faced an uproar when he purchased a two-story home on Berkeley's College
Avenue in 1909. The White neighbors objected, but before 1913 they had no legal basis for excluding Japanese
8 https://www.latimes.com/california/story/2020-10-15/glendale-racist-past-sundown-town-apology
9 https://www.noplaceproject.com/california
10 http://cho.pol.illinois.edu/wendy/papers/gaines.pdf
11 https://www.inclusity.com/george-shima-1864-1926/
Discriminatory Exclusion and Terrorism 6

Module 2: HISTORY
immigrant families from purchasing homes in their community. Local newspapers announced the purchase
with headlines like "Japanese Potato Magnate Invades Exclusive Berkeley Society," "Shima's Coming Angers
All Society," and "Jap Puts on Airs." Undeterred, Shima built a wall around his home and was active in the
local community, including donating significantly to local charities.
When Japan attacked Pearl Harbor in 1941, the resulting unjust incarceration of Japanese Ameri
cans12 continued a long history of hostility toward people of color in California, including Asians. Notwith
standing the immense physical and psychological toll of internment, approximately 93,000 Japanese Ameri
cans were forced to vacate or sell their homes at a great loss. The massive economic toll was never quantified,
although, acting on the recommendations of the Commission on Wartime Relocation and Internment of Civil
ians, President Ronald Regan signed the Civil Liberties Act of 1988. The Act offered a formal apology and
reparation payments of $20,000 to each surviving internee.
Valuation and Race

As cities were growing and developing in the early 1900s, property developers, real estate agents, appraisers,
and government officials promoted the idea that people of color living in a neighborhood negatively impacted
property values. These discriminatory views laid the foundation for the Federal Government's future
redlining policies13 .
Racially mixed neighborhoods or communities of color were considered less valuable and risky for loans.
Richard Ely, Professor and National Association of Real Estate Boards (NAREB) consultant and educator,
worked with NAREB to develop real estate education for its members. He taught Frederick Babcock and
other influential real estate valuation leaders. He once bragged that his valuation theories "would be felt a
hundred years from now."
NAREB changed its name to the National Association of REALTORS® in 1972.
Frederick Babcock would eventually shape the Federal Housing Administration's (FHA) discriminatory val
uation policies as its Director of Underwriting. In his first book, 1924's The Appraisal of Real Estate,
Babcock linked race and religion to property values. His influential 1932 text, The Valuation of Real Estate,
expanded on his ideas about the connection between neighborhood homogeneity and property values. He
wrote that "there is one difference in people, namely race, which can result in a very rapid [property value]
decline." Babcock helped develop the FHA's Underwriting Manual, which directed appraisers to consider the
presence of certain racial groups, integration, and other exclusionary policies like restrictive covenants when
determining risk for financing and property values.
12 https://www.intimeandplace.org/Japanese%20Internment/index.html
13 https://www.platformspace.net/home/how-academia-laid-the-groundwork-for-redlining
7 Discriminatory Exclusion and Terrorism

Module 2: HISTORY
Zoning
Between 1900 and 1910, California's population grew from 1.48 million to 2.28 million. Cities established
needed infrastructure, and developers began subdividing land to build homes.
Some of these newcomers were African Americans who were fleeing racist violence in the South and seeking
more opportunities in the North and West. Upon arriving in California, Black migrants found their housing
options limited. Local officials, developers, and White homeowners had developed systems, such as zoning
ordinances14 , to exclude people of color.
Zoning laws are rules that cities make to dictate the uses of individual parcels of land. When used to
prohibit specific uses, including occupancy by or transfer to individuals based on race or ethnicity, these
restrictions are called exclusionary zoning.
Baltimore was one of the first cities to use zoning for segregation. Baltimore's 1910 law prohibited African
Americans or Whites from buying on blocks where the other was in the majority. City officials struggled to
enforce the ordinance given how evenly divided or integrated some blocks were. Officials eventually revised
the ordinance to apply only to blocks that were exclusively one race. Other cities around the country soon
followed suit.
The United States Supreme Court invalidated race-based zoning as unconstitutional in the 1917 case Buchanan
v. Warley15 . This case covered a Louisville ordinance that prohibited Black people from living on a block
where most residents were White. The Court found that this law deprived White property owners of the right
to sell to a qualified purchasers in violation of the Fourteenth Amendment. Additionally, the Constitution
"expressly provided that all citizens of the United States in any State shall have the same right to purchase
property…without laws discriminating against them solely on account of color."
To allow for racial exclusion that would withstand legal challenge, cities like Berkeley adopted zoning ordi
nances that didn't expressly mention race but effectively supported segregation. Prominent local developer
Duncan McDuffie, who developed several Berkeley neighborhoods and was a proponent of building restric
tions that included racial exclusion, spoke in favor of these zoning laws at a 1916 University of California
lecture:
"The adoption of a district or zone system by Berkeley will give property outside of restricted sections
that protection now enjoyed by a few districts alone and will prevent deterioration and assist in stabilizing
values."
14 https://www.lewis.ucla.edu/programs/housing/housing-supply/zoning/
15 https://supreme.justia.com/cases/federal/us/245/60/
Zoning 8
Module 2: HISTORY
Berkeley's zoning ordinance designated certain districts as exclusively for single-family homes. It first only
applied to one neighborhood, Elmwood Park. Property owners from other areas later petitioned the City
Council to become single-family residential home districts to eliminate two Japanese laundries, a Chinese
laundry, and a "negro dance hall."
Zoning laws that don't expressly exclude residents based on race but disparately impact communities of color
have endured. Jesse Barber, writing for Berkeleyside16 states:
"The vision of McDuffie and the real estate owners of East Berkeley was largely achieved. Through legal
means, they created a plan for land use that reinforced the racial and class divisions from which they
directly benefited. Unlike restrictive covenants and redlining, the zoning code remains today."
Restrictive Covenants
Restrictive covenants are provisions within a deed or neighborhood rules restricting use, occupancy by
certain groups, or structures that can be built on a property. They were also used to exclude use or occupancy
by certain groups based on race, religion or ethnicity.
Developers of new residential communities throughout the United States, including many California com
munities, began inserting restrictive covenants into property deeds as they began building homes to accom
modate growing cities.
Source: 1949 Declaration of Restrictions from a community in Danville, California
Source: https://www.stfranciswood.org/history
Many California developers, such as Duncan McDuffie in the Bay Area and Harry Culver (Culver City
founder), put restrictive covenants into the property deeds and used them as marketing tools.
16 https://www.berkeleyside.org/2019/03/12/berkeley-zoning-has-served-for-many-decades-to-separate-the-poor-from-the-rich-and
-whites-from-people-of-color
9 Zoning
Module 2: HISTORY
Source: San Francisco Examiner 10/20/1912
Use of racially restrictive covenants became even more common after 1926 when a U.S. Supreme Court
decision, Corrigan v. Buckley, validated their use.
For existing communities that didn't have race restrictions, neighborhood groups organized campaigns to
convince the homeowners to place racial restrictions on their communities. According to the California
Eagle, a newspaper reporting on issues of importance to Los Angeles' Black community in 1946: "solicitors
were visiting property owners with restrictive covenant petitions." Groups organized to fight the spread of
covenants, including labor unions, churches, schools, and other civic groups.
Restrictive Covenants 10
Module 2: HISTORY
Source: Oakland Tribune Oct 4, 1924
In 1924, Sidney and Irene Dearing17 were likely the first Black residents in a racially restricted Piedmont,
California. Shortly after moving to Piedmont after purchasing their home for $10,000, a mob of hundreds
surrounded the house demanding that the family leave and offering to buy the house back from him. The
Dearings stood their ground, refusing an offer from the West Piedmont Improvement Club to purchase the
home for $8,000.
The protests continued. Multiple bombs, including one with an actively lit fuse, were found planted on the
property during the Dearings' ownership.
The Piedmont City Clerk then attempted to condemn the property, again offering to buy the home for
$8,000. The stated reason for the condemnation was to build a side street that would connect the street
fronting the Dearing home to one on that was a block away. The following year, the Dearings finally agreed
to sell the home to the city for $10,500.
17 https://piedmontexedra.com/2020/09/uncovering-dearing-how-piedmonts-first-black-homeowner-was-run-out-of-town-and-the
-lingering-effects-on-the-citys-history
11 Restrictive Covenants
Module 2: HISTORY
Eminent Domain
Eminent domain is often used to by a municipality to acquire property with compensation to the property
owner for transportation, utility, public buildings, and park development.
Unfortunately, there are some instances in the early part of the 20th century government officials sometimes
used eminent domain in discriminatory or abusive ways to take land from property owners of color. According
to a 2014 report by the U.S. Commission on Civil Rights, "between 1949 and 1973… 2,532 projects were carried
out in 992 cities that displaced one million people, two-thirds of them African American." The report stated
that African Americans were five times more likely to be displaced than they should have been based on
their population numbers.
An early example of this practice in California was Manhattan Beach's condemnation of Black-owned prop
erty, Bruce's Beach, in the 1920s. The city claimed an urgent need for a public park to justify taking their
land by eminent domain and razing the buildings. The land was then left vacant for decades. Fearing the
displaced families would sue, the city finally developed a park on the land in the 1950s.
City governments targeted communities of color throughout the United States for "urban renewal" or "slum
clearance." It was typical for redevelopment or highway construction to focus on taking the land in com
munities of color, particularly Black communities. Some civil rights advocates called this method of urban
renewal "Negro removal."
In California, there are a number of examples of public officials targeting communities of color for eminent
domain in California. Urban renewal projects severely impacted Japanese communities in places like San
Francisco18 and Sacramento beginning in the 1940s. In San Francisco, it is estimated that at least 1,500
residents and more than 60 Japanese-owned businesses were displaced in a predominantly Japanese commu
nity due to urban renewal projects. Santa Monica is considering ways to compensate the descendants of the
Black displaced residents more than 50 years ago during the construction of the Interstate 10 highway. An
estimated 600 homes were destroyed in a predominantly Black community.
These takings contributed to the wealth and homeownership gaps that continue to plague many communities
of color.
18 https://www.achp.gov/preserve-america/community/san-francisco-japantown-california
Eminent Domain 12
Module 2: HISTORY
Real Estate Professionals

Real estate agents and appraisers helped develop the foundation of our modern valuation systems. They
were influential in supporting and promoting government and private policies that created segregated and
unequal communities. Article 34 of the 1924 Realtor Code of Ethics stated that "[a] Realtor should
never...introduce into a neighborhood...members of any race or nationality, or any individuals whose presence
will clearly be detrimental to property values in that neighborhood."
Blockbusting is the practice of soliciting and encouraging homeowners to sell, often at below-market prices,
by provoking fears that individuals of a different race or ethnicity would soon be moving in. This practice
was most common in the 1940s through the 1970s. Speculators would capitalize on White homeowners'
irrational fears and prejudices to influence them to "panic sell" their homes, often for below-market value.
They would then purchase the homes and resell them, often at inflated prices to newcomers of different
ethnicities.
Before the Fair Housing Act of 1968, real estate agents openly steered clients, showing them different prop
erties and communities or treating them differently based on their demographics, especially race, during the
home buying process. They believed they were duty-bound by covenants, the REALTOR® Code of Ethics,
customs, or simply the apparent racial demographics of a community.
Although steering is now illegal, several recent studies, including the famous Newsday Divided Investigation,
suggest that steering is still too common. However, modern steering is often now due implicit or unconscious
bias rather than an intent to discriminate.
In the book Boyle Heights, George J. Sánchez describes the housing discrimination faced by Edward Roybal,
an Army veteran and the first Mexican American to serve on the Los Angeles City Council.
In 1949, the year after the United States Supreme Court outlawed government enforcement of racially
restrictive covenants and the day after his swearing-in ceremony, Roybal took a $250 check to a new housing
development advertised as "GI Housing." The salesperson there apologetically stated, "Well, I'm sorry, young
man, it's not my fault, but I'm instructed that I cannot sell to you because you're a Mexican... but if you say
you are of Spanish or Italian descent we will sell you a house." Roybal handed him his new card and walked
out - the salesperson followed him to his car, now offering to sell him a home because "you're different." He
later reported that only six developers in the County did not discriminate against people of color and that
eleven "would sell if the prospective purchaser claimed Spanish descent."
After Roybal and the Community Service Organization picketed in front of the housing development, the
head of the housing development company amended the discriminatory policy.
13 Real Estate Professionals

Module 2: HISTORY
Financing
Redlining began when the Federal Government established the Federal Housing Administration (FHA) in
1934 during the Great Depression to increase housing supply and help provide affordable homeownership
opportunities for middle- and working-class families. The new central bank adopted a property valuation
system that color-coded neighborhoods based on their perceived risk, with the riskiest areas color-coded
in red or yellow. At the time, communities of color or racially integrated neighborhoods were deemed the
riskiest. The race of the prospective home buyer or residents of a community where a property was located
was why the government and others could refuse to offer mortgages, insurance, or other services.
Redlining was based on discriminatory property valuation standards that appraisers and real estate profes
sionals had already been in use for years.
Before fair housing laws outlawed it, people of color, par

ticularly Black people, were largely excluded from the home
financing options afforded to White buyers. Discriminated
buyers used contracts, land contracts, or installment
sales to fill the gap to purchase a property. For buyers shut
out of standard forms of lending, these models offered an
alternative lending option. In these forms of property pur
chases, the seller retained legal title to the land and acted as
the lender. Legal title to the property would transfer to the
buyer only after the buyer paid off the loan.
Although they filled, and still sometimes fill, a gap where

financing is unavailable, these forms of alternative lending were used in a predatory manner, particularly
within the Black community between the 1930s and 1960s. Taking advantage of a community with few or
no other lending options, the seller/owner/lender often priced the homes well beyond comparable properties
in exclusively White communities or charged an extremely high-interest rate or excessive fees.
A Chicago Tribune article explained19 that while paying off these contracts, buyers "have few of the
legal protections of a typical home buyer but all of the responsibilities of one. They don't build equity with
time. They can be easily evicted. And if that happens, they lose all of their investment."
Often these alternative-lending loan terms provided that if borrowers missed a single payment, the investor
could evict the contract buyer, who had no equity, and then resell the property to another contract buyer.
Unsurprisingly, as described in The Color of Law, the highly inflated prices made it more likely that the
buyers would fall behind on their payments. Richard Rothstein's seminal work, The Color of Law quotes
Beryl Satter's book Family Properties, to explain the duress that Black contract buyers often experienced:
"Because black contract buyers knew how easily they could lose their homes, they struggled to make
their inflated monthly payments. Husbands and wives both worked double shifts. They neglected basic
maintenance. They subdivided their apartments, crammed in extra tenants and, when possible, charged
their tenants hefty rents."
An article in the Winter 2022 issue of C.A.R.'s California Real Estate Magazine explained the impact of
redlining,
19 https://www.chicagotribune.com/business/ct-contract-selling-resurgence-20160513-story.html
Financing 14
Module 2: HISTORY
"[l]ack of investment and mortgage financing in predominantly Black and Latino neighborhoods resulted
in higher rates of blight. This contrasted starkly with exclusively White communities where there was
abundant government-backed financing for building new homes and home loans."
Law and Policy Advances
Court Cases
The United States Supreme Court began to chip away at California's anti-Asian Alien Land Laws in the 1948
case Oyama20 v. State of California. Kajaro Oyama, a Japanese immigrant ineligible for US citizenship,
purchased land in his son's name and appointed himself as his son's guardian. The Oyamas were among the
Japanese Americans forced to leave their homes and sent to internment camps during World War II. During
this time, California legislators began bringing escheat suits to take property from Japanese Issei residents,
arguing that the practice of transferring land into their children's names was illegal under the Alien Land
Act. Although it did not invalidate California's Alien Land Laws, the Court found that the Oyamas were
deprived of 14th Amendment Equal Protection laws. California halted its escheat actions after this decision.
A famous civil rights attorney who would later become a

California Superior Court Judge, Loren Miller successfully
defended Black homeowners who had moved into LA's Sugar
Hill neighborhood despite racial covenants. Several white
owners sued the new Black homeowners, alleging that their
purchases violated the restrictive covenant in the property
deed. The defendants in the 1945 Sugar Hill case were famous
actors Hattie McDaniel, Ethel Waters, and Louise Beavers.
Miller joined Thurgood Marshall on the legal team of the

famous 1948 United States Supreme Court case Shelley v.
Kramer. Previous decisions had struck down racially restric
tive policies by local governments as violative of the Fourteenth Amendment's Equal Protection Clause,
reasoning that the Amendment did not reach agreements between private parties. Miller's argument that
the restrictive covenants had to be enforced by courts and, therefore, required government action persuaded
the Court that the Fourteenth Amendment applied to these private agreements. The Court agreed, finding
that racially restrictive covenants unenforceable under the Constitution's Equal Protection Clause.
California's Supreme Court finally invalidated the Alien Land Act in 1952 with Fujii v. California21 . The
Court in Fujii ruled that the law violated the Fourteenth Amendment even though the Act did not reference
Japanese individuals in its text. In his decision, Chief Justice Phil Gibson stated: "It is generally recognized,
however, that the real purpose of the legislation was the elimination of competition by alien Japanese in
farming California land." This reason, Gibson writes, is "obviously contrary to the Fourteenth Amendment."
20 https://encyclopedia.densho.org/Oyama_v._California/
21 https://law.justia.com/cases/california/supreme-court/2d/38/718.html
15 Financing
Module 2: HISTORY
Statutes
A growing movement in the 1960s called for laws that would end legal housing discrimination. One of the
first California fair housing laws was a 1963 Berkeley ordinance that was overturned by a ballot measure that
was organized, in large part, by local REALTOR® associations. Although having passed a series of federal
civil rights laws starting in 1957, legislation at the federal level that would address housing discrimination
had also failed repeatedly.
Also in 1963, a statewide fair housing law, known as the Rumford Fair Housing Act, authored by William
Byron Rumford in 1955, finally passed in the legislature and was signed into law by Governor Pat Brown.
This act was enacted five years before the Federal Government adopted the Fair Housing Act of 1968. The
Rumford Act was one of the first fair housing laws in the country.
This hard-fought victory was short-lived. Soon after the passage of the Rumford Act, California REAL
TORS® launched a massive campaign that included local, state, and national REALTOR® associations to
repeal the Rumford Act. The goal was to amend California's constitution via proposition to give property
owners "absolute discretion" to discriminate.
Law and Policy Advances 16

Module 2: HISTORY
Source: Hanford Sentinel, 12/20/1963
17 Law and Policy Advances

Module 2: HISTORY
The REALTOR®-led ballot initiative, Proposition 14, was controversial. Opponents picketed California
Real Estate Association (CREA) meetings and Dr. Martin Luther King Jr visited California to speak out
against it. Several local REALTOR® associations, including Sonoma and Valley, defied CREA by remaining
neutral or registering opposition. A state-wide group with a reported 5000+ members, REALTORS® for
Fair Housing, was formed to oppose Proposition 14.
Although 65% of California voters approved the constitutional amendment, Proposition 14 was fortunately
short-lived and overturned by the California and United States Supreme Courts.
California communities paid dearly for Proposition 14. A few years before Proposition 14 was passed, the
federal government announced a new policy of withholding federal funding from projects with discriminatory
policies. The Los Angeles Times reported that Federal Housing Administrator Robert Weaver ordered the
Urban Renewal Agency to discontinue funding residential projects in California because they "could no longer
guarantee non-discrimination in use of the housing when turned over to private developers, as required by
the urban renewal law." At least $80 million in new contracts were impacted, including Redondo Beach,
Fresno, and San Francisco projects. The federal government lifted the funding freeze only after high court
decisions invalidated Proposition 14.
In April Congress finally passed the Fair Housing Act of 1968 one week after Dr. King's assassination.
The Work Continues

The segregation and disinvestment caused by redlining are still visible in formerly redlined communities.
In a recent NPR interview, Princeton University professor and Race for Profit author Keeanga-Yamahtta
Taylor explained:
"African Americans and other people living in the redlined, grade-D areas...are excluded from small repair
loans as well. [T]he housing is in greater distress, is in greater disrepair. The lack of investment means
there are fewer jobs. So these neighborhoods look depressed. But people coming through the neighborhood
don't understand the public policy decisions that have been made that have created these conditions."
A 2019 Realtor.com analysis found that homes in formerly redlined communities sold for 29% less than
homes in neighborhoods that once were exclusively white. While many communities and regions are still
segregated, residential segregation may be increasing. The University of California Berkeley's Othering and
Belonging Institute found that 81% of American cities are more segregated today than in 1990.
Other lasting impacts include widening wealth and homeownership gaps, a regulatory climate that makes
it hard to build housing in California, longstanding housing affordability challenges, and, unfortunately,
discrimination and bias.
The rest of this course will offer information about continued fair housing challenges and solutions
ranging from simple compliance to proactive steps you can take to help address barriers to home
ownership for underserved communities.
Law and Policy Advances 18

Module 3: FAIR HOUSING LAWS
Real estate licensees must comply with and be aware local, state, and federal laws prohibiting discrimination
and requiring accommodation. The penalties and other ramifications for violating these laws can be costly or
otherwise professionally damaging. Furthermore, since the laws attempt to address housing challenges that
are more likely to impact individuals from underserved communities, compliance helps address the critical
need for equal access to housing for all.
Where federal, state, and local fair housing laws overlap, they are implemented to provide the broadest
protection. California fair housing laws are generally more protective than their federal counterparts. For
example, veteran or military status is not a protected characteristic under federal law but it is in California.
This section lists the primary laws regulating licensee conduct and real estate transactions. We will not
discuss city or county fair housing laws in this course, but some local municipalities have fair housing laws
that provide additional protections within their jurisdiction.
The Fair Housing Act of 1968 (FHA) and Fair

Employment and Housing Act (FEHA)
The Fair Housing Act of 1968 (the FHA) (42 USC §3601 et seq), and the Fair Employment and
Housing Act (FEHA) (Cal. Gov. Code §12900 et seq; 2 CCR §12005 et seq) together prohibit discrimi
nation in California based on 22 demographic characteristics, often called "protected classes."
Both laws prohibit discrimination based on the following seven characteristics:

• Race (including use of criminal history)
• Color (often used with race)
• National origin (country of one's birth)
• Religion
• Sex (physical differences between people who are male, female, or intersex; including sexual harassment;
gender identity and sexual orientation are currently interpreted to fall within this category)*
• Disability (also known as handicap; includes mental and physical impairments)
• Familial status (families with children under the age of 18; pregnant women; senior housing exception).
FEHA adds the following 15 categories for California:
• Ancestry (country of one's parents' birth)
• Sexual orientation (regarding the gender one is attracted to; e.g., heterosexual, homosexual, pansexual,
bisexual)
• Gender (sometimes used interchangeably with sex; social and legal status set by society about behavior,
characteristics, and sexual identity; includes male, female, and non-binary genders)
• Gender identity (how one feels about their own gender; may or may not align with their assigned sex;
e.g., transgender, cisgender, non-binary or genderqueer)
• Gender expression (how one outwardly expresses their gender)
• Marital status (e.g., married or unmarried persons living together)
• Source of income (including Section 8 voucher recipients)
• Veteran or military status
• Genetic information
• Medical condition
• Citizenship
• Primary language
• Immigration status
• Age (exception for senior housing)
• Arbitrary characteristics
Not only do the FEHA protections apply to persons with the proscribed characteristics, but also those
associated with or who are perceived to be members of these groups. For example, a parent of a
disabled child cannot be discriminated against by their landlord because of the parent's association with
their disabled child. Another example might be that a landlord cannot deny a prospective tenant under a
mistaken belief from their appearance that the individual is transgender when they are not.
The Fair Housing Act of 1968 (FHA) and Fair Employment and Housing Act
(FEHA) 20
*There is an argument about whether the FHA would include gender identity and sexual ori
entation under the category of sex. While the law does not formally include these subcategories,
federal courts and the federal government have moved to broaden the definition of sex to include
these additional protections.
Prohibited Acts
These are some of the acts that are prohibited in the housing
context under the FHA and the FEHA if they are based on
protected characteristics (listed above):
• Refusing to sell or rent
• Refusing to negotiate for housing
• Making housing unavailable
• Discriminating on terms, conditions or privileges in rental

or sale
• Discriminatory advertising or statements
• Discriminating in the provisions of brokerage services
• Inducing panic selling
• "Redlining"
• Restricting housing choices, by words or conduct, in connection with buying or renting a dwelling (steer
ing)
• Harassment
• Refusing a request for reasonable accommodation or a reasonable modification due to disability
• Refusing to make a mortgage loan or other financial assistance for a dwelling
• Discriminating in appraising a dwelling
• Denying homeowners insurance coverage
• Discriminating in terms of conditions of homeowners insurance
• Giving unequal access to facilities, amenities, or common areas
• Retaliating against someone who intends to file or has filed a fair housing complaint
Under the FEHA, violation of the FHA is considered a violation of the California law as well.
21 (FEHA)
Scenario 1: Yuna
Yuna's home has been popular since the moment you listed it. The open houses have been packed and you've
received more phone calls and emails than you expected. Yuna has lived in this home for thirty years. She
knows many of the neighbors and is sad to be leaving.
As expected, multiple offers come in. You schedule a meeting with Yuna at your office to present a whopping
ten offers. During the offer presentation, Yuna says that it's tough for her to decide which offer to pick and
she'd like more information about the buyers.
Because she raised her children in this home she'd love to see a family with young kids or someone planning
to raise kids as the next owner. Additionally, there are a lot of Asian American families in the community
so an Asian buyer might really appreciate the neighborhood.
How do you respond to Yuna's request for more information about the buyers?
Option 1
Remind Yuna that sellers can't make decisions based on race, national origin and familial status and many
other demographic categories because of federal and state fair housing laws. You also let her know that
learning additional information about the buyer might result in her selecting an offer based on these prohib
ited reasons even if she is unaware that she has been influenced by knowing this information You refer her
to the Fair Housing and Discrimination Advisory or another resource to help her with compliance.
You've created a spreadsheet that shows the offers side-by-side with categories for price, terms and loan
information to help her determine the best offer.
Option 2
Ask all of the listing agents if they could provide a bit of information about the buyers or a letter from them
to the seller to help Yuna decide.
Option 3
Tell Yuna that you understand how difficult it can be to select an offer when there are so many of them.
To help her decide which offer to select, you create a spreadsheet that shows the offers side-by-side with
categories for price, terms and loan information to help her determine the best offer.
(FEHA) 22
Scenario 1: Outcomes
Option 1: This best informs Yuna of and helps her meet her fair housing obligations as a seller. As the listing
agent, you should offer Yuna information about her responsibilities as a seller, including those regarding
fair housing. The Fair Housing and Discrimination Advisory or the California Civil Rights Department's
website can help Yuna understand her fair housing responsibilities as a home seller. Additionally, creating
a spreadsheet will help ensure that Yuna is selecting the buyer based on permissible criteria rather than
demographic information.
Option 2: This option is not recommended since knowing buyer demographic characteristics, including
those that might be included in buyer letters, could lead the seller to, sometimes inadvertently, determine
which offer to accept based on those characteristics. If the seller selects an offer based on reasons prohibited
under federal or California fair housing law, such as one of the 22 protected demographic characteristics,
they might be violating the law.
Furthermore, you have not informed Yuna of her fair housing responsibilities.
Option 3: While a spreadsheet can help reduce the chances that a seller will base their decision improperly
on the buyer's demographic information, you should also refer sellers to resources that help them understand
their fair housing responsibilities.
Who Must Comply with FHA and FEHA

These laws apply to most housing providers, whether private, public, or federally funded. Homeowners,
sellers, landlords, property managers, sublessors, real estate brokerage firms, real estate licensees, mortgage
lenders providing financial opportunities related to housing, appraisers, insurance providers (as related to
housing), mobile home parks, homeowner's associations (HOAs), and government entities providing housing-
related services must comply. The FEHA also applies to short-term rental owners/landlords.
There may be vicarious liability to principals (e.g., landlords or real estate licensees) for discriminatory
conduct by a third party they hire (e.g., a handyman or resident manager) or have some control over (e.g.,
tenants or residents).
23 (FEHA)
Exemptions
The FHA and the FEHA do not apply to the following housing types:
• Senior housing (only exempt from the law's familial status provision) or
• Housing operated by nonprofit organizations, religious institutions, and private clubs that limit occupancy
to their members.
The FEHA has a narrow owner-occupant exemption applying to a single-unit dwelling where the owner
resides with one lodger for rental purposes, as long as:
• the owner does not use the services of a real estate licensee, and
• the owner does not make discriminatory statements or advertisement.
This owner exemption under the FEHA is more restrictive than under the FHA.
Disclosure of Death or HIV Positive Status

In a sale or lease transaction, property owner and agents involved in the transaction should not disclose, as
material fact, that an occupant has HIV or died of AIDS (California Civil Code 1710.2). During the height of
the HIV/AIDS epidemic, people suffering from HIV/AIDS were stigmatize and discriminated against. This
1986 law predates the current inclusion as protected characteristics sexual orientation and HIV/AIDS as a
disability under the Unruh Act and the FEHA.
Disparate Impact
The FEHA explicitly recognizes discrimination by discriminatory effect or disparate impact, even if those
actions or practices were not motivated by actual discriminatory intent. The FHA has a more limited
recognition of discrimination by discriminatory effect or disparate impact.
Use of criminal history information and occupancy limits are examples of disparate impact dis
crimination.
(FEHA) 24
Voluntary Affirmative Marketing Agreements (VAMA)

In 1975, HUD and NAR entered into their first Voluntary Affirmative Marketing Agreement. The last
agreement expired in 1996. The VAMA was meant to gain voluntary compliance by REALTORS® to go
beyond the minimal requirements of the fair housing laws and affirmative further fair housing goals by
providing equal housing opportunity programs via outreach and advertising, engaging in equal employment
practices, and establishing office procedures to prevent steering and other prohibitory activities that restrict
equal housing opportunity.
Although the VAMA expired in 1996, many of the affirmative fair housing activities proscribed in the VAMA
are outlined in the Best Practices Section.
Steering
Under the FHA , steering is any statement or conduct by a real estate agent that, in effect, discourages
someone from considering a particular location, home, or apartment and encourages them to consider another
location or property because of the client's protected characteristics or based on the composition of the
neighborhood. Such actions perpetuate the segregation of housing patterns, limit buyers' or renters' choices
in an area, and constitute illegal housing discrimination. Specific activities that are unlawful steering based
on neighborhood demographics or entrant's protected characteristics include but are not limited to:
• using coded words or other devices to segregate.
• discouraging the selection of a dwelling by exaggerating drawbacks or failing to describe desirable features.
• communicating to a prospective buyer or renter that they would be uncomfortable or incompatible with
existing residents of the neighborhood.
• using selective listings or showing of properties, limited and selective advertising, or discriminatory tenant
assignment policies.
NAR Code of Ethics Art 10-1 states when involved in a sale or lease of a residence, REALTOR® shall not
volunteer any information regarding the racial, religious or ethnic composition of any neighborhood.
25 (FEHA)
Examples
Evidence of racial steering is gathered by testers. Fair housing testing is a form of mystery shopping
where trained individuals impersonate prospective home buyers or tenants to see if a housing provider or
real estate professional will discriminate based on race or another prohibited reason. If the testers detect
different treatment based for prohibited demographic reasons, the fair housing organization that employs
the testers may consider bringing a lawsuit against the agent or property manager.
Whether conducted subtly or blatantly, the Newsday Investigation documented how pervasive steering is in
real estate sales.
Although steering may be based on any protected characteristic, race and familial status are the
most common basis for steering.
Unruh Civil Rights Act (Unruh Act)

The Unruh Act prohibits businesses operating throughout all of California from denying full and equal ac
commodations, advantages, privileges, or services to all persons based on protected classes or characteristics.
These classes are the same as those protected under the FEHA.
Within the real estate industry, the businesses subject to the Unruh Act are, but not limited to real es
tate brokerage firms, property management companies, real estate licensees, mortgage lenders, insurance
providers, and HOAs.
This law has been held to prohibit discrimination based on any arbitrary characteristics beyond
those listed within the law.
Senior Citizen Housing
Unruh Civil Rights Act (Unruh Act) 26

The senior citizen housing exception to fair housing laws ap

ply to age-restricted senior communities. 62 and over com
munities are completely made up of people who are 62 years
and older. Among other requirements, 55 and over commu
nities require a minimum of 80 percent of the housing units
have at least one person who is 55 years or older. Califor
nia's senior housing exemption is narrower than the FHA's
exception.
Unruh Act requires all non-senior residents to be limited to

"qualified permanent residents." Qualified permanent resi
dent is someone who resides with a senior citizen (age 55
or older) and is at least 45 years of age, a spouse or cohabi
tant who provides physical or financial support for the qualified senior. Health care providers or a disabled
child or grandchild of a resident may also be permitted to reside in the community.
The senior housing exemption applies only to discrimination based on familial status.
Ralph Civil Rights Act

This California anti-hate violence law prohibits violence or threat of violence because of a person's actual
or perceived demographic characteristics (covering the same categories as the Unruh Act). The Ralph Act
levies additional penalties for housing discrimination that rises to the level of a hate crime.
The Civil Rights Act of 1866 & 1870
These federal Civil Rights Acts were passed in the aftermath of the Civil War primarily to afford formerly
enslaved persons of African descent equal protection of federal laws and citizenship rights. It provides that
people of color have the same right to make and enforce contracts to the full and equal benefit of all laws
and proceedings for the security of persons and property enjoyed by White citizens.
Courts have held that these laws prohibit refusing to sell lots to Black Americans, an HOA's discriminatory
interference with the sale of a home to a Black person, racial based steering, and racially motivated opposition
to the construction of low-income housing.
27 Ralph Civil Rights Act

The 14th Amendment

The 14th Amendment to the U.S. Constitution was adopted in 1868, elevating the "equal protection" rights
first introduced in the Civil Rights Act of 1866. This amendment prohibited states and local governments
from treating similarly situated individuals differently under the law.
The Equal Protection Clause had been the bedrock for providing civil rights protections in housing before
the passage of the FHA. This amendment continues to be the constitutional basis for civil rights protection
in all areas for people who are marginalized and discriminated against.
Disability Protections
Americans with Disabilities Act of 1990 (ADA)

The ADA prohibits discrimination against individuals with disabilities in employment, public services,
telecommunications, public accommodations, and commercial facilities.
The ADA requires owners or lessees of commercial buildings to make sure that these properties comply with
accessibility rules for the public. This includes real estate brokerage and rental offices.
Section 504 of Rehabilitation Act of 1973

Employers and organizations that receive financial assistance from any federal department or agency are
prohibited from discriminating on the basis of disability. Any housing provider receiving federal funds is
subject to this law.
California Disabled Persons Act (CDPA)
The CDPA provides that blind and other disabled persons are entitled to full and equal access and cannot be
discriminated against in public accommodation, transportation, telecommunications, and housing. CDPA
explicitly recognizes the rights of a disabled person to be accompanied by and reside with their service animal
in housing. The regulation also follows the FEHA in the definition of disability.
The 14th Amendment 28

The CDPA tracks the FEHA's requirements for reasonable accommodations to policies and reasonable mod
ifications to physical structure and exemption status.
Fair Lending
The Home Mortgage Disclosure Act (HMDA) of 1975

This federal law requires financial institutions to collect and disclose loan-level information about mortgage
applicants and their loans, whether approved or declined. The data is used to determine whether lenders
are serving the housing needs of their community, provides information to public officials to guide in policy-
making, and helps shed light on lending patterns that could be discriminatory.
Equal Credit Opportunity Act (ECOA)

This 1974 law makes it illegal for issuers of credit to discriminate against credit applicants based on
• race,
• color,
• religion,
• national origin,
• age,
• sex,
• marital status, or
• on the grounds of receipt of income from a public assistance program.
The law requires lenders and creditors who deny an application for credit to provide the applicant with a
statement of the denial reasons or a written notification of the applicant's right to obtain a statement of the
reasons.
The Federal Trade Commission enforces ECOA.
29 Disability Protections
The Holden Act

The Housing Financial Discrimination Act of 1977 (Holden Act) prohibits financial institutions from discrimi
nation based on protected characteristics under the FHA. The Act applies to loans for purchase, construction,
or refinance of owner-occupied residences containing no more than four dwelling units and home improvement
loans even for owner-occupied and non-owner-occupied properties.
Holden Act Requirements

Holden Act requires lenders excluded from the federal HMDA to report loans they make. California-licensed
lenders that originate residential mortgage loans must report their lending activities to the California agency
under whose jurisdiction they operate, either the California Department of Real Estate or the California
Department of Financial Protection and Innovation.
This law imposes substantially the same reporting requirements as those imposed by the federal HMDA.
Fair Appraisal Act (AB 948)

Effective July 1, 2022, the Fair Appraisal Act requires a notice be attached to every real property sale contract
stating that appraisals must be unbiased, objective, and not influenced by improper or illegal considerations.
If a buyer or seller believes an appraisal had been improperly influenced based on protected characteristics
listed in FHA, they can file a report with the lender and the California Bureau of Real Estate Appraisers.
This new law also requires the Bureau to offer a way to collect voluntary demographic information about
who is making complaints and requires cultural competency continuing education for appraisers.
Scenario 2: Your Faith
While attending open houses on a lovely Sunday afternoon you're excited that one seems to meet all your
requirements. You call your agent, Sean, who helps you submit a full price offer that evening.
Unbeknownst to you, the seller, Alicia, was at the open house and recalls seeing you in person and noting
your name from the sign-in sheet. You wear a turban that is a dressing requirement of your faith, Sikhism,
an ancient religion that originates from India. Alicia mistakenly believes you are Muslim from your headwear
Fair Lending 30
and rejects the offer. When Sean questions the reason for the outright rejection, Alicia's agent admits that
it's because Alicia doesn't want to sell her home to a person of Islamic faith.
Sean shares what he learned from the seller's agent with you. You are hurt and discouraged that the seller
would take someone's faith into consideration instead of evaluating the offer on its objective material terms.
How might you respond?
Option 1
While you are extremely upset you don't do anything, electing to continue searching for a home.
Option 2
Upon further reflection, you feel something was not right and consult with a local fair housing organization.
You are advised it is illegal for a seller to discriminate based on perceived membership in a protected class.
The seller's intention only to discriminate against persons of Islamic faith is not a defense to unintentionally
discriminating against someone of a different faith. You are encouraged to file a fair housing complaint
against the seller and seller's agent with CRD.
Option 3
You call the listing agent's broker and let them know that you feel that Alicia, by way of her listing agent,
discriminated against you based on religion and national origin. You hope that the broker will prevent the
listing agent from supporting or engaging in discriminatory practices in the future.
Option 2, consulting with a fair housing organization, is the choice most likely to result in a penalty against
the seller or her agent if they are found to have violated fair housing laws and might discourage them from
discriminating in the future. State and federal law prohibit discrimination on the basis of religion and
national origin.
Option 1: Although the seller and her agent may have engaged in unlawful discrimination under State and
federal law on the basis of religion and national origin, you are not required to take action if you believe you
have been discriminated against. However, a formal complaint to the CRD can help stop individuals from
continuing to engage in discriminatory behavior by penalizing those found in violation of fair housing laws.
Option 3: After becoming aware that the seller and her agent may have engaged in unlawful discrimination
under State and federal law on the basis of religion and national origin, the broker should take action to
31 Scenario 2: Your Faith

ensure that the listing agent doesn't engage in this kind of behavior again. The Broker may face liability for
failure to properly supervise and stop discriminatory behavior by their agent under fair housing laws.
Scenario 3: Maya
Your client, Maya, informs you that under no circumstances will she accept an offer from a buyer who has
tattoos. Maya explains that she believes people with tattoos are unsavory and not trustworthy.
You and Maya are present at the open house. One of the attendees, Dana, has a visible arm tattoo.
Dana submits a clean, above list price offer. Maya does not wish to accept Dana's offer due to her feelings
about people with tattoos.
How do you advise Maya?
Option 1
Remembering that federal law covers race, color, national origin, religion, sex, disability and familial status
and that State law covers sexual orientation and gender identity, you inform Maya that people with tattoos
are not covered by fair housing law so she should be able to reject Dana's offer. You call Dana's agent to
thank him for his efforts and the great offer but explain that your client will not accept offers from anyone
with tattoos.
Option 2
You review the Fair Housing and Discrimination Advisory with Maya, explaining that fair housing laws that
require sellers and yourself, as real estate licensee, not to discriminate based on a protected characteristic.
Although "Tattoos" are not listed, California law covers "any arbitrary characteristic." You advise Maya to
seek legal advice before rejecting this offer since you are not an attorney and are not licensed to give legal
advice.
Option 3
Maya's request seems unreasonable and possibly inappropriate. Dana's offer comes in and you ask her to
reconsider her stance. The next day, an offer comes in at around the same price with a slightly longer escrow
period. Maya elects to accept this offer. You call Dana's agent to thank him for the offer but let him know
that ultimately two offers came in. You tell Dana's agent that it was a tough decision for Maya, both offers
were great but that she could only select one and she elected to accept the other. You wish Dana the best
of luck in finding a home.
Scenario 2: Your Faith 32

Option 2 is the recommended course of action. As the listing agent, you should offer Maya information
about her responsibilities as a seller, including those regarding fair housing. You can should direct Maya
to resources like the Fair Housing and Discrimination Advisory or the California Civil Rights Department's
website to help her understand her fair housing responsibilities as a home seller. Additionally, if Maya has
more detailed questions about her legal responsibilities, you should refer her to a licensed California real
estate attorney so that she can be offered legal counsel about this matter.
Option 1: Not Recommended. The information that you have provided to Maya is incorrect and you have
not fully informed her of her fair housing responsibilities. You and Maya may be in violation of California
law and subject to a fair housing complaint for violation of the Unruh Act and the FEHA.
The California Supreme Court interprets the Unruh Civil Rights Act, by extension the FEHA, to prohibit
arbitrary and intentional discrimination in housing, this likely includes discrimination against individuals
with tattoos. Particularly since tattoos are common and do not indicate a propensity for dishonesty nor
inability to perform on a contract.
Option 3: Supporting Dana's decision to accept another offer based on her bias against individuals with
tattoos, is also not recommended. As with Option 1, you have not informed Maya of her responsibilities as
a seller, including those regarding fair housing. You and Maya may be in violation of California law and
subject to a fair housing complaint for violation of the Unruh Act and the FEHA.
Scenario 4: Hugh
33 Scenario 3: Maya
You manage a large brokerage in Bakersfield. During an initial meeting with one of your agents, Lucia, Hugh
shares that he lives with his brother, Roy, who suffers from Post Traumatic Stress Disorder (PTSD). Roy
has a service animal that is specifically trained to assist him when he suffers from night terrors resulting
from PTSD. Hugh is looking to purchase a condominium where they would live together.
Lucia asks you for advice, she isn't sure how to help Hugh because of Roy's service animal and is considering
telling him that he should work with another agent who is more familiar with assisting disabled clients.
How do you advise Lucia?
Option 1
Support Lucia's decision not to work with Hugh. You don't believe Lucia has an obligation to work with
Hugh in finding a home that will work for him and Roy because Roy is not her client.
Option 2
Advise Lucia to take on Hugh as a client but recommend that she only show Hugh single family residences
with a yard for the service animal. After all, it would be better for the animal to have a yard to run around
in and many HOAs have rules restricting animal size and breed that may make finding an appropriate condo
difficult.
Option 3
Advise Lucia to do a thorough client intake to get all of Hugh's property criteria and draw up a list of
properties for Hugh to view.
Option 3 is the recommended course of action. Upon securing a detailed list of property criteria, you will
be better able to find appropriate housing options for Hugh and Roy.
Option 1, advising Lucia that she does not have to work with Hugh, provides Lucia with incorrect infor
mation about her fair housing obligations. It is illegal under the California Fair Employment and Housing
Act to refuse real estate services due to an association with a person with protected characteristics. Roy's
right to keep his service animal is protected under the CDPA and the FEHA.
Only showing Hugh single family homes, as described by Option 2, restricts a person's housing choices
due to an association with a person with protected characteristics. Roy's right to keep his service animal
is protected under the CDPA and the FEHA and Option 2 presents a likely violation of California's fair
housing laws.
Scenario 4: Hugh 34
Hugh asked to see condos, not single family homes. You should not assume what is appropriate or better
fit for a client unless that information is coming from the client. By inserting your own assumptions, you
are improperly limiting Hugh's selection of housing opportunities. Also, HOAs, as housing providers, are
required to comply with fair housing laws regarding service animals. Any breed or size restriction HOA rules
may contain would not apply to service animals.
California Department of Real Estate Regulations

DRE regulations list 31 specific acts that are considered fair housing law violations by a DRE licensee that
subject them to potential disciplinary action. This list tracks the prohibited acts listed under the federal and
state fair housing laws. Generally, licensees are prohibited from making a property unavailable, providing
unequal treatment or different terms, steering, causing panic selling, and making discriminatory statements
or advertisements based on protected characteristics.
REALTOR® Code of Ethics

Article 10 of the National Association of REALTORS® Code of Ethics and Standards of Practice states that
REALTORS® cannot deny equal professional services or be parties to any plan or agreement to discriminate
against any person or group on the basis of: race, color, religion, sex, handicap, familial status, national
origin, sexual orientation or gender identity.
Prohibited acts include:
• Volunteering information regarding racial, religious, or ethnic composition of any neighborhood or causing
panic selling. Demographic information may only be provided if obtained from recognized, reliable, and
independent and impartial sources consistent with Article 10.
• Printing, displaying, or circulating any statement or advertisement that indicates any preference, limita
tion, or discrimination
• Using harassing speech, hate speech, epithets, or slurs. These violations may be found on public facing
social media posts.
Fair Housing Law Enforcement
35 REALTOR® Code of Ethics

US DOJ and HUD

Most federal fair housing laws fall within the jurisdiction of the U.S. Department of Justice (US DOJ) and
the U.S. Department of Housing and Urban Development (HUD) for enforcement action.
CA DOJ and CRD

California fair housing laws generally fall within the jurisdiction of the California Department of Justice (CA
DOJ) and the California Civil Rights Department (CRD). Through a work-share agreement between HUD
and CRD, most fair housing complaints raised through HUD based in California are referred to CRD for
enforcement.
Any cases initiated by CRD in California that may also violate the federal FHA may be pursued by CRD
on HUD's behalf. For cases involving California Department of Real Estate (DRE) licensees, enforcement
actions will be pursued by the DRE.
In July 2022, the Department of Fair Employment and Housing's name changed to the Civil
Rights Department (CRD) to more accurately reflect the Department's powers and duties, which
include enforcement of laws prohibiting hate violence, human trafficking, discrimination in busi
ness establishments, and discrimination in government-funded programs and activities, among oth
ers. Thus, previous references to the Department of Fair Employment and Housing (DFEH) are
changed to Civil Rights Department (CRD).
Fair Housing Law Enforcement 36

Local Association of REALTORS®

A Realtor® or a member of the public may file a complaint for fair housing violation under the NAR® Code
of Ethics. These matters are adjudicated at the local association level where the respondent is a member.
Private Action
Private action may be filed by the complainant either through a private attorney, or non-profit organizations
such as public housing councils.
Penalties for Fair Housing Violations
If prohibited discrimination is confirmed by a regulatory agency or a court of law, the guilty party will be
ordered to stop the discriminatory practice. The victim who experienced the discrimination could also be
compensated for their suffering. Courts can also issue civil penalties against the guilty party.
Federal FHA & California FEHA Penalties

• Civil Penalties
FHA FEHA
(2023 rates)
Max civil penalty for first (first) violation $24,793 $16,000
Max for second violation within 5 years: $61,982 $37,500
Max for two or more violations within 7 years $123,965 $65,000
37 Fair Housing Law Enforcement

• Actual (compensatory) damages: Compensatory damages are money to compensate a complainant

for actual loss suffered and make them whole. These damages may compensate for things like out-of-
pocket expenses and emotional distress damage.
• Temporary and/or permanent injunctive relief: A court may order the respondent to prohibit an
act that is causing irreparable harm that cannot be calculated with monetary value (damages) such as
stopping a discriminatory housing policy.
• Appropriate equitable relief: A court may order the respondent to perform certain acts to that is
causing irreparable harm that cannot be calculated with monetary values such as requiring previously
denied housing or loan be made available.
• Reasonable attorney's fees and costs: Respondent may be liable for complainant's attorney fees and
costs. These fees could become prohibitively high when a public housing council or private attorney is
involved on behalf of a complainant and there is a drawn out legal proceeding. Oftentimes the prospect
of high attorney's fees, for both sides that the respondent may become responsible for, may motivate the
respondent to settle a charge of fair housing violation quickly rather than face a lengthy and therefore
costly legal dispute.
• Punitive damages: This is additional money awarded by a court to punish the respondent. This is in
addition to fees assessed based on the actual damages. They are issued at the court's discretion when
the respondent's behavior is found to be especially egregious.
DRE Penalties
• The complainant could file a complaint for discrimination directly with DRE against a licensee.
• Publication on the DRE website under an individual's license record of any disciplinary action taken by
DRE.
• Potential loss or suspension of the licensee's real estate license upon finding of violations against DRE
regulations.
NAR® Code of Ethics

Local Boards of REALTORS® can discipline their members for violating the NAR Code of Ethics. Typical
discipline for Code violations includes:
• Requiring attendance at courses and seminars designed to increase REALTORS®' understanding of the
ethical duties or other responsibilities of real estate professionals.
• Issuing of a letter of reprimand
• Issuing a fine against a member
• For serious or repeated violations, a REALTOR®'s membership could be suspended or terminated.
REALTOR® associations cannot require its members to pay monetary damages to parties who filed ethics
complaints, nor can they award punitive damages for Code violations. They also do not have the authority
Penalties for Fair Housing Violations 38

to suspend or revoke a real estate professional's license although they shall report violations of public trust
to the DRE.
Common Fair Housing Property Management Issues

Fair housing issues in property management are easy to detect and prosecute. Therefore, CRD handles many
cases in this sector versus cases in financial services or sales, which are more complicated to identify and
prosecute. Liability for fair housing violations applies to real estate licensees, whether the offense was at the
client's direction, committed by an employee/agent of the licensee, or carried out by a third party such as a
tenant.
Note: The terms property manager and landlord are used interchangeably in this section.
Disability
Disability is the most common basis for FEHA complaints
filed with the CRD.
Fair housing laws define a disability as a physical or mental

impairment that limits one or more of the major life
activities of an individual. The ability to fully use and enjoy
a dwelling is considered a major life activity.
The FEHA defines physical disability as any physiological

disease, disorder, condition or cosmetic disfigurement, or anatom
ical loss that affects one or more body systems. Mental disability includes any mental or psychological dis
order such as intellectual disability, organic brain syndrome, emotional or mental illness, or specific learning
disability. Chronic or episodic conditions such as HIV/AIDS, epilepsy, heart disease, clinical depression,
ADHD, anxiety, and PTSD are a few recognized disabilities and conditions associated with disability.
Federal v. California Law
39 Penalties for Fair Housing Violations

Federal fair housing laws - the ADA and the FHA-have a more restrictive definition of disability, requiring
"substantial limitation" of one or more major life activities. However, since California has adopted a more
permissive definition, that broader protection prevails in California and will be the focus of the discussion
in this section.
Also as a practical matter, it would be difficult to challenge the basis of the disability when the underlying
condition does not need to be disclosed.
Reasonable Accommodation
With very limited exceptions, it is illegal for a housing provider to discriminate by refusing to make "rea
sonable accommodation" in rules, policies, practices, or services when such accommodation may
be necessary to afford an individual with a disability an equal opportunity to use and enjoy a
dwelling unit and any common areas.
Persons with a disability or their representatives may make a request for a reasonable accommodation to
the landlord. When the disability and disability-related need are obvious, no request is required to be made.
The housing provider must simply provide the obvious accommodation that is needed.
The most common request is for the housing provider to make an exception to a rule prohibiting animal.
Other common requests include:
• An assigned parking spot close to the entrance for a person with a mobility disability.
• A mobility impaired tenant might request additional time to move out, even if they are moving because
of an eviction.
• An applicant receiving SSI or SSDI based on their disability might request permission to use a cosigner
for the income or credit qualification portion of the tenant screening process.
Common Fair Housing Property Management Issues 40

Handling Reasonable Accommodation Requests

Housing providers should have a written policy and procedure for handling reasonable accommodation re
quests.
Requests should be documented in writing to establish a non-

obvious disability, describe the non-obvious needed accommo
dations, and show the disability and the accommodation re
quest. An underlying condition or diagnosis is not required to
be disclosed or proven by the requester. The housing provider
should reiterate the accommodation request in writing if the
request was given orally.
Establishing the disability and disability-related need may be

done by
• the requester using reliable self-certifiable situations,
• a medical professional or health care provider,
• a peer support group (such as Alcoholics Anonymous or grief support group),
• a non-medical services agency or person (e.g., in-home supportive services), or
• other reliable third party that are in a position to know about the individual's disability or
disability-related need for an accommodation (the third-party must provide their contact information).
The landlord should handle all requests for reasonable accommodations confidentially and expeditiously
within 10 days.
A request may be unreasonable if the request causes an undue financial or administrative burden on the
housing provider. Such requests are handled on a case-by-case basis.
If there are grounds for a non-immediate approval of the request, the requester and landlord should engage,
in good faith, to come to an alternative resolution. Housing providers may not substitute what they deem
a reasonable alternative accommodation instead of the complying with the specific request.
Support Animals
When it comes to support animals, the FHA and the FEHA have similar rules for reasonable accommodation.
However, the FEHA is, in many aspects, more permissive and more protective of the disabled person.
Therefore, the discussion here will be about the FEHA regulations.
41 Common Fair Housing Property Management Issues

What is a Support Animal?
An assistance animal- service or support- aids a person with a disability to have equal use and enjoyment
of their dwelling. A support animal (ESA) provides emotional, cognitive, or similar support to an
individual with a disability.
Often support animals provide support through companionship and can help ease or alleviate symptoms
related to a person's disability. A support animal does not require specialized training to perform any
task.
Procedure for Handling Support Animal Requests

Housing providers should have an established written policy and procedure for handling requests before one
is received.
The following steps in this section can be used as a guide when developing written policies and
procedures.
Requests should be in writing along with written verification of the disability and disability-related needs.
If an oral request is received, the landlord should memorialize it in writing back to the tenant, but a written
verification from the tenant is still required.
Written Verification
Any reliable third party in a position to know about the person's disability and the disability-related need may
make a written verification. Often, this is a medical professional; however, that is a not a legal requirement.
Refer to previous "Handling Reasonable Accommodation Requests" section for General Procedure.
There is a notable exception for online purchased certificates or vests. Such items purchased without
additional information based upon an individualized assessment from a medical professional are NOT
considered a legally sufficient written verification. Housing providers should check the source of the online
certificate to verify the process engaged by the online vendor. If the website simply states that for a $50
fee, they will send an ESA certificate or vest, then that is not a legally sufficient verification. If the website
states that after an individual evaluation with a medical professional they will issue a certificate or vest for a
$50 fee, then that may be considered sufficient. Unlike a regular written verification, a medical professional
must provide an online certificate.

Reasonableness
A request may be unreasonable if it causes an undue burden for the landlord or the animal poses a threat of
bodily harm to others or would cause substantial property damage. However, the prohibition against banning
certain breeds, species, sizes, or generalized fear of certain animals would NOT be considered reasonable.
For example, a request to accommodate a German Shepard support animal cannot be rejected because of
assumptions about breed reputation or because of the animal's size. Reasonable grounds for rejection must
be specifically about the support animal such as a prior history of destroying property or attacking people.
An undue burden based on a financial basis is also difficult to prove. Homeowner's insurance is often cited
as being financially prohibitive and, thus, causing a undue burden for the landlord. However, insurance
companies issuing homeowner's insurance are housing providers under fair housing laws and must also ac
commodate for disability just as any landlord would. If the landlord has difficulties with the homeowner's
policy caused by the acceptance of a support animal, then they should seek an accommodation with their
insurance carrier.
Interactive Process
The landlord and tenant must engage in an interactive process if the request cannot be granted immediately
(or within ten days), the original request is unreasonable, or the request would place an undue burden on
the landlord. All information should be kept confidential and only shared with parties required to assist in
responding to the request.
Consult with legal counsel before denying a reasonable accommodation request.
Additional Rules
An assistance animal may be any animal; there are no breed, size, or species restrictions. For instance, pit
bulls as a breed cannot be banned. A ban on animals larger than a certain weight (e.g., 25 lb. or larger)
is also prohibited. Legally, a service animal or support animal is not a "pet"; therefore, an additional pet
deposit or increase in rent to accommodate the animal is NOT allowed.
Disabled tenants may not be treated any differently in terms or conditions of the lease or in the use of
facilities than any other tenant who does not have an assistance animal.

Service Animals
The federal FHA and the California FEHA recognize that service animals have had long-established pro
tections under ADA and CDPA. As such, service animals have a simpler verification process than support
animals. Service animals are trained to perform specific tasks to aid a person with disability-related needs
and are assistance animals under the FEHA.
Dogs, particularly Labrador Retrievers, are most widely trained

to be service animals; however, there are no breed, size, or
species restrictions under the FEHA.
The federal FHA is more restrictive and limits allowable

species to dogs and miniature horses. Unique animals that
perform specific tasks, including therapeutics, are handled
under reasonable accommodation procedures. Due to the
more protective and permissive nature of the FEHA, we'll
focus on the California law in this section.
Some examples of service animals trained to perform disabil

ity-related tasks are:
• guiding a vision-impaired person;
• fetching items for a mobility-impaired person;
• alerting a hearing-impaired person to certain sounds;
• waking up a person suffering from night terror due to post-traumatic stress disorder (PTSD);
• detecting low blood sugar levels for a person who has diabetes.
There is no requirement for a formal certificate or registration for service animals. Some service animals
such as guide dogs may have standardized identification tags, but they are not a requirement in housing
situations. Proof of participating in formal training is not required as long as the animal has been specifically
trained for whatever disability-related task it assists with.
Procedure for Handling Service Animal Requests
Service animals are NOT subject to the same reasonable accommodation request procedure as support
animals under the FEHA. For a non-obvious disability and disability-related need, landlords may
legally ask two questions:

1. Does the person have a disability?
2. What disability-related task is the animal trained to perform?
If the disabled person cannot answer these two questions, their animal may instead qualify as a support
animal. In such a situation, the housing provider should allow the requesting party to make a reasonable
accommodation request for a support animal.
In contrast, a blind person with a guide dog has an obvious disability and disability-related need
performed by their animal. In an obvious situation, no questions may be asked. The guide dog must be
allowed to live with and accompany the person with a disability even if the housing provider has general
restrictions that would prohibit dogs.
As part of the verification process, the service animal does not have to demonstrate the tasks it was trained
to do. No additional verification is required as long as the two legally allowed questions are answered
appropriately. The requesting party must then be allowed to be accompanied by and reside with their
service animal.
Reasonable Modification
Both the FEHA and the FHA require a landlord to allow a tenant, at their cost and upon request, to
make reasonable modifications to the unit as necessary for their condition. A request to make reasonable
modification is a change to the physical living space such as installing a wheelchair ramp or a grab bar
in the bathroom. This is different from a "reasonable accommodation request," which is a request to change
the landlord's rules, policies or procedures.
Tenant Pays for Modification

While the landlord must reasonably allow the tenant to make necessary modifications, the landlord does not
have to pay for them. Furthermore, depending on the type of modification, the landlord can insist that the
work be performed by a licensed contractor if required by law.
Removal of Modification at End of Tenancy

When the tenant leaves the unit, the tenant should remove any modifications and repair any damage that
may be caused by removing the modifications. However, a landlord may not ask for the removal of certain
alterations if they are of the sort that would not interfere with the future use and enjoyment of the premises
by the landlord or future tenants.
For example, if a tenant was permitted to widen a doorway to allow for a wheelchair, at the termination of
the tenancy, the landlord would likely not be able to ask the tenant to narrow the doorway, as the wider
doorway in no way interferes with the use and enjoyment of the premises by future occupants. The same
reasoning may apply to the installation of a grab bar in the bathroom.

Apartment Complex and ADA

Title III of the ADA prohibits discrimination based on disability in goods, services, facilities, and accommo
dation of places of public accommodation. Public accommodation covers buildings and public areas open to
the general population, such as commercial properties, hotels, and common areas of residential complexes,
but not residential units themselves unless the property itself is government subsidized.
If an apartment complex was built before the most current ADA rules, the property is grandfathered in, and
the landlord does not have to bring the building up to the most recent standards. However, if significant
improvements are done to a property, that may trigger the requirement to bring the complex up to code.
Familial Status (Occupancy Limit)

Fair housing laws prohibit discrimination based on familial status to protect families with children under
the age of 18. This form of discrimination often occurs under the guise of maximum occupancy limits.
Although occupancy limits are not explicitly discussed in federal and State fair housing laws, HUD and
CRD frequently prosecute cases alleging that an occupancy limit has resulted in discrimination based on
familial status because such policies can have disparate impact on families with kids. Occupancy limits may
also have disparate impact on other groups based on protected characteristics, such as people of certain
national origins that more commonly live with multi-generational family.
Minimum Square Footage

Most local building codes are based upon the Uniform Housing Code which sets the minimum square footage
required for habitability.
• Every residential unit must have one room that is at least 120 square feet.
• Other rooms used for living must be at least 70 square feet.
• Any room used for sleeping must increase the minimum floor area by 50 square feet for each occupant in
excess of two.
Under this standard, a bedroom size of 70 square feet would be appropriate for one person, a 120 square
foot bedroom for two, and three people could fit in a 170 square foot bedroom. This standard can be the
base for minimum square footage per occupant.

Two Persons per Bedroom Plus One Rule
The CRD uses the "two person per bedroom plus one" rule which is presumed to be a non-discriminatory oc
cupancy limit. The HUD relies on the 1998 "Keating Memo" and use a two persons per bedroom rule. Under
both rules, the presumption is rebuttable and other factors may come in to play to determine discrimination
such as:
• size of rooms and unit;
• age of kids (small kids);
• configuration of unit - separate den, living room aside from "bedrooms" that may be used for sleeping;
• limits of septic, sewer or other plumbing systems;
• state/local laws for occupancy; and
• other special circumstances e.g., discriminatory statements or treatment by landlord.
Examples
At a minimum, a landlord should follow the "2P/BR plus 1"
set by CRD. Also, larger units should allow for more occupants
than by bedroom count. For example, a 3-bedroom 2,400 sq.
ft. SFR can house more occupants than a 3-bedroom 1,200 sq.
ft. condo unit.
The general standard of two persons per bedroom plus one is

a good starting point. If it is a very large unit with large bed
rooms and a family applies which, for example, might end up
with three in one bedroom, the landlord may need to accept
that tenant if otherwise qualified. If the owner objects, a property manager should discuss with the owner
whether the potential risk of being sued for a fair housing violation is worth whatever concerns the owner
has about having that many occupants per room. The property manager must treat all potential tenants
the same, and standards of occupancy should be the same regardless of the type of tenants applying.
Other forms of familial status discrimination occur where housing is offered but only certain units are
available; or different rules or services apply to families. For example, a landlord may not only prohibit
children from leaving their bikes in the common area but not enforce similar rules against adults nor generally

prohibit kids from using the pool. Additionally, a landlord may not decline to show an upper-floor unit to
a family with kids because the landlord feels it would be best if kids are not placed above other tenants.
Race (Criminal History Information)

In 2016, the United States Department of Justice released guidelines for use of criminal history information
in the tenant screening process because such use was found to more often negatively impact on people of
color. Since then, the FEHA regulations have created a robust set of guidelines for using such information in
an attempt to lessen the adverse impact of criminal background checks on people of color while preserving
the business need of landlords to protect the safety of other residents and their property.
Tenant Screening Process
Using criminal history information during the tenant screening process is only allowed under very narrow
circumstances to meet the substantial, legitimate non-discriminatory business need of the landlord to protect
the safety of their other residents and employees, and to preserve their real property. To effectively carry out
this business interest, only directly-related conviction records may be used and there is no feasible alternative
practice with a less discriminatory effect. The following guidelines must be adhered to be in compliance with
this law:
Housing providers shall not use arrests records. They may only consider directly-relevant convictions. No
blanket ban on persons with criminal history is allowed.
With few exceptions, record of conviction or release of parole dates older than seven years will not be listed
on a criminal background report. Even within this seven-year period, the housing provider may have to
consider a shorter lookback period based on the crime and circumstances involved.
Housing providers must consider the nature and severity of the conduct. Their denial policy must accurately
distinguish between criminal conduct that indicates a demonstrable risk to resident safety and conduct that
which isn't directly relevant to meet lease requirements. For example, a seven-year-old misdemeanor driving
offense is not relevant to a person's ability to be a good tenant; however, a two-year-old residential arson
conviction may be considered to determine whether an applicant poses a risk to others or property.
Housing providers must provide the applicant with a written notice of opportunity to review and correct
for factual accuracy of the criminal history information. The third-party company that compiles the in
vestigative report containing the criminal history information can do this by providing the applicant with
written notice of their opportunity to present mitigating information. Mitigating information may include:
the circumstances surrounding criminal conviction; age at time of conviction; time lapse since conviction;
evidence of good tenant history; employment; rehabilitation efforts; and other relevant factors.

Any criminal background check should be conducted only after an applicant has passed financial and other
screening processes to prevent them from being prejudiced by information contained in a criminal background
check.
Housing providers must apply their rules equally. For example, accepting a White applicant with a 4-year-
old burglary conviction record while rejecting a Black applicant with same record is discrimination unless
mitigating circumstances for the White applicant warranted the exception and no such circumstances existed
for the Black applicant.
During Tenancy
For example, suppose a resident informs the landlord that another resident is selling drugs or threatening
bodily harm to another resident. In that case, the standard residential lease agreement has a covenant
against committing illegal acts or posing harm to others or to the property. At that point, there is no
criminal conviction, even if the complaining resident had filed a police report and even an investigation or
arrest had occurred based on such information. The landlord is legally prohibited from using the arrest or
investigation as the basis for filing a 3-day notice to cure or quit or a 3-day notice to quit.
Instead, if the landlord believes that the current situation is a violation of the lease terms or endangering
others, they should base the notice to cure or notice to quit on a detailed written account from witnesses or
victims of the alleged violations of the covenant and not based upon an arrest record. Improper use of such
criminal information may invalidate the notice under which an eviction proceeding is initiated.
Scenario 5: Mary and James
Mary and James are living in a small, one bedroom apartment and are working with you, as their real estate
agent, to find a house to purchase. Unfortunately, locating an affordable house that will suit both their
needs has been a challenge. James asks you for help locating another apartment that's larger than the one
they have now.
After finding an ideal location, Mary and James complete the lease application and submit it to the com
plex's rental office. You receive a call from the apartment complex that the background check the rental
office requested revealed a six-year-old misdemeanor petty theft conviction on James' background check and
therefore their application was being denied.
How do you advise your clients Mary and James?
Option 1

You suggest that Mary and James secure at least two letters from professional references to help persuade
the leasing agent to accept their application.
Option 2
You explain to them that the property manager did not appear to have followed proper legal guidelines
when dealing with criminal history information found on a background check. The property manager was
required to use only directly-relevant conviction records, consider the nature and severity of the conduct,
and provide an opportunity to James to verify the accuracy of the information and opportunity to provide
any mitigating factors.
You let Mary and James know that you will go back to the property manager to provide an explanation of
how their process for denying James' application may not have complied with fair housing laws regarding
the use of criminal history information. You also inform Mary and James that they can file a complaint with
the CRD if they believe that they have been unlawfully discriminated against.
Option 3
You tell them that you know that this is disappointing but that you've located a number of other apartments
that they can look into. Although they may be heartbroken, they should move onto the next property.
Option 2 is the recommended course of action. After reviewing the law on using criminal history information,
the leasing officer may realize their error and review their decision to reject Mary and James' application.
As Mary and James' agent, you are a resource for their rights in the rental process, including their fair
housing rights. This option also informs them of how to make a complaint.
Under California and federal law, some uses of criminal history information are deemed to have an unjustified
discriminatory effect on people of color. Landlords, therefore, are limited in how they can collect this
information and what kinds of information can justify denying a rental application.
Options 1 and 3 do not inform Mary and James of their fair housing rights.

Source of Income
Under the FEHA, source of income refers to verifiable income that is paid directly to the tenant or on behalf
of the tenant.
It is illegal discrimination for housing providers to treat certain income differently as "earned" versus "paid
to" income for the purpose of evaluating financial qualifications for housing. Examples of protected sources
of income are alimony, child support, SSDI income, government housing vouchers (such as HUD Section 8),
and rental assistance programs.
Section 8 and Income Eligibility
For government subsidies, such as Section 8, the financial income standard for assessing eligibility for the
rental must be based on the portion of the rent to be paid by the tenant.
For example, if monthly rent is $2,000 and Section 8 voucher covers 70% (standard percentage) of that total
for $1,400, the tenant's obligation to pay rent is $600. Therefore, when applying a monthly minimum income
requirement, such as requiring twice the monthly income of the monthly rental amount, the rent would be
$600. A lease qualification would require a monthly income of $1,200.
Enforcement
Since 2020, CRD has undertaken an active campaign to educate housing providers and enforce this new law.
CRD regularly scans advertisements that explicitly ban Section 8, and for similar words or phrases such as
"Professionals only" that may cause persons protected under source of income to believe they would not be
accepted. CRD also has begun partnering with local housing councils and sending out paired testers to find
landlords who discriminate.

Other Forms of Source of Income Discrimination

Refusing to cooperate with the housing authority by failing to complete paperwork to participate in the
HUD program or complete required inspections are considered violations. If a current tenant qualifies for a
Section 8 voucher a landlord must, in good faith, engage in the process to qualify to be a Section 8 approved
landlord. If an existing Section 8 tenant has a new landlord due to the sale of the property, the new landlord
is required to engage in the process to qualify to be a Section 8 landlord.
Offering inferior facilities, limiting privileges/amenities or different terms (i.e. higher security de
posit) due to a tenant's source of income status are other examples of illegal discrimination.
Harassment
There are two types of harassment: quid pro quo and hostile
environment. Harassment may be based on any of the pro
tected characteristics, not just sex. Harassment may occur in
many different housing contexts (e.g., sales, brokerage prac
tice) but for discussion here, we will review it in the rental
context.
Quid pro quo means "this for that," which can occur when
someone demands a favor that is linked to a protected char
acteristic in exchange for some benefit. An example is a prop
erty manager demanding a date from a prospective tenant in
exchange for approving their application. The harassment is
based on the prospective tenant's sex.
An illegally hostile environment may exist when a housing provider engages in or allows unwelcome conduct
that is sufficiently severe or pervasive that it interferes with the full use and enjoyment of a dwelling. Unlike
quid pro quo, a hostile environment harassment does not require an exchange of benefits. An example of
this is a property manager not taking any action against tenants who are yelling racial epithets at a Latino
tenant every time they encounter them. If the tenant of Latino descent complains to the property manager
who now becomes aware of the situation, the property manager must take actions to stop the harassing
behavior based on the relevant lease agreement provisions. Lease agreements typically contain provisions
that prohibit harassing behavior by the tenants and describe the consequences for violating these rules, (i.e.
a 3-day notice to cure). Property managers may be vicariously liable for the actions of the third-party
tenants if the property manager fails to take any appropriate action to stop the unwanted behavior.

Marketing and Advertising
FHA and the FEHA state that it is unlawful to make, print, or publish, or cause to be made, printed,
or published, any notice, statement, or advertisement with respect to the sale or rental of a dwelling
that indicates any preference, limitation, or discrimination because of protected characteristics, or an
intention to make any such preference, limitation, or discrimination.
This applies to communication in any form, including words (written or verbal), photography (depiction of
human models), illustrations, or symbols (religious objects or flags).
According to the FEHA regulations, when determining whether an advertisement is unlawful, the standard is
whether an "ordinary listener or reader" may understand the meaning of the advertisement or statement
as discriminatory. No actual intent to discriminate is required to be shown.
Please note that there is no official prohibited word or phrase list. HUD, at one point, had issued
this kind of advisory but formally withdrew it in the 1990s and has not replaced it.
Human Models in Advertisements

The FHA regulations recommend using a diverse cast of human models in advertisement to avoid an inference
that there is a preference based on race, color, religion, sex, disability, familial status, or national origin. If
human models are used, an inclusive cast representing various racial groups, all genders, individuals with
disabilities, and families with children, should be used as appropriate; this will indicate to the public that
the housing opportunity is available to all and does not exclude certain groups.

Language
The language in which you advertise may raise fair housing issues. A legitimate business goal for a landlord
is finding a qualified tenant irrespective of their spoken language. Advertising only in English may limit
non-primary English speakers from finding out about available housing, especially in a neighborhood where
another language such as Spanish may be the dominant language.
However, the reverse may also be problematic. A "for rent" sign only in Spanish would shut out speakers of
other languages and races.
Prudent action in a predominantly non-English speaking community would be to advertise in both

English and any other language that is prominent within a community.

Module 4: CONTINUING
CHALLENGES
Although housing discrimination in California has been illegal since the 1960s there is still quite a bit of work
to do to eliminate discrimination or different treatment based on race and other protected characteristics.
The nation also continues to struggle against segregation and greater housing and homeownership challenges
within communities that are struggling with less generational wealth and the legacy of past exclusion.
Implicit Bias
Implicit bias is an automatic association or an unconscious assumption we have about a thing or person.
Unconscious decision-making is a natural human behavior, our brain is wired to help us react quickly without
consciously stopping to think. If we see a raging fire, we do not stop to think there is danger, our brain
processes the information automatically and reacts without conscious thought. However, these quick and
unconscious decisions or opinions can be based on previously learned negative or positive stereotypes, which
may lead individuals to treat others differently based on their demographics.
Module 4: CONTINUING CHALLENGES
Real Estate Agent Bias

Implicit bias plays a role in real estate when real estate professionals unconsciously treat certain persons
differently due to unconscious stereotypes about their protected characteristics, such as race and color.
Regardless of whether the different treatment is conscious or unconscious, there may still be harm and
possible illegal discrimination.
For example, if a licensee asks a Black prospective buyer client for a prequalification letter before they will
show the client homes but does not do the same for an otherwise similar White prospective buyer, the
licensee may not have been even aware they were treating Black and non-Black clients differently. This
different treatment might have been based on unconscious stereotypes regarding race and perceived ability
to afford a home.
In the introduction to this course, we mentioned the 2019 News

day investigation that revealed continued widespread evidence
of unequal treatment towards buyers based on race by real es
tate agents. While the videos showed some licensees acting with
intentional discrimination, openly talking about demographic-
based preferences, most of the different treatment captured by
the testers appeared to arise out of implicit bias.
As a result of the investigation, 18 of the agents identified as

treating fair housing testers differently in that investigation
have faced disciplinary action by the New York Department of
State. New York State has also opened 52 more investigations
into potential fair housing violations tied to the 2019 Newsday investigation.
Additionally, Newsday's report has resulted in increased focus nationwide on fair housing laws. The State of
California passed a law increasing the continuing education requirements pertaining to fair housing that will
add implicit bias training for DRE license renewal in California starting 2023. California has also increased
funding for fair housing enforcement.
The Newsday investigation showed how bias impacted both the level of service to prospective buyers as
well as how agents offered neighborhood or school recommendations. In a number of instances, agents
recommended different communities to prospective buyers of different races.
It is important to remember that positive or negative comments regarding schools or communities or other
wise avoiding recommendations within certain areas that meet a buyer's stated criteria may make housing
unavailable to those buyers. According to NAR's advisory on Steering, Schools, and Equal Professional Ser
vice, when these housing preferences are based on race, religion, or other protected demographic category,
the agent could be violating fair housing laws as well as the REALTOR® Code of Ethics.
Furthermore, according to NAR,
"discussions about schools can raise questions about steering if there is a correlation between the quality
of the schools and neighborhood racial composition – or if characterizations such as 'a school with low test
scores' or 'a community with declining schools' become code words for racial or other differences in the
community. Similarly, making unspoken distinctions by promoting a school in one district while keeping
silent about the quality of another school can have the same effect. These become fair housing issues."
Implicit Bias 56
Perceptions about VA and FHA loans or the financial profile of buyers that use these and other non-
conventional lending products or first-time buyer programs is another way that bias may color the way that
real estate professionals advise their clients.
There is explicit protection for veterans and military members as a protected class under FEHA. Because
only veteran/military members and their immediate family may obtain a VA loan, a blanket ban on VA
borrowers is a violation of FEHA.
Appraisal Bias
Most instances of appraisal bias stem from unconscious or implicit bias that is not intentional and thus
difficult to notice. While an appraisal should be based on the physical condition of the subject property and
recent neighborhood sale prices of comparable homes, statistical and anecdotal evidence suggest that the
racial identity of the occupant, homeowner or seller, whether intentionally or not, may negatively affect an
appraiser's perceived value of the property.
The impact of appraisal bias on a sales transaction may be

severe. If the appraised value comes in lower than the con
tract price due to a biased appraisal, a seller may be asked to
reduce the accepted offer price to meet that lower valuation,
to the seller's financial detriment. If the seller will not reduce
the price after a low appraisal, the buyer may be forced to
cover the gap between the low appraised value ( upon which
the lender will base the loan amount) and the sales price with
additional down-payment. If the buyer cannot afford to do
this and the seller still will not reduce the contract price, the buyer might be at risk of losing their deposit.
In late 2021, a Black couple filed a discrimination lawsuit against an appraiser for race discrimination when
their house in Marin County, California appraised at $995,000, $455,000 less than it had appraised just a
year before. The owners then removed photos and other information from their home that indicated their
race and got a second appraisal. The second valuation came in at $1.48 million, which was comparable to
the median price for a SFR in Marin County.
In an effort to combat appraisal bias, California passed the Fair Appraisal Act as discussed earlier in this
course.
An issue related to appraisal bias is the lower overall valuation of communities of color.
According to Andre Perry, author of Know Your Price, Valuing Black Lives and Property in America's Black
Cities, owner occupied homes in predominantly Black neighborhoods are undervalued by $48,000 on average
when compared to predominantly White communities with similar housing quality, amenities, education, and
crime statistics, resulting in $156 billion in cumulative wealth loss. This disparity is particularly significant
because of the importance of home equity to the net worth of most Americans.
57 Implicit Bias
Scenario 6: Priyanka
You're representing Priyanka and her husband Sanjay in the sale of their home. Priyanka and Sanjay were
unable to move out of the home prior to the sale. Their family photos as well as many precious keepsakes
are visible throughout the home.
Priyanka and Sanjay have heard about recent stories of appraisal bias impacting people of color and they
are nervous that the buyer's appraisal will come in lower than other similar homes. They are present during
the appraisal and hear the appraiser making comments such as: "Indians make pungent food" and "Indian
owners delay repairs."
The buyer's agent calls to inform you that the appraisal came in much lower than the price they were in
contract to pay and that the buyer wants to discuss a $75,000 price reduction. Based on the comparable
market analysis that you shared with them, Priyanka and Sanjay feel that the appraised value is too low
because it is well below the sales prices of nearby similar homes. They ask you what their options are at this
point.
How should you advise them?
Option 1
Inform Priyanka and Sanjay that you can ask the buyer's agent to ask the lender to submit a request for
a new appraisal or reconsideration. You let them know that you'll provide comparable sales to the buyer's
agent to support a change in value.
Option 2
Advise the sellers that they are entitled to fair appraisal valuation that is free of any bias based on protected
characteristics, such as national origin. Because the comments made by the appraiser referenced negative
stereotypes based on national origin and the appraisal came in at a significantly lower value than recently
sold homes that seem to be comparable , you recommend that the sellers let the buyer's lender know that
they believe that the appraisal was improperly low due to bias or they can consider filing a complaint with
the Bureau Real Estate Appraisers.
Option 3
Advise the sellers that low appraisals are more common in a rapidly rising market and if they want to sell
their house quickly, they should consider giving the buyers the price reduction. Besides, challenging a low
appraisal rarely results in a different outcome.
Implicit Bias 58
Option 2 is highly recommended. This more fully informs the sellers of their rights under the law. Effective
July 2, 2022, Fair Appraisal Act, states that purchase agreements must contain a notice stating that the
sellers who believe that an appraisal is based on improper or illegal considerations can report this to the
lender and may also file a complaint with the Bureau of Real Estate Appraisers.
Option 1, offering to request a reconsideration from the buyer's lender, offers Priyanka and Sanjay an
avenue where you will support them in addressing the low appraisal but it does not fully inform them of
their rights under the law.
Option 3, encouraging the sellers to move forward with the price reduction with no further fair housing
information, is not acceptable advice. It fails to inform Priyanka and Sanjay of their rights under the law
and might lead them to believe that they don't have any recourse here even though the law actually offers
several ways to address their concerns.
Lender Bias
Mortgage applicants of color are far more likely to be denied conventional mortgages when benchmarked
against similarly situated White applicants. According to a 2020 analysis of mortgage and refinance
data22 released under the federal Home Mortgage Disclosure Act, Black home buyers in Los Angeles were
87% more likely to be rejected for a home loan than the average home buyer.
Here are some instructional statistics from the 2021 State

of Housing in Black America (SHIBA) report by National
Association of Real Estate Brokers (NAREB):
• 13% of Black loan recipients received high-cost loans,

nearly three times the rate for White applicants at 5%
• Denial rate for Black applicant is 16%, more than double

versus White applicants at 7%
• High-income Black applicant denial rate was lower at

independent mortgage companies (7%) than at banks (19%);
this gap persists regardless of income level
22 https://www.dailynews.com/2020/07/07/mortgage-injustice-blacks-twice-as-likely-to-get-rejected-for-a-loan/
59 Implicit Bias
Algorithms may embed the patterns of past segregation into investment risk assessment formulas in ways
that perpetuate patterns of disinvestment or result in systematic bias. Therefore, lending institutions that
aren't intentionally discriminating on the basis of protected categories, may have systems that produce
discriminatory outcomes. These systems impact a number of real estate-related systems. With algorithmic-
based systems increasingly used to screen prospective tenants, underwrite mortgages, and insure residential
properties, the CRD is evaluating the fair housing implications of technological bias and working on recom
mendations for eliminating bias in these kinds of systems that may result in disparate impact discrimination.
Scenario 7: Sketchy
You're coming home from the grocery store with your youngest child and you see an open house sign on the
corner of your street. After dropping off the groceries, you let your partner know you're going back to check
out the open house down the street. You and your youngest child head over.
You arrive at the open house, and the seller's agent says, "You don't want to live here - it's sketchy at night."
A few minutes later, you overhear the same agent talking to a new open house visitor who had walked in
alone. The agent explains to the new visitor that, "it's a great community," and suggests to the new person
that they should make an offer.
You feel that the agent wanted to discourage you from pursuing this home because you were with a child.
What should you do if you don't want this to happen again?
Option 1
Let the agent know that you heard them say something different about the neighborhood to you than to
others and that you believe that it was because you were with a child. You also tell them that treating
prospective buyers of a home you are selling differently based on familial status might be a fair housing
violation.
Option 2
Tell the agent's broker what the agent did and follow up with a complaint with the CRD, the state agency
responsible for protecting consumers from discriminatory housing practices.
Option 3
After determining that the agent is a REALTOR®, you reach out to their local REALTOR association to
make a Code of Ethics complaint.
Implicit Bias 60
Option 1, directly informing the agent that you heard them telling you something different about the
neighborhood than others, could raise the listing agent's awareness of the fact that they have been making
contradictory statements to open house visitors, possibly because of implicit bias, which could be a fair
housing issue. However, because no complaint is filed with any body governing fair housing laws, there
would not be an investigation of any possible wrongdoing that could result in a penalty and the agent might
continue these practices.
Options 2 and 3 are both likely to lead to a disciplinary process or penalty if the agent is found to have
violated fair housing laws. These ramifications may keep the agent from engaging in this kind of behavior
in the future.
Redlining
Although redlining was officially made illegal by the passage of FHA in 1968, vestiges of segregation re
main years later. Lending and appraisal practices stemming from bias about demographic groups or the
racial composition of neighborhoods continues to segregate people now as they were pre-1968. Side-by-side
comparisons of historical redlining maps and current neighborhood racial composition based on census data
show not much has changed in many previously redlined areas. Many redlined areas were offered inferior
neighborhood amenities or closer to environmental hazard, these location-based differences often continue to
impact food availability, health care accessibility, and educational opportunities.
The following examples are some of the ways that unequal credit services still impacts some communities of
color:
61 Implicit Bias
• concentrating services in predominantly White communities (with fewer or no branch offices in commu
nities with larger concentrations of people of color)
• having no loan officers or community lending specialists who meet the needs of communities with less
generational wealth or the needs that individuals within protected categories are more likely to have
• not conducting advertisement or outreach to underserved communities
• charging higher rates and fees to individuals living in or seeking housing in predominantly non-White
communities
• imposing additional qualification requirements on or denying applicants of color more often than similarly
situated White applicants
Predatory Lending and Reverse Redlining

Reverse redlining may occur when a lender or insurer provides predatory or fewer options in communities of
color compared to their offerings in other communities.
In the 2019 case Saint-Jean v Emigrant Mortgage Company,

the lender was held liable for violating FHA and ECOA when
targeting minority neighborhoods for predatory loans be
tween 1999 and 2008. They also marketed aggressively to
Black and Latino homeowners, advertising in four primarily
Black or Latino newspapers.
The lender targeted borrowers who had poor credit but sig
nificant equity in their homes. They did not examine the
borrower's ability to repay the loan but lent the money solely
based on the value of the home. When a single payment was
missed, the bank imposed an automatic 18% default interest
rate, causing many borrowers to sell or face foreclosure. The bank knew of its high rates of delinquency,
foreclosures, and equality losses, yet continued its predatory practices until this lawsuit commenced in 2014.
Other ways that racial bias or practices that are reminiscent of redlining continue to impact lending services
is in the location of bank branches and targeted marketing that leaves out certain demographic groups.
Additionally, the practice of having a home price minimum before a real estate company will provide services
has also fallen under recent scrutiny.
The seriousness and pervasiveness of this problem was further recognized in the latest FEHA regulations
that went into effect on January 1, 2022. FEHA regulations as amended in 2022 have been strengthened to
explicitly recognize financial assistance practices that result in discriminatory effect. Even if there was no
actual intent to discriminate based on a protected characteristic, if any practices result in disproportionate
impact on certain protected class, then the practice might be illegal housing discrimination. Statistics and
demographic or census data may be used to establish or rebut existence of discriminatory effect.
In the introduction to this Fair Housing course, we mentioned persistent and largely unchanged racial home
ownership gaps as well as a number of current fair housing challenges. Pervasive discrimination prior to the
passage of the FHA of 1968 as well continuation thereafter, whether related to enforcement challenges or
Redlining 62
implicit bias, suggest that these challenges are related, at least in part, both to a history of exclusion and
real estate industry customs and practices.
The great news is that every single real estate professional can play a role in helping to close these gaps
by understanding fair housing laws and adopting business practices that will help members of all communi
ties, including those that have historically been underserved, achieve homeownership. The next section on
Recommended Business Practices, offers practical tips.
Scenario 8: Jane and Sam
Jane, and her fiancee Sam drop in to a local mortgage brokerage firm to inquire about qualifying for a
mortgage to purchase their first home together. They are helped by Angela, one of the loan officers.
They hope their joint income will qualify them for a higher loan amount to buy their dream home with three
bedrooms, two bathrooms and a large backyard. Angela will only take Jane's income into calculation even
though both Jane and Sam have excellent credit scores and each earns an income from jobs that they have
held for over five years. Jane lets Angela know that Sam's pronouns are "they/them" but Angela refers to
Sam several times as "she" and calls Sam Jane's "friend."
Angela informs Sam and Jane that she'll only be able to use Jane's income and the most she can qualify for
is $450,000, which would only purchase a condo in their local area.
You are the supervising broker of the mortgage brokerage. Sam and Jane reach out to you to ask if there is
any way that Sam can also be included on the loan.
How should you respond?
Option 1
Reach out to Angela who tells you that she didn't know Jane and Sam were an engaged couple because
they did not explicitly let her know that. Also, she admits that she referred to Sam with the pronoun "she"
instead of using "they" but states that it was just a slip of the tongue because she normally refers to people
whose outward gender expression is considered traditionally feminine as "she."
Angela says that she will reach out to Jane and Sam, apologize for misgendering Sam and redo the loan
qualification to include Sam's information.
Option 2
63 Predatory Lending and Reverse Redlining

Discuss the matter with Angela and institute several new, firm-wide policies along with mortgage loan broker
training. Now, every mortgage loan broker will use a client intake form to inquire about what Sam and Jane
were seeking. The form will include questions about whether more than one loan applicant is involved,
whether they are applying for a home to live in together and their preferred pronouns.
Angela also says that she will reach out to Jane and Sam, apologize for misgendering Sam and redo the loan
qualification to include Sam's information.
Option 3
Inform Sam and Jane they may apply for a loan together even though they did not get this impression from
Angela.
Option 2 is the best course of action. Providing all loan brokers with training as well as instituting a policy
that mandates a consistent firm-wide process will reduce the risk that any of the brokerage's clients will
experience biased or different treatment. Asking every prospective borrower for their preferred pronouns is
both consistent treatment and may also reduce the risk of unintentionally misgendering borrowers.
The fact that Jane and Sam are not yet married should not impact their ability to get a loan together.
Marital status is a protected category under the Equal Credit Opportunity Act and Fair Employment and
Housing Acts.
California fair housing law as well as federal law (based on an executive order and a recent Supreme Court
case) prohibits discrimination based on sexual orientation and gender identity.
Angela might have treated Sam and Jane differently than she would have treated a straight couple. She may
also have treated Jane and Sam differently because of Sam's gender identity.
Option 1 also may correct Angela's initial errors with Jane and Sam. However, with no change in the
office policy or standards of practice, this brokerage firm's mortgage loan brokers could engage in similarly
discriminatory behavior against other prospective clients.
Option 3 is not recommended. It does not address concerns that Sam and Jane may have that they are being
treated differently because of sexual orientation, gender identity or marital status. There is no indication
that Angela will treat members of the LGBTQ+ community differently in the future. They also haven't
received any assurance that Angela is aware that two individuals, whether they are married or not, may
apply together for a mortgage.
This option is more likely to result in Sam and Jane filing a compliant with the CRD for discrimination
based on marital status, sexual orientation and gender identity.
Scenario 8: Jane and Sam 64

Module 5: RECOMMENDED
BUSINESS PRACTICES
In this section we will offer practical tips that can help all real estate professionals comply with fair housing
laws.
There are quite a few laws and simply intending not to discriminate may not be enough to avoid violating
the law. Real estate professionals may treat individuals inconsistently for a number of reasons, bias may
play a role but other times they may treat clients differently due to other reasons like workload or life
circumstances. Additionally, some real estate professionals may recommend neighborhoods or schools, or
reference area crime in an attempt to be helpful without realizing the possible fair housing implications of
these actions.
Fortunately, there are simple systems that REALTORS® can use to avoid inadvertently violating fair housing
laws or treating prospective and current clients differently. There are also ways that you can use to help
support your clients in their compliance and awareness of fair housing laws.
Buyer Intake Processes
Create a thorough, neutral new client checklist to use with all prospective buyer clients to solicit from
them their personal criteria for property and neighborhood selection.
• Price range
• Size (bedroom and bathroom count. Square footage)

Module 5: RECOMMENDED BUSINESS PRACTICES
• Features of the house (pool, backyard, single level)
• Neighborhood features (close walking distance vs driving distance to markets or mass transit; nearby
parks or schools or houses of worship; density)
• Distance to work or family
• Other unique needs of buyer
Share the same objective information about property and neighborhood conditions with all prospective
clients.
Be aware of your own unconscious bias. Consciously work towards neutralizing bias by using checklists and
providing relevant information to all, not just select individuals.
Related to steering: brokerage firms should not informally or formally assign walk-in clients to licensees of
the same racial background. Do not assume a client would be more comfortable with someone of the same
or similar background.
Home Recommendations
Show buyers every home that meets their criteria within their
desired regions.
Be careful if a client wants you to restrict their housing

choices for them. A real estate licensee should never encour
age or discourage a prospective client from renting or buying
a property because of the racial, ethnic, or religious make-
up of a building or neighborhood. If a prospect asks you
to restrict their housing search based on any protected char
acteristics such as race, color, religion, sex, national origin,
disability, or family status, be clear about and reaffirm your
commitment to the requirements of the fair housing laws.
Furthermore, never assume that a client would prefer a particular location or feature due to their protected
characteristics. Real estate licensees should ask the same set of neutral questions of every prospect.
In an example with a prospective tenant with kids, a property manager should not ask, "Would you prefer
to see a lower floor unit?" Instead, a neutral question should be asked such as, "Do you have a preference
for upper or lower floors?" Consistency with the client intake process, asking the same question and showing
all areas that meet the buyer's stated criteria (unless restricted by the buyer) will help ensure that your
recommendations don't inadvertently reflect bias.
Buyer Intake Processes 66

Neutral Community Descriptions
Don't disparage any communities or provide your personal opinion as to what is a "good" or "bad" neighbor
hood or school. These may be subjective judgments based that may vary from individual to individual.
FHA regulations specifically prohibit the use of coded words or other devices that might result in steering
or otherwise influencing the locations of a buyer's home search because of protected characteristics. Unfor
tunately, discussion of schools and crime levels may be used to imply a certain racial demographic based
on negative stereotypes. These kinds of discussions could perpetuate housing segregation and are, to some
extent, prohibited under FHA regulations.
When a client asks about schools or crime levels, the licensee should provide websites that provide objective
information that will help the client decide what neighborhoods and school districts they prefer. Reputable
third-party sources might be website hosted by the local police department or school district.
When clients use vague or subjective terms such as "safe" or "good" neighborhood/school when explaining
what they are interested in, ask for the specific locations that they are interested in or what their desired
school districts are.
Fair housing laws do not prohibit buyers from choosing to reside in a particular home or neighborhood based
on their personal preference, even if the choice has a religious or demographic bias. The distinction is that
the real estate agent may not make this determination for the client.
For example, if a client directs a buyer's agent to a specific geographical location due to their religious
practice, which requires the home to be within walking distance to a temple and homes with dual sinks
and ovens, commonly called a "Kosher kitchen", the buyer's agent may limit the scope of search within that
geographical boundary and homes with a Kosher kitchen. If a prospective tenant requests to be shown
ground-level units only due to their mobility impairment, a real estate licensee may do so. The key is for
the client to select the boundaries and requirements.
67 Neutral Community Descriptions

Scenario 9: Pilar
Pilar is an agent with Best Brokerage. Best Brokerage is located in the town of Hillside, a suburb located
30 minute drive from downtown. Shanice, a Black woman, is referred to Pilar by her coworker Richard, a
White man, who said Pilar helped him find a nice house. Shanice speaks to Pilar over the phone and then
comes into the office for an in-person meeting.
Shanice tells Pilar she is looking for a home that is about a 30 minute distance from downtown where she
works and heard that Hillside is a nice place to live. Pilar tells Shanice that Northside, which is 45 minutes
away from downtown, may be a "better fit" for her. Shanice knows very little about Northside except that
it is predominantly non-White versus Hillside being predominantly White. Shanice wonders if her race has
anything to do with Pilar recommending that she look for homes in Northside. Pilar also says that Shanice
will need to provide her with a pre-qualification before she will take Shanice on as a client.
Shanice senses that something isn't quite right. She asks Richard if he was asked for a pre-qualification letter
before Pilar would work with him and he says that she didn't. In fact, the day he called and explained what
he was looking for Pilar said that she knew of the perfect home and offered to connect him with a great
lender.
Feeling that she is being treated differently based on her race, Shanice decides not to work with Pilar and
instead calls you, another local agent. How will you conduct the initial client intake?
Option 1
You have a detailed client intake form that you go through with Shanice to make sure that you have a
consistent process with each new client. This form also helps you find out, in more detail, what Shanice's
requirements are. Your policy with every client is to hold off on showings until the client is pre-approved.
You let Shanice know that this is your broker's policy and offer to send her a list of reputable mortgage
loan brokers if Shanice requires a referral. You immediately enter Shanice into your system so that she can
receive listings that meet her stated criteria.
You follow up with a phone call a few days later to check on her pre-approval process and to see if any
listings have come through that are of interest.
Option 2
You know of some great areas in Hillside with wonderful schools. You ask Shanice what kind of home she's
looking for and start sending her listings in those areas. You also send her a list of reputable mortgage loan
brokers that she may reach out to as she's beginning her home search.
Scenario 9: Pilar 68
Option 3
You tell Shanice to check online for some homes that she might be interested in and to send those to you and
you'll be glad to look into them for her. You didn't think it was a terrible idea to ask for a pre-qual letter
up front and let Shanice know that the market is heating up so to be sure that she can afford the prices in
Hillside, she should get a preapproval letter before you and her look at homes together.
Option 1 is the recommended intake process.
If Pilar has treated Shanice differently and if that different treatment was due to Shanice's race, then she may
have violated both State and federal fair housing laws. A great way to reduce the chance of inadvertently
treating new buyer clients differently, whether due to unconscious bias or for other reasons, is to have a
checklist that is used with each prospective buyer client. This checklist will also help you more fully capture
what the buyer is interested in so you can craft a search that reflects their preferences.
Additionally, Newsday's Long Island Divided investigation showed agents asking for pre-approval letters from
African American testers before they would agree to show them homes while not requiring the same from
White testers. Here, Pilar also treated Shanice and Richard differently, which might have been because of
conscious or unconscious racial or gender bias. A great way to avoid inadvertently treating clients differently
is to have policies that are used consistently with each client.
Even though Option 2 has you sending Shanice listings within the city that she's interested in, you have
restricted her search by only showing her homes in selected neighborhoods without her input. Real estate
agents should always present all options to their clients based on their clear direction. When real estate
agents select neighborhoods for their clients, the neighborhoods that they select may reflect their personal
biases and they might inadvertently recommend different areas to different clients.
Bias has caused real estate agents to inadvertently recommend different neighborhoods to clients from dif
ferent racial or ethnic backgrounds, even when they weren't aware of their bias or that they were treating
people differently. This different treatment might violate fair housing law.
Option 3 is also not recommended. It is unclear from this option if your standard policies for all clients
are to direct them to send you homes that they've found online and to have them present a prequalification
letter before you'll show them homes. To help ensure that you aren't inadvertently treating clients differently
based on unconscious bias, it's best to use consistent systems and policies with all of your prospective buyer
clients.
69 Scenario 9: Pilar
Scenario 10: Sheree
Sheree is moving to the area from another state for a new job. She was referred to you by one of your
former clients who is her good friend. She's visited a few times but she's not very familiar with all of the
neighborhoods.
You have an initial conversation with Sheree to find out what her criteria is. She doesn't want to be too
far from her new office but would also love a larger backyard because she enjoys gardening. She also has a
young daughter and wants you to help her find homes that are in a "good" area with "great schools". How
do you advise her?
Option 1
You're a huge fan of the Brightside and Oxford neighborhoods, which also happen to have highly rated
schools. There are some other areas within Sheree's price range but you elect not to show her homes in those
areas because you don't think they are quite as desirable.
Option 2
You ask a few follow up questions as to what constitutes a "good neighborhood" and direct Sheree to a local
schools guide so that she can select areas based on the schools she'd like to be near. Sheree says that for
her, a good neighborhood would be away from busy streets and near parks. You then craft a search based
on this information.
Option 3
You let Sheree know that everyone has a different idea of what a good neighborhood or school would be so,
to avoid steering, you'll need a little more information from her to help craft her search. You advise her to
do some research on the area and let you know the specific neighborhood boundaries that she'd prefer. The
other alternative would be to show her homes in all areas that otherwise meet her stated needs.
Sheree emails you the next day with several areas that she's selected based on her research.
Scenario 10: Sheree 70

Option 3 is highly recommended: real estate agents should always present all options to their clients based
on their clear direction to avoid inadvertently steering clients. Ideally, if the client would like to only see
properties in particular areas, you can ask them for specific boundaries or areas and then you can craft their
search.
Real estate agents may show different neighborhoods to clients from different racial or ethnic backgrounds
because of bias. Even if they aren't aware of their biases or that they might be treating clients differently
based on protected categories, these agents might still be violating fair housing laws. To keep from making
this mistake, it's best to either show clients all areas or to restrict the search to specific areas based on
detailed specific direction from the client.
Option 2, asking follow up questions before selecting neighborhoods for Sheree, is a decent option because
it does allow for her to help guide the search. However, Option 3 gives Sheree the most control over her
search and is most likely to minimize the chance that agent bias will direct the areas selected for Sheree's
search.
Option 1 is not recommended. While Sheree may not decide to see all the homes you present to her, real
estate agents should always present all options to their clients based on their clear direction.
Marketing and Advertising

All advertising for residential housing advertising should display the Equal Housing Opportunity logo, state
ment, or slogan, depending on the medium of advertising.
Brokers should review all written materials, as well as the practices of their salespersons.
71 Scenario 10: Sheree

Words to Use and/or Avoid

Avoid using words, phrases, photographs, illustrations, symbols, or forms, which might suggest a preference
for, or discrimination against, certain categories of persons on the basis of their protected characteristics.
Advertising or marketing messaging that implies or explicitly states that only certain persons based on
certain protected characteristics are welcome or unwelcomed is prohibited.
A statement or advertisement is considered discriminatory if it would suggest such a preference to "an

ordinary reader or listener." Proof of discriminatory intent by the speaker or writer is not necessary.
The following examples have previously been deemed unacceptable by HUD or CRD.
Prohibited References Examples
Religion "Kosher kitchen"

Close to Methodist Church, synagogue
Source of Income "No Section 8"

"no voucher"
"Professionals only"
"Employed only"
Race, Color, National Origin Black neighborhood

"English Speakers only"
Gender, Sexual Orientation, Gender Identity "Traditional families only"
Disability "No handicap parking"

"No wheelchair access"
Age or Familial Status "No kids"

(unless exempt senior housing) "Singles only"
"No play area"
Criminal Record "No felony"
The prohibition against discriminatory messaging extends to use of symbols and images. In an NAR case
regarding the Code REALTOR® Code of Ethics, a REALTOR® placed on the Multiple Listing Services
photos of a property containing in the background a display of a Confederate flag. The seller's agent was
found to have violated Article 10 of the Code. The hearing panel determined that a reasonable person seeing
the Confederate flag could reasonably construe a racial preference, that Black persons were not welcome to
apply for that housing opportunity. This is irrespective of the REALTOR®'s actual intent.
Marketing and Advertising 72

Permissible Phrases
Context may determine whether a word or phrase is acceptable or not. Listing accessibility features of a
home or neighborhood is also acceptable because that may be useful information for all prospective buyers.
Describing an objective feature of the property should not be misinterpreted as limiting or discriminatory
by an ordinary person.
However, negatively stating that there is no accessibility feature is not the same. This statement has no
objective purpose in selling a property aside from indicating a negative preference against a individuals with
certain disabilities. An "ordinary person" would likely believe that persons with disabilities would not be
welcomed.
The examples below have previously been deemed permissible by HUD or CRD.
Permissible Phrases Examples
Descriptions of Property Great view

Fourth floor walkup
Walk-in closet
Fixer-upper
White picket fence
Description of Neighborhood Jogging trails

Quiet neighborhood
On bus route/mass transit
"Walkability index"
Conduct Required of Residents "Non-smoking"

"Sober living" facility
Description of Accessibility Features Wheelchair ramp

ADA compliant bathroom
Familial Status Family room

Nursery
Services or Facilities In-house Chapel
Roommate situation Female preferred

(Gender preference allowed only when advertised by non-licensee)
73 Marketing and Advertising

Inclusive Terminology
In 2020, the Houston Association of Realtors® adopted the term "primary" over the prevalent term "master"
when describing bedrooms or suites due to the negative racial undertones associated with the term "master."
The term "master" is not currently (2022) a violation of the REALTOR® Code of Ethics. However, as more
organizations are proactively adopting the term "primary" rather than "master," it is recommended that
more inclusive and less divisive terminology, such as "primary," be used instead.
Here's a list of phrases that may be used in place of commonly used, but less inclusive, language:
Common Phrases Alternative Phrases
Master Bedroom/Suite Primary Bedroom/Suite
Family Room Common Room
Mother-in-law suite/Granny Flat Accessory Dwelling Unit (ADU)
Bachelor/Bachelorette Studio
Other Recommendations
1. Market Widely. Run ads in general media to ensure the property is made available to a wide audience.
Only advertising to targeted groups, whether in print or social media, may be problematic if the targeted
group or groups is so specific that large swaths of the general public are excluded.
2. Use Diverse Images. Use images showing individuals from a variety of backgrounds to indicate that
all are welcome.
3. Practice Language Inclusivity. You should consider what language to advertise to make the housing
opportunity known to as wide an audience as possible. When marketing in a predominantly non-English
speaking areas, advertise in the more prevalent language as well as in English.
Scenario 11: Jamal
Marketing and Advertising 74

Jamal has an exciting new listing that the sellers just renovated very nicely. He drafts an advertisement
with the following property description: "This captivating three bedroom, two bath home is a rare find in
a highly desirable neighborhood within walking distance from a Synagogue and restaurants. Located in a
safe neighborhood with great schools that is perfect for families with kids. This home has a "kosher kitchen"
perfect for preparing large meals and a large backyard for get-togethers."
Jamal runs the marketing material by you, his supervising broker, per your office policy for pre-approval of
an advertisement. How do you advise him as the supervising broker?
Option 1
Review the material and remove all the potential references to Jewish faith. You point out "safe neighbor
hood" and "great school" could be problematic code phrases that should be avoided and instead refer to any
inquiries about school districts and crime rates to reliable 3rd party sources for additional information.
Option 2
You are extremely busy but your office has distributed some advertising guidelines. Jamal is a top producer
so you trust that his advertising is compliant. You approve the marketing without reviewing it.
Option 3
Review the material and let him know that it's wonderful. You've seen so many bland marketing pieces
and this level of description really captures this stunning home's essence. Jamal is a top producer and you
expect no less.
Option 1 is highly recommended. It appropriately recommends that references that have either been
prohibited by government fair housing agencies or that could indicate a preference for individuals with
certain demographic characteristics.
Federal and State fair housing laws state that it is illegal to advertise in a way that indicates a preference
based on protected characteristics (including religion, familial status, or race). While there is no list of
prohibited words, "Kosher kitchen" has been deemed unacceptable.
Additionally, we recommend proactively avoiding words that could indicate bias in favor of more inclusive
language.
Furthermore, if Jamal is a REALTOR then he will also be subject to Standard of Practice 10-3 of the
REALTOR Code of Ethics. It states that advertisements may not indicate any preference based on race,
color, religion, sex, handicap, familial status, national origin, sexual orientation or gender identity.
75 Marketing and Advertising

Option 2 and 3 are not recommended. Neither recognizes and informs Jamal of the possible fair housing
issues with his marketing. Option 3 might give Jamal the incorrect impression that there aren't any fair
housing issues with his marketing
C.A.R.'s Fair Housing and Discrimination Advisory Form
California REALTORS are encouraged to discuss the new Fair Housing and Discrimination Advisory (FHDA)
form, released in 2020, with their clients. The FHDA is a summary of the fair housing rights and responsi
bilities of all parties to the transaction. It's a great quick fair housing resource for REALTORS, offers vital
information for home sellers and housing providers and lists additional resources for anyone who believes
that they may have been discriminated against.
Buyer Love Letters

Buyer love letters are typically letters that sometimes include family photos and other demographic descrip
tors from prospective buyers to the seller and seller agent to sway the seller's decision favorably in the offer
selection process.
Whether personal information or letter about a buyer is so

licited by the seller or offered voluntarily by the buyer before
acceptance, receipt of such information may directly or indi
rectly reveal protected characteristics of the buyer that may
result in the seller inadvertently acting on the basis of bias.
C.A.R.'s Fair Housing and Discrimination Advisory Form 76

Advice to Seller's Agents

Brokerages should have an office policy regarding seller treatment of buyer love letters. This will ensure that
all sellers who are clients of the brokerage receive consistent information about buyer letters.
Additionally, to help sellers avoid actual or unconscious bias and, potentially violating fair housing laws, the
seller's agent should discuss the pitfalls of such letters at the time of the listing and note accordingly in the
listing agreement. C.A.R. form FHDA contains this warning and advice. The C.A.R. Residential Listing
Agreement allows the seller to state if they would like their agent to specify on the MLS that the seller will
not review buyer love letters.
Advice to Buyer's Agents

Buyer's agents should review the FHDA and its advice regarding buyer love letters with buyers. Agents
should also advise buyers if the seller has requested that no buyer letters be submitted in the MLS. If a
buyer insists on submitting such a letter or photos, the buyer's agent should document in writing that the
buyer is acting against the broker's advice and should not aid in any manner with the drafting or delivery
of such letter to the seller.
Lending and Appraisal Tips
Although real estate salespersons may have less expertise about or control over financing and appraisal, it
is still imperative that agents understand how certain discriminatory financial lending practices may impact
their clients. and Agents should be able to advise clients who believe that they have been discriminated
against in lending or appraisal.
77 Buyer Love Letters

Appraisal
Real estate licensees should be aware how a biased appraisal, particularly those resulting a valuation that is
lower than market value, may negatively affect a sales or refinance transaction and how to advise their client
accordingly. They should also inform their clients of their rights to unbiased and fair appraisals and their
right to file a complaint if they feel an appraisal came in at lower than market value due to discriminatory
reasons. This information is discussed on the Fair Appraisal notice in the purchase agreement.
Finally, licensees should inform buyers of the risks involved with waiving an appraisal contingency.
Lending
Numerous studies and reports show that mortgage applicants of color continue to be rejected at higher rates
or they are offered higher interest rates than their White counterparts.
Licensees should remind buyers that they have the right to nondiscriminatory financing terms under fair
housing laws. A great resource is the FHDA, which provides information on filing fair lending complaints.
Licensees can also support their clients by helping them identify or question higher than typical interest
rates or lender fees.
Licensees that work with buyers and sellers should become as familiar as possible with all of the financing
options so that they are properly informing their clients. There may be home buyer assistance programs that
can help buyers afford a home purchase. Additionally, listing agents should provide objective and unbiased
information about loan products to reduce the possibility of unfair exclusion.
Licensees should never tell buyers that they can't afford to buy or that they don't have the correct financial
profile to qualify for lending. If an agent believes that a buyer will have difficulty affording or qualifying
for a mortgage to purchase their homes of interest and they aren't aware of programs that might help, they
should refer these buyers to another agent, lender or HUD counselor familiar with first time buyer programs.
This practice may help support buyers with less generational wealth, like some people of color, since they
are less likely to have parents who can use their home equity to help them purchase a home.
Finally, offering more than one lender to buyer clients so that they can compare interest rates and fees will
allow for them to identify possible bias or different treatment. Additionally, it will help increase the chances
that they receive competitive loan pricing.
Next Steps
This course is just a start for those who would like to do even more to help expand homeownership oppor
tunities in underserved communities. A great next step is to take NAR's At Home With Diversity Course,
which explains how to serve the needs of a variety of demographic groups in your business. Additionally,
there are a number of forums hosted by REALTORS® at the local, State, and national level where you can
learn more about how California's affordability challenges as well as gentrification in historically redlined
communities can sometimes exacerbate wealth and homeownership gaps. Finally, there are multicultural
trade organizations, some with local chapters, that host seminars and offer resources regarding the specific
needs of various demographic groups.
Lending and Appraisal Tips 78

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Fair Housing

Fair Housing Education

Fair Housing Education 2

Major Homeownership Inequality Persists

Black and Latino homeownership rates are well below Cali­

Fair Housing Law is Not Intuitive

3 Major Homeownership Inequality Persists

Role of Real Estate Agents

Fair Housing Law is Not Intuitive 4

Discriminatory Exclusion and Terrorism

Discriminatory Exclusion and Terrorism 6

Valuation and Race

NAREB changed its name to the National Association of REALTORS® in 1972.

7 Discriminatory Exclusion and Terrorism

Source: 1949 Declaration of Restrictions from a community in Danville, California

Source: San Francisco Examiner 10/20/1912

Source: Oakland Tribune Oct 4, 1924

Real Estate Professionals

13 Real Estate Professionals

Before fair housing laws outlawed it, people of color, par­

Although they filled, and still sometimes fill, a gap where

Law and Policy Advances

A famous civil rights attorney who would later become a

Miller joined Thurgood Marshall on the legal team of the

Law and Policy Advances 16

Source: Hanford Sentinel, 12/20/1963

17 Law and Policy Advances

The Work Continues

Law and Policy Advances 18

The Fair Housing Act of 1968 (FHA) and Fair

Both laws prohibit discrimination based on the following seven characteristics:

• Race (including use of criminal history)

• Color (often used with race)

• National origin (country of one's birth)

• Disability (also known as handicap; includes mental and physical impairments)

FEHA adds the following 15 categories for California:

• Ancestry (country of one's parents' birth)

• Gender expression (how one outwardly expresses their gender)

• Marital status (e.g., married or unmarried persons living together)

• Source of income (including Section 8 voucher recipients)

• Veteran or military status

• Age (exception for senior housing)

• Refusing to sell or rent

• Refusing to negotiate for housing

• Making housing unavailable

• Discriminating on terms, conditions or privileges in rental

• Discriminatory advertising or statements

• Discriminating in the provisions of brokerage services

• Inducing panic selling

• Refusing a request for reasonable accommodation or a reasonable modification due to disability

• Refusing to make a mortgage loan or other financial assistance for a dwelling

• Discriminating in appraising a dwelling

• Denying homeowners insurance coverage

• Discriminating in terms of conditions of homeowners insurance

• Giving unequal access to facilities, amenities, or common areas

Who Must Comply with FHA and FEHA

• the owner does not make discriminatory statements or advertisement.

Disclosure of Death or HIV Positive Status

Voluntary Affirmative Marketing Agreements (VAMA)

• using coded words or other devices to segregate.

Unruh Civil Rights Act (Unruh Act)

Senior Citizen Housing

Unruh Civil Rights Act (Unruh Act) 26

The senior citizen housing exception to fair housing laws ap­

Black and Latino homeownership rates are well below Cali

Before fair housing laws outlawed it, people of color, par

The senior citizen housing exception to fair housing laws ap

Some examples of service animals trained to perform disabil