Ownership of real property - Fair housing/discrimination

Learning Outcomes

After reading this article, you will be able to identify which housing transactions are covered by federal fair housing laws, recognize protected classes, distinguish statutory exemptions, and apply the correct legal standards to MBE-style questions on real property discrimination. You will also be able to spot common exam pitfalls and confidently answer fair housing questions on the MBE.

MBE Syllabus

For the MBE, you are required to understand the federal statutory framework prohibiting discrimination in the sale, rental, and financing of dwellings. This includes knowing who is protected, what conduct is prohibited, and the scope of statutory exemptions. For revision, focus on:

  • The scope and application of the federal Fair Housing Act (FHA)
  • The definition of protected classes under the FHA
  • Prohibited discriminatory practices in housing transactions
  • Statutory exemptions and their limits
  • The relationship between fair housing laws and other anti-discrimination provisions
  • The concept of state action and private conduct in discrimination cases

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. Which of the following is NOT a protected class under the federal Fair Housing Act?
    1. Race
    2. Religion
    3. Sexual orientation
    4. National origin
  2. A landlord owns a four-unit building, lives in one unit, and refuses to rent to families with children. She advertises "adults only." Which statement is correct?
    1. The refusal is always prohibited
    2. The refusal is exempt, but the advertisement is not
    3. Both the refusal and the advertisement are exempt
    4. The refusal is allowed only if the landlord is over 62
  3. Which of the following is a prohibited practice under the FHA?
    1. Refusing to rent to someone because of their religion
    2. Charging higher rent to out-of-state residents
    3. Refusing to rent to a person with a criminal conviction
    4. Requiring a security deposit from all tenants

Introduction

Federal law prohibits discrimination in most residential real estate transactions. The Fair Housing Act (FHA) is the primary federal statute regulating discrimination in the sale, rental, and financing of dwellings. Understanding the scope of the FHA, the protected classes, prohibited conduct, and statutory exemptions is essential for MBE success. This article explains the key principles, common pitfalls, and exam-relevant details tested on the MBE.

The Fair Housing Act: Scope and Coverage

The FHA applies to most residential sales, rentals, and financing transactions. It covers both private and public actors, with limited statutory exemptions.

Key Term: Fair Housing Act (FHA) A federal statute prohibiting discrimination in the sale, rental, and financing of dwellings based on specified protected characteristics.

Protected Classes

The FHA prohibits discrimination based on race, color, religion, sex (including gender identity and sexual orientation by current federal interpretation), national origin, familial status (families with children under 18), and disability.

Key Term: Protected Class A group shielded from discrimination under the FHA, including race, color, religion, sex, national origin, familial status, and disability.

Prohibited Practices

The FHA makes it unlawful to:

  • Refuse to sell, rent, or negotiate for housing with a person in a protected class
  • Set different terms, conditions, or privileges for sale or rental
  • Falsely deny that housing is available
  • Advertise a preference, limitation, or discrimination based on a protected class
  • Coerce, intimidate, threaten, or interfere with anyone exercising fair housing rights

Key Term: Discriminatory Housing Practice Any action prohibited by the FHA, including refusal to sell or rent, different terms, false denial of availability, or discriminatory advertising.

Exemptions and Limitations

Certain transactions are exempt from the FHA:

  • The "Mrs. Murphy" exemption: Owner-occupied buildings with four or fewer units
  • Single-family housing sold or rented by an owner without a broker or discriminatory advertising
  • Religious organizations and private clubs may limit occupancy to their members, provided they do not discriminate in membership based on protected classes

Key Term: Mrs. Murphy Exemption An FHA exemption allowing owners of buildings with four or fewer units, if the owner lives in one, to discriminate in rental decisions (but not in advertising).

Advertising and Statements

It is unlawful to make, print, or publish any notice, statement, or advertisement indicating a preference, limitation, or discrimination based on a protected class, even if the property or transaction is otherwise exempt.

Disability and Reasonable Accommodation

The FHA requires landlords to make reasonable accommodations for persons with disabilities and to permit reasonable modifications at the tenant's expense.

Key Term: Reasonable Accommodation A change in rules, policies, or services required by the FHA to allow a person with a disability equal opportunity to use and enjoy a dwelling.

Key Term: Disability (for FHA) A physical or mental impairment that substantially limits one or more major life activities, including persons with a history of such impairment or regarded as having such impairment.

Familial Status

Familial status means the presence of children under 18 in a household. Discrimination against families with children is prohibited, subject to limited exemptions (e.g., certain senior housing).

Key Term: Familial Status The presence of children under 18 in a household, protected from discrimination under the FHA.

Relationship to Other Laws

The FHA operates alongside other anti-discrimination statutes, such as the Civil Rights Act of 1866 (prohibiting race discrimination in property transactions) and state/local fair housing laws, which may provide broader protections.

State Action and Private Conduct

The FHA applies to private conduct; state action is not required for liability under the statute. However, constitutional claims (e.g., Equal Protection) require state action.

Key Term: State Action Conduct by government or its agents required to trigger constitutional protections against discrimination, but not required for FHA liability.

Worked Example 1.1

A landlord owns a triplex (three units), lives in one, and refuses to rent to a family with children. She advertises the units as "adults only."

Answer: The landlord's refusal to rent to families with children is exempt under the "Mrs. Murphy" exemption because she lives in one of the units and the building has four or fewer units. However, the discriminatory advertisement ("adults only") is not exempt and violates the FHA.

Worked Example 1.2

A real estate agent refuses to show homes to a couple because they are of a particular religion. The agent claims the owner is a private individual selling a single-family home.

Answer: The FHA exemption for single-family homes sold by owners without a broker does not apply when a real estate agent is involved. The agent's conduct violates the FHA.

Exam Warning

The FHA does not protect against discrimination based on age, criminal history, or income unless used as a pretext for prohibited discrimination. Always check the protected classes and the facts carefully.

Revision Tip

On the MBE, always check whether the transaction falls within an FHA exemption. If a broker or discriminatory advertising is involved, the exemption does not apply.

Key Point Checklist

This article has covered the following key knowledge points:

  • The FHA prohibits discrimination in most residential sales, rentals, and financing.
  • Protected classes include race, color, religion, sex, national origin, familial status, and disability.
  • Prohibited practices include refusal to rent or sell, different terms, false denial of availability, and discriminatory advertising.
  • The "Mrs. Murphy" exemption applies to owner-occupied buildings with four or fewer units, but not to advertising.
  • Reasonable accommodations must be made for persons with disabilities.
  • State action is not required for FHA liability; constitutional claims require state action.
  • The FHA does not protect against discrimination based on age, criminal history, or income unless used as a pretext for prohibited discrimination.

Key Terms and Concepts

  • Fair Housing Act (FHA)
  • Protected Class
  • Discriminatory Housing Practice
  • Mrs. Murphy Exemption
  • Reasonable Accommodation
  • Disability (for FHA)
  • Familial Status
  • State Action
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