Blockbusting
Blockbusting is the act of encouraging people to sell or rent their homes by claiming that the entry of a protected class of people into the neighborhood will have some sort of negative impact on property values. Any message, however subtle or accidental, that property should be sold or rented because the neighborhood is “undergoing changes” is considered blockbusting.
It is illegal to suggest that the presence of certain persons will cause property values to decline, crime or antisocial behavior to increase, or the quality of schools to suffer.
A critical element in defining blockbusting, according to HUD, is the profit motive. A property owner may be intimidated into selling his property at a depressed price to the blockbuster, who in turn sells the property to another person at a higher price. Blockbusting is also called panic selling. To avoid accusations of blockbusting, licensees should use good judgment when choosing locations and methods for marketing their services and soliciting listings.
Steering
Steering is the channeling of home-seekers to particular neighborhoods. It also includes discouraging potential buyers from considering some areas. In either case, it is an illegal limitation of a purchaser’s options.
In the rental process, steering occurs when the landlord puts members of a protected class on a certain floor or building. Another form of steering occurs when the landlord tells a prospective tenant that no vacancy exists when, in fact, there is a vacancy. When the misstatement is made on the basis of a protected class, the prospect is steered away from that building.
Many cases of steering are subtle, motivated by assumptions or perceptions about a homebuyer’s preferences, and based on some stereotype. Such assumptions about a buyer’s preferences may be legally dangerous. The licensee should never assume that prospective buyers “expect” to be directed to neighborhoods or properties. Steering anyone is illegal.
The Illinois Real Estate License Act of 2000 expressly prohibits “Influencing or attempting to influence by any words or acts a prospective seller, purchaser, occupant, landlord, or tenant of real estate, in connection with viewing, buying or leasing of real estate, so as to promote, or tend to promote, the continuance or maintenance of racially and religiously segregated housing, or so as to retard, obstruct or discourage racially integrated housing on or in any street, block, neighborhood, or community.”
Advertising
Advertisements of property for sale or rent may not include language indicating a preference or limitation. No exception to this rule exists, regardless of subtle or “accidental” wordings. HUD’s regulations cite numerous examples that are considered discriminatory. However, an advertisement that is gender specific, such as “female roommate sought,” is allowed as long as the advertiser seeks to share living quarters with someone of the same gender.
The media used for promoting property or real estate services must not target any one population to the exclusion of others. The use of media that targets only certain groups based on, for example, language or geography, is also viewed as being potentially discriminatory. For instance, limiting advertising to a cable television channel viewed mostly by one demographic group might be construed as discriminatory. The best rule is never to advertise using only one group of narrowly focused media. Running ads in several locales or in general-circulation media as a standard rule is good practice.
Many licensees choose to run a small version of the equal housing opportunity symbol in all of the materials that represent them, along with the words “equal housing opportunity’ underneath. The fair housing symbol signals the world that one is open for business to anyone who is of age and financially able to purchase real estate.
Appraising
Those who prepare appraisals or any statements of valuation whether they are formal or informal, oral or written (including a competitive market analysis) may consider any normal qualifying factors that affect value. However, race, color, religion, national origin, sex, disability, and familial status are not factors that may be considered.
Redlining
The practice of refusing to make mortgage loans or issue insurance policies in specific areas for reasons other than the applicant’s financial qualifications is known as redlining. Redlining refers to literally or figuratively drawing a line around particular areas. Such practices contribute to the deterioration of older neighborhoods. Redlining is often based on racial grounds rather than on any real objection to an applicant’s creditworthiness. Redlining means that the lender has made a policy decision that no property in a certain area will qualify for a loan, no matter who wants to buy it. The federal Fair Housing Act prohibits discrimination in mortgage lending and covers not only the actions of primary lenders but also activities in the secondary mortgage market. A lending institution can, however, refuse a loan solely on sound, documentable financial grounds.
The Home Mortgage Disclosure Act requires that all institutional mortgage lenders with assets in excess of $36 million and one or more offices in a given geographic area make annual reports. The reports must detail all mortgage loans the institution has made or purchased, broken down by census tract. This law enables the government to detect patterns of lending behavior that might constitute redlining.
Intent and Effect
If an owner or real estate licensee purposely sets out to engage in blockbusting, steering, or other unfair activities, the intent to discriminate is obvious. However, owners and licensees must examine their activities and policies carefully to determine whether they unintentionally appear to engage in discriminatory actions. Whenever policies or practices result in unequal treatment of persons in a protected class, they are considered discriminatory, regardless of intent. This “effects test” is applied by regulatory agencies to determine whether discrimination has occurred.
Response to Concerns of Terrorism
In response to the concern of future terrorist attacks, landlords and property managers have been developing new security procedures. These procedures have focused on protecting buildings and residents. Landlords and property managers are also educating residents on signs of possible terrorist activity and how and where to report it. At the same time, landlords and property managers need to ensure that their procedures and education do not infringe on the fair housing rights of others.
For screening and rental procedures, it is unlawful to screen housing applicants on the basis of race, color, religion, sex, national origin, disability, or familial status. According to HUD, landlords and property managers have been inquiring about whether they can screen applicants on the basis of citizenship status. The Fair Housing Act does not specifically prohibit discrimination based solely on a person’s citizenship status. Therefore, asking applicants for citizenship documentation or immigration status papers during the screening process does not violate the Fair Housing Act. For many years, the federal government has been asking for these documents in screening applicants for federally assisted housing. There is, however, a specific procedure for collecting and verifying citizenship papers provided by HUD.
