Real estate professionals are legally obligated to uphold fair housing laws, and the language and images you use in your advertising needs to be vetted carefully. REALTORS® also have an obligation to do so under Article 10 of the Code of Ethics.

“Advertisements should never indicate a preference or limitation based on a protected class, which at the federal level includes race, color, religion, sex, disability, family status, and national origin,” Mike Rohde, staff attorney at the National Association of REALTORS®, says in a recent “Window to the Law” video. “HUD recently expanded its interpretation of sex to include sexual orientation and gender identity, and state and local laws may expand the categories of protected classes further.”

Access NAR’s fair housing resources.

Rohde provides a tip: When advertising a property, focus on describing the property, not the buyer or tenant. As such, he cautions against using phrases like “ideal for empty nesters” or “perfect for students” that could raise red flags by implying a preference of one demographic over another. On the other hand, he says phrases like “easy walk to train” or “beautiful Mexican doors” are likely to be acceptable since they describe the property’s characteristics.

Also, Rohde says, just like when you’re advertising properties, describe your services and not whom you want to serve. For example, agents may promote their fluency in a particular language or specialization in an area of the community. But avoid indicating a preference for or limitation to the clients you serve, he says.

Real estate ads are judged using a reasonable person standard, which can evolve over time, he adds. As such, once-overlooked words and images, such as the Confederate flag, could present fair housing concerns nowadays.

©National Association of REALTORS®
Reprinted with permission

The National Association of REALTORS® is leading a large coalition of stakeholders in the real estate industry—property owners, real estate professionals, appraisers, portals, valuation, and public records companies, and others—that is urging the Supreme Court to review and overturn a federal appeals court threatening copyright liability for the use of floor plans in the sale of a home. Realtor.com® operator Move Inc. and the Council of Multiple Listing Services also have each filed briefs in support of reversing the lower court’s opinion.

On Thursday, the coalition filed an amicus curiae (friend of the court) brief with the nation’s highest court, seeking a review of a 2021 Eighth Circuit ruling in Designworks Homes Inc. v. Columbia House of Brokers Realty. Designworks and its owner, Charles James, claimed two real estate companies in Columbia, Mo., had violated copyright law when they created floor plans to assist in the sale of homes that James had built.

A U.S. District Court had ruled in favor of the real estate companies, concluding that a statutory defense shielding the creation of “pictures” or “other pictorial representations” of architectural works covered floor plans. The appeals court disagreed that the law extended to floor plans and vacated the district court’s ruling.

The ruling has chilling implications for homeowners and their agents throughout the country, says NAR General Counsel Katie Johnson. Floor plans are fundamental to the buying, selling, appraisal, and renovation of homes. Buyers rely on them to get a feel for the flow of a house before touring it; appraisers use them to develop an opinion of value; and owners and building contractors use them for a variety of purposes—from furniture installation to home improvement projects.

The brief cited NAR’s 2021 Home Buyers and Sellers Generational Trends Report, which showed that more than two-thirds of online home shoppers found floor plans to be “very useful” and noted that new technologies make it easy to measure properties and create floor plans using a smartphone.

The American Property Owners Alliance(link is external), which joined in the brief, cited its own data(link is external) showing that “89% of respondents strongly agree homeowners should be able to create a floor plan of their home anytime they want and select whomever they want to fulfill that task.”

“It is a safe bet that most Americans would be startled to hear they could be sued for copyright infringement for making floor plans of their home,” coalition members said in the brief, adding that the ruling threatens to severely limit property rights. “Even setting aside litigious home designers, the decision … opens up a new hunting ground for enterprising copyright trolls.” The brief cited one such company that has filed more than 100 copyright infringement suits based on floor plans over the last decade or so.

According to the rules of the Supreme Court, four of the nine justices must vote to accept a case; a decision on whether the court will review the case is expected this year. “NAR, our institutes, societies and councils, and all other entities who signed on to this effort share the common goal of making property ownership desirable and feasible for consumers,” Johnson says. “By joining together in filing this brief, we are asking the Supreme Court to acknowledge that homeowners should be able to create and use floor plans without fear of litigation throughout the ownership and sale of their homes.”

©National Association of REALTORS®
Reprinted with permission

Homeownership rates for many minority groups continues to be well below that of whites, and discriminatory policies are often blamed for that. During National Fair Housing Month in April, many housing groups and organizations are bringing the racial housing gap to the forefront and asking others in the real estate industry to support programs that seek to make a change.

Realtor.com® announced it is teaming with the Homeownership Council of America to donate the first $100,000 to the new Equity Down Payment Assistance Fund, for people of color and low- to moderate-income buyers. Realtor.com® says it will match every donation by HCA’s Equity DPA fund through June 30, up to $100,000. It’s asking leaders in the real estate industry to donate to HCA’s Equity DPA fund to help minorities and low- to moderate-income consumers afford down payments and closing costs.

“Survey data shows having enough for a down payment is one of the largest barriers to homeownership and, with this fund, we can directly help people break through to start building generational wealth,” says Mickey Neuberger, chief marketing officer for Realtor.com®.

The homeownership rate for Blacks is 43.1%, 48.4% for Hispanics, and 61.2% for Asian Americans and Pacific Islanders. The ownership rate for Whites is 74.4%, realtor.com® says.

“We believe it’s our responsibility to not only address [the] disparity in homeownership but bring others alongside to take up the challenge,” Neuberger says. “As a company, we strive to make a positive impact on fair housing issues, but as an industry, we have the power to eliminate it.”

Realtor.com® has launched its Closing the Gap Challenge focused on increasing the homeownership rate of racial minorities. Other initiatives in the program include a new down payment assistance search tool(link is external) where consumers can see if they’re eligible for programs, a down payment assistance guide(link is external), and a free First-Time Homebuying 101 e-book(link is external) offered in both English and Spanish, among other programs.

©National Association of REALTORS®
Reprinted with permission

What you need to know to serve this protected class.

Definition: Federal fair housing law defines a person with a disability as any individual with a physical or mental impairment that substantially limits one or more major life activities. Some disabilities, such as blindness or mobility impairment, are readily observable, while others are invisible.

What’s required: Besides prohibiting discrimination, the law requires housing providers to make reasonable accommodations in rules or policies—such as assigning parking spaces—and allow reasonable modifications at the tenant’s expense—such as the installation of grab bars. HUD says 60% of fair housing complaints it receives relate to reasonable accommodation requests.

Assistance animals: The law says housing providers must modify or make exceptions to pet policies to allow a person with a disability equal opportunity to enjoy use of the property. In 2020, HUD released guidance on assessing a request. Key takeaways:

• You must reply promptly to a request for a reasonable accommodation.
• You may seek confirmation of a connection between the individual’s disability and the animal if the need for the accommodation is not readily apparent or known.
• You may request information verifying the individual’s disability and need for the accommodation. In most cases, medical records aren’t needed—a credible statement by the individual or reliable third party is sufficient.
• You may refuse a reasonable accommodation for an animal that poses a direct threat that can’t be eliminated or reduced by the individual controlling the animal.
• Before denying a reasonable accommodation request due to a lack of information confirming the individual’s disability or need for an animal, engage in a good-faith dialogue with the requestor.

Advertising: When advertising property for sale or rental, use factual language to describe the property. Avoid describing what type of person might want to—or not want to—buy or lease the property. Unacceptable: ads that disallow handicap accessories. Acceptable: phrases that describe the property characteristics, such as “third-floor walk-up,” or neighborhood characteristics, such as “bike trails nearby.”

Sources: hud.gov; Real Estate Brokerage Essentials; “Window to the Law: Fair Housing Assistance Animal Guidance”

©National Association of REALTORS®
Reprinted with permission

Understanding how antitrust law applies to the practice of real estate is foundational knowledge. Let’s see how much you know.

Understanding how antitrust law applies to the practice of real estate is foundational knowledge. Let’s see how much you know.

1. Federal and state antitrust laws are designed to:

A. Prevent companies from misleading the public in their advertising.
B. Protect competition.
C. Limit competition.
D. Regulate trust funds.

Answer: B. The nature of the real estate brokerage—characterized by vigorous competition for listings and cooperation in sales—makes real estate brokers particularly susceptible to antitrust challenges. Therefore, it’s imperative to understand what actions might constitute a potential violation.

2. Under Section 1 of the federal Sherman Antitrust Act, there are two basic elements of any violation: There must be a (1) ____________ that (2) unreasonably restrains trade.

A. Contract, combination, or conspiracy
B. Rumor, falsehood, or threat
C. Rule, signage, or physical barrier
D. Person, place, or thing

Answer: A. The conspiracy element is satisfied when two or more persons or entities carry out a common scheme or plan. If that can be shown, the remaining issue is whether or not the effect was an unreasonable restraint of trade.

3. Courts apply one of two analytical standards to antitrust cases: the per se rule and _______.

A. The rule of threes
B. The rule markets
C. The rule of reason
D. The rule of thumb

Answer: C. The per se standard in restraint of trade cases is applied to practices deemed so inherently anticompetitive under Section 1 that their effects on trade are presumed to restrain trade. Under the rule of reason, the court weighs the pro-competitive and anticompetitive aspects of a practice. Conduct challenged as unlawful under this standard may escape condemnation if the pro-competitive benefits outweigh the anticompetitve implications.

4. Brokers are in violation of antitrust law if they

A. Join with other brokers to shut out a competitor.
B. Fail to keep escrow money separate from personal money.
C. Lie about a competitor publicly.
D. Charge one seller a higher commission than another seller.

Answer: A. Group boycotts, or concerted refusals to deal with another competitor or a supplier, and conspiracies to fix prices, such as real estate commission rates, are examples of unlawful per se restraints. (As for the other choices, state license law governs the proper use of escrow accounts; disparaging a fellow REALTOR® by using false or misleading language could result in an ethics complaint; and all commissions are negotiable!).

5. To avoid antitrust problems, your brokerage firm should

A. Adopt and rigorously apply a written officewide antitrust compliance program.
B. Review their antitrust compliance policy with every staff member and independent contractor.
C. Instruct sales agents to report to the broker any suggestions by sales agents from other firms that could be interpreted as an invitation to fix commissions or boycott a competitor.
D. Identify legal counsel to be consulted when antitrust issues arise.

Answer: A. Answer: All of the above. An antitrust compliance policy is a business necessity since brokers are responsible for the conduct of their staff and salespeople. Source: Real Estate Brokerage Essentials, Fourth Edition

How Did You Do?

Five correct answers. Maybe it’s time to open your own brokerage.

Three to four. You get it, but keep your knowledge fresh with the Antitrust Compliance Guide for REALTORS®, a pocket guide from store.realtor(link is external) (member price: $6.95).

Fewer than three. Break out the books—specifically, Real Estate Brokerage Essentials, Fourth Edition, by NAR’s legal team. The book provides clear explanations, sample documents, case law, and training materials on a range of legal matters.

©National Association of REALTORS®
Reprinted with permission