What’s This Change to the Fair Housing and Discrimination Advisory CAR Form?

November 10, 2020 | Category: BPE Newsletter, Fair Housing Act

What’s This Change to the Fair Housing and Discrimination Advisory CAR Form?

By: D. Keith Dunnagan, Esq.

November 10, 2020

This year there was a major change in the Fair Housing & Discrimination Advisory by the California Association of Realtors. At the basic level, it is a violation of both federal and state law for a person that engages in the business related to residential real estate transactions. (42 USC 3605; CA Gov. Code 12955(i)).

The interpretation of what is acceptable and what is not, is broad. Cases in California have stated that Brokers who participate in a discriminatory action even if the Broker was simply following the instruction of their client may still be held liable under the California Unruh Civil Rights Act. (Vargas v. Hampson (1962); Wagner v. O’Bannon (1969)). Additionally, in 1970, the California Attorney General’s Office came out with an Opinion Letter that stood for the proposition that any Broker that provided information on race, color, religion, sex, national origin, ect, could be held liable under California’s Fair Housing and Employment Act (“FEHA”).

These laws exist to enforce the public policy against discriminatory acts. You may ask why is this important. This year saw a significant change to the Fair Housing & Discrimination Advisory CAR form. Of particular importance and what has been driving many questions lately is the addition of Paragraph 8 of that form that states as follows:

EXAMPLES OF CONDUCT THAT MAY NOT BE MOTIVATED BY DISCRIMINATORY INTENT BUT COULD HAVE A DISCRIMINATORY EFFECT:

A. Prior to acceptance of an offer, asking for or offering buyer personal information or letters from the buyer, especially with photos. Those types of documents may inadvertently reveal, or be perceived as revealing, protected status information thereby increasing the risk of (i) actual or unconscious bias, and (ii) potential legal claims against sellers and other by prospective buyers whose offers were rejected. (emphasis added).

B. Excluded for purposes of this Article.

Over the years it has become a common place for Sellers to request or Buyers to offer letters explaining their interest in a home. They provide pictures of their family and how they plan to raise their children or host their grandchildren in a particular home and how it may fit there needs. These letters are often designed to give the seller a look at who was buying their home. While these letters may seem innocuous, they provide a treasure trove of potential violations of state and federal anti-discrimination laws that can expose an individual to significant financial liability or DRE discipline.

Take for example the simple statement that “This house is perfect for our traditional family as it will be within walking distance of local parks for our kids and a well-regarded church.” This statement could lead a seller to consider the familial status, prefer a family with children over one that has no children. It could lead the seller to choose a buyer based upon a religious affiliation over one that has no religious affiliation or a different religion. The word “traditional” could lead the seller to choosing a buyer based upon sexual orientation. While the Buyer may not have intended such decision making and the agent provides the letter to introduce the Buyer, this communication is ripe with potential discriminatory statements and could expose the parties to discriminatory based litigation.

The question then becomes, and we have received many of these questions: “With the revision to the FHDA should we be submitting letters from buyers?” In short, NO, you should not be submitting these buyer letters. As the law continues to develop in the discrimination sphere the potential exposure to liability will begin to outweigh any incidental benefit. Sellers should be making decisions based upon the merit of the offer and nothing else. I have heard -what if two offers are equally meritorious, the letter could help put one buyer over the top. Maybe, the letter helps, but it likely helps for all the wrong reasons. As shown above, it is easy to take a seemingly harmless letter and identify all sorts of information that is unlawful to consider.

Further, it is rare that two offers have the same level of merit or strength. In the case of multiple offers where 2 or more are strong offers, a better action for a Seller may be a multiple counter scenario to improve the offers and see which Buyer is willing to improve their offer the most. The determination should be made only on the terms of the transaction and there should be no consideration of prohibited information.

This new paragraph, while revised in the updated CAR Form, is not a new legal standard. As you can see from some of the authority cited above, these issues were decided more than five decades ago in California. The law is clear, not only is it unlawful inquire about protected status – it is unlawful to volunteer information about protected status.

Today, the Court maintains the same resolute commitment to eliminating discrimination from the residential real estate transaction that it did 50 years ago. The natural conclusion is that the protected status information is provided to sway the seller. In the end it is not worth the risk.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.

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