Avoiding discrimination

Housing testing often focuses on advertising and MLS listings. But it can also attempt to uncover discriminatory actions during the real estate transaction.

Monahan suggests these actions to protect yourself and your clients:

Know the law. Texas REALTORS® offers several courses on this subject. Visit motorclubmonterey.com/findacourse to see upcoming sessions.

Tell people you follow the law. This can include posting fair housing signs from HUD in your office.

Provide equal service to all. State law and the REALTOR® Code of Ethics require this.

Don’t assume you know a buyer’s preferences. You may be trying to be helpful, but assumptions can lead to accusations of steering.

Never work with discriminatory sellers. If sellers have let you know they want to exclude certain groups or individuals, do not take their business. It is not worth the risk.

Not everyone who contacts you is a potential customer or client. Housing testers are people or organizations who check for compliance with anti-discrimination laws.

Some groups, like nonprofits and governmental agencies, are testing to ensure fair treatment for consumers.

More often in Texas, lawyers employ testers to scan MLS listings, advertising, and print media to look for potential violations of the law that could lead to a monetary settlement.

Regardless of who’s testing, you and your firm need to ensure you’re complying with the law. Consider the following advice from representatives from The Herbert H. Landy Insurance Agency, a Texas REALTORS® risk management partner, and Great American Insurance Group.

When a Tester Calls

Housing testers will act just like a typical customer or client. “It starts with a phone call,” says Rick Monahan, Divisional Assistant Vice President at Great American Insurance Group. “They may ask very pointed questions. Some may even go to the property and meet with the agent. After that, the law firm sends the letter threatening legal action.”

“Typically, the housing tester calls about one property and does not want to see any others. Then they’ll turn around and say ‘I was discriminated against’ if they find a potential violation on that one specific property,” adds Matt Ehmann, Divisional Vice President, Professional Liability Division, at Great American Insurance Group.

One firm hired people with vision impairments to flip through real estate websites, Ehmann says. “If they weren’t able to look at the listings or the tools were not there to guide them through the pages, the brokerages would get sued for discriminating against the visually impaired.”

You should share letters threatening legal action regarding fair housing with your broker and E&O provider immediately. Once informed of the letter, your E&O provider will likely reach out to you to gather any emails, text messages, or relevant records related to the interaction, Monahan says. Your provider may also contact an attorney on your behalf.

Most E&O policies have a generous limit for discrimination claims and legal expenses, Ehmann says. Coverage focuses on violations of the Fair Housing Act or similar state statutes.

It’s worth noting that E&O policies and defenses pertain to unintentional discrimination. Intentional discrimination is criminal and not covered by your policy, Ehmann explains.

Education is key

Brokers can reduce their risk by educating themselves and their agents about discriminatory practices.

Once you know what is discriminatory, keeping that top of mind is key. Always look at your ads and double check them for violations, according to The Herbert H. Landy Insurance Agency. Make sure your legal guidance is up to date; things can change and mistakes can be made.

Brokerages can consider adopting guidelines and templates for consistency.

Brokers may want to review the ads with fair housing in mind as another layer of protection even if someone else in the brokerage has screened them, Monahan says.

If a landlord or seller wants to do something that discriminates against a protected class, you should explain what the protected classes are in the Fair Housing Act and why you can’t include certain restrictions.

Discrimination claims can also show up in other lawsuits and complaints. All the more reason to safeguard against it. “If there was a problem in the transaction, parties may be much quicker to say the deck was stacked against them,” Ehmann says.