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Overview
Fair housing laws prohibit discrimination in the sale, rental, and financing of housing based on specific protected characteristics. The Federal Fair Housing Act of 1968 forms the foundation of these protections, with subsequent amendments, state laws, and local ordinances expanding coverage. Texas real estate salespersons must understand both federal and state-level requirements, prohibited practices, exemptions, and enforcement mechanisms to remain compliant and serve all clients ethically.
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Federal Fair Housing Act Basics
Historical Background
The Federal Fair Housing Act was enacted in 1968, just days after the assassination of Dr. Martin Luther King Jr., which accelerated its passage. However, racial discrimination in real property had already been addressed earlier.
• The Civil Rights Act of 1866, upheld by the Supreme Court in Jones v. Alfred H. Mayer Co. (1968), prohibits racial discrimination in all real property transactions with no exemptions whatsoever
• The 1968 Fair Housing Act built upon this foundation, establishing broader protected classes and enforcement mechanisms
The Seven Federally Protected Classes
| Protected Class | Added By |
|---|---|
| Race | Civil Rights Act of 1866 / FHA 1968 |
| Color | FHA 1968 |
| National Origin | FHA 1968 |
| Religion | FHA 1968 |
| Sex (Gender) | Housing and Community Development Act of 1974 |
| Familial Status | Fair Housing Amendments Act of 1988 |
| Disability (Handicap) | Fair Housing Amendments Act of 1988 |
> Memory Tip: Use the acronym "RCaN ReS FD" — Race, Color, and National origin, Religion, Sex, Familial status, Disability.
Key Definitions
• Familial Status: Protects households with one or more children under age 18, pregnant women, and people in the process of securing legal custody of a child
• Disability: Includes physical or mental impairments that substantially limit one or more major life activities; also covers those with a record of impairment or those regarded as having an impairment
• Reasonable Accommodation: A change in rules, policies, practices, or services that enables a person with a disability to have equal opportunity to use and enjoy a dwelling (landlord's responsibility to provide at no cost to tenant)
• Reasonable Modification: A physical change to the unit or premises to accommodate a disability (tenant's financial responsibility in most private housing; landlord may require restoration upon move-out)
Key Terms
• Federal Fair Housing Act (FHA)
• Civil Rights Act of 1866
• Jones v. Alfred H. Mayer Co.
• Fair Housing Amendments Act of 1988
• Housing and Community Development Act of 1974
• Protected class
• Familial status
• Reasonable accommodation
• Reasonable modification
⚠️ Watch Out For
• The Civil Rights Act of 1866 covers race only but has zero exemptions — it applies to every real property transaction, no exceptions
• Sex was added in 1974, NOT in the original 1968 act — a common exam trick
• Disability and familial status were added in 1988, not 1968
• A reasonable accommodation (policy change) is paid for by the landlord; a reasonable modification (physical change) is paid for by the tenant — don't confuse the two
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Prohibited Practices
The Three Major Illegal Practices
#### Blockbusting (Panic Selling)
Blockbusting is the illegal practice of inducing homeowners to sell by making representations that a protected class is moving into the neighborhood, implying property values will decline.
• Also known as "panic selling"
• The agent profits from commissions on rapid turnover of homes in a neighborhood
• Example: "You should sell now before the neighborhood changes and your home loses value."
#### Steering
Steering is the illegal practice of directing buyers or renters toward or away from certain neighborhoods based on their membership in a protected class.
• Can be overt or subtle — even well-intentioned steering is illegal
• Example: Only showing minority buyers homes in certain neighborhoods, or discouraging buyers from considering areas where their group is a minority
#### Redlining
Redlining is the illegal practice by lenders of refusing to make loans or offering unfavorable terms based on the racial or ethnic composition of a geographic area.
• Applies to mortgage lenders, insurance companies, and other financial institutions
• Named after the practice of drawing red lines on maps around minority neighborhoods
Other Prohibited Practices
• Discriminatory advertising: Using language, images, or symbols that indicate a preference, limitation, or discrimination based on a protected class
• Misrepresentation: Falsely telling a person that housing is unavailable when it is not
• Discriminatory terms and conditions: Offering different terms, conditions, or privileges based on protected class membership
• Refusing to allow reasonable accommodations or modifications for persons with disabilities
Key Terms
• Blockbusting / Panic selling
• Steering
• Redlining
• Discriminatory advertising
• Misrepresentation of availability
⚠️ Watch Out For
• Steering is illegal even when done with good intentions (e.g., trying to guide someone to a "more comfortable" neighborhood)
• Redlining is specifically a lender practice — distinguish it from blockbusting and steering, which involve real estate agents/sellers
• Discriminatory advertising includes any medium — print, online, verbal descriptions — even using code words like "perfect for Christian families"
• Refusing to allow a service animal for a tenant with a disability is a violation — service and assistance animals are a required accommodation, not subject to "no pets" policies
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Exemptions
Overview of Key Exemptions
Not all housing is subject to every provision of the Fair Housing Act. However, race is NEVER exempt — the Civil Rights Act of 1866 always applies.
The "Mrs. Murphy" Exemption
The Mrs. Murphy exemption allows an owner-occupant to discriminate when:
• Renting rooms or units in a dwelling with four or fewer units
• The owner lives in one of the units
• No discriminatory advertising is used
• No real estate agent is involved
> Remember: Even under Mrs. Murphy, you cannot discriminate based on race (Civil Rights Act of 1866 has no exemptions).
Single-Family Home Exemption
An owner may be exempt from the FHA when selling a single-family home if:
• The owner does not own more than three single-family homes
• No broker or agent is used
• No discriminatory advertising is used
• If the owner does not reside in the home, the exemption may only be used once every 24 months
Religious Organization Exemption
A religious organization may restrict housing to members of that religion if:
• The housing is not operated for commercial purposes
• The religion does not restrict membership based on race, color, or national origin
Private Club Exemption
A private club may limit occupancy to its members if:
• The lodging is not operated commercially
• Membership is not restricted based on a protected class
Housing for Older Persons Act (HOPA) – 55+ Communities
HOPA provides an exemption from familial status protections (only) if:
• 80% of occupied units have at least one resident age 55 or older
• The community publishes and follows policies demonstrating intent to be senior housing
• The community registers with HUD
Key Terms
• Mrs. Murphy exemption
• Single-family home exemption
• Religious organization exemption
• Private club exemption
• Housing for Older Persons Act (HOPA)
• 55+ community / senior housing
⚠️ Watch Out For
• No exemption covers race — the Civil Rights Act of 1866 always applies, regardless of any other exemptions
• The Mrs. Murphy exemption requires the owner to live in the building — absentee owners do NOT qualify
• Even with an exemption, using discriminatory advertising voids the exemption
• HOPA only exempts from familial status — it does NOT allow discrimination based on race, religion, or other protected classes
• The 62+ community rule (100% of residents must be 62+) is an alternate senior housing exemption that is stricter
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Enforcement & Penalties
Filing a Complaint with HUD
• Primary enforcer: U.S. Department of Housing and Urban Development (HUD)
• Filing deadline: Complaint must be filed within one year of the alleged discriminatory act
• HUD investigates and may refer cases to an Administrative Law Judge (ALJ)
Civil Penalties (HUD Administrative Action)
| Violation | Maximum Penalty |
|---|---|
| First violation | Up to $21,663 |
| Second violation (within 5 years) | Higher amounts (periodically adjusted) |
| Three or more violations (within 7 years) | Even higher amounts |
> Note: Penalty amounts are periodically adjusted for inflation — expect the exam to reference the approximate current figure or test conceptual knowledge.
Private Lawsuit Option
A complainant may also:
• File a private lawsuit in federal district court
• Must be filed within two years of the alleged discriminatory act
• Available remedies include:
- Actual damages
- Punitive damages
- Attorney's fees and court costs
- Injunctive relief
Key Terms
• HUD (U.S. Department of Housing and Urban Development)
• Administrative Law Judge (ALJ)
• Civil penalty
• Actual damages
• Punitive damages
• Injunctive relief
⚠️ Watch Out For
• HUD complaint deadline = 1 year; private lawsuit deadline = 2 years — these are different and commonly tested
• A complainant can pursue BOTH a HUD complaint AND a private lawsuit, but cannot recover double damages
• Civil penalties are paid to the government, not the complainant — actual damages go to the victim
• There is no cap on punitive damages in federal court fair housing cases
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Texas Fair Housing & Additional Protections
Texas Fair Housing Act
• The Texas Fair Housing Act mirrors the seven federal protected classes — it does not add additional state-level protected classes
• Administered and enforced by the Texas Workforce Commission Civil Rights Division (TWC-CRD)
• Texas law generally follows the same standards, procedures, and exemptions as federal law
• Some Texas cities (e.g., Austin, Dallas, Houston) have local ordinances that extend protections to additional classes such as sexual orientation, gender identity, and source of income
Texas vs. Federal Comparison
| Feature | Federal FHA | Texas FHA |
|---|---|---|
| Protected Classes | 7 classes | Same 7 classes |
| Enforcing Agency | HUD | TWC Civil Rights Division |
| Local Additions | N/A | City ordinances may add classes |
Disability Protections: Accommodations vs. Modifications
| Type | Definition | Who Pays? |
|---|---|---|
| Reasonable Accommodation | Change in rules/policies/services | Landlord |
| Reasonable Modification | Physical change to the unit/property | Tenant (in private housing) |
• The landlord may require the tenant to restore the unit to its original condition upon move-out (at tenant's expense)
• This applies under both the FHA and the Americans with Disabilities Act (ADA)
Key Terms
• Texas Fair Housing Act
• Texas Workforce Commission Civil Rights Division (TWC-CRD)
• Local ordinance
• ADA (Americans with Disabilities Act)
• Restoration requirement
⚠️ Watch Out For
• Texas does NOT add extra protected classes at the state level — additional protections come from local city ordinances, not state law
• Know which agency handles federal (HUD) vs. state (TWC-CRD) complaints
• Do not confuse reasonable accommodation (landlord pays) with reasonable modification (tenant pays)
• The ADA applies primarily to commercial properties and public accommodations — the FHA governs residential housing disability protections
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Quick Review Checklist
Use this checklist before your exam to confirm you know the essential concepts:
• [ ] Know all 7 federally protected classes and when each was added (1968, 1974, 1988)
• [ ] Understand that the Civil Rights Act of 1866 covers race only, with NO exemptions
• [ ] Distinguish between blockbusting, steering, and redlining — know which party commits each
• [ ] Explain the Mrs. Murphy exemption and its conditions (owner-occupied, 4 or fewer units, no agent, no discriminatory advertising)
• [ ] Know the single-family home exemption requirements (max 3 homes, no broker, once per 24 months)
• [ ] Understand HOPA / 55+ exemption — 80% of units with one resident age 55+, familial status only
• [ ] Remember that no exemption covers race discrimination
• [ ] Know HUD is the primary federal enforcer and TWC-CRD is the Texas state enforcer
• [ ] Remember HUD complaint deadline = 1 year; private lawsuit deadline = 2 years
• [ ] Distinguish reasonable accommodation (landlord's cost, policy change) from reasonable modification (tenant's cost, physical change)
• [ ] Know that Texas FHA mirrors federal law — additional local protections come from city ordinances
• [ ] Understand that service/assistance animals must be accommodated as a reasonable accommodation, bypassing "no pets" policies
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Good luck on your Texas Real Estate Salesperson Exam! Review these concepts regularly and practice applying them to scenario-based questions, which are common on the exam.