Megan's Law.
Federal legislation, known as Megan's Law, promotes the establishment of state registration systems to maintain residential information on every person who kidnaps children, commits sexual crimes against children, or commits sexually violent crimes. Upon release from prison, an offender must register his or her name with state authorities and indicate where he or she will be residing. Local law enforcement agencies may release relevant information about such an offender upon request if they deem it necessary for the protection of the public.

Megan's Law affects a licensee's duty of disclosure. In accordance with state law, a licensee may need to request that a customer sign a form indicating where the customer may obtain information about the sex offender registry. Typically, a licensee may be required to disclose information regarding a released offender if the licensee is aware that officials have informed individuals, groups, or the public that a sex offender resides in a particular area. (Megan's Law, in effect, creates another category of stigmatized property. See Chapter 4 for more information on stigmatized property.)

Equal Credit Opportunity Act
The federal Equal Credit Opportunity Act (ECOA) prohibits discrimination based on race, color, religion, national origin, sex, marital status, or age in the granting of credit. Note that the ECOA protects more classes of persons than the Fair Housing Act. The ECOA bars discrimination on the basis of marital status and age. It also prevents lenders from discriminating against recipients of public assistance programs such as food stamps and Social Security. The ECOA is the only federal law that grants protection on age, marital status, and receipt of public assistance. As in the Fair Housing Act, the ECOA requires that credit applications be considered only on the bases of income, net worth, job stability, and credit rating.

Americans with Disabilities Act
Although the Americans with Disabilities Act (ADA) is not a housing or credit law, it still has a significant effect on the real estate industry. The ADA is important to licensees because it addresses the rights of individuals with disabilities in employment and public accommodations. Real estate brokers are often employers, and real estate brokerage offices are public spaces. The ADA's goal is to enable individuals with disabilities to become part of the economic and social mainstream of society. The ADA is discussed in detail in Chapter 17.

Title I of the ADA requires that employers (including real estate licensees) make reasonable accommodations that enable an individual with a disability to perform essential job functions. Reasonable accommodations include making the work site accessible, restructuring a job, providing part-time or flexible work schedules, and modifying equipment that is used on the job. The provisions of the ADA apply to any employer with 15 or more employees.

IN PRACTICE     In 1999, the U.S. Supreme Court strictly limited the definition of "persons with disabilities" protected by the ADA. The decision excludes individuals whose disability, such as nearsightedness, can be corrected. In 2002, the U.S. Supreme Court narrowed the definition even further by stating that in determining whether a person is disabled, you need to ask whether the impairment(s) prevented or restricted the person from performing tasks that are of central importance to most people's daily lives.
 
Title III of the ADA provides for accessibility to goods and services for individuals with disabilities. While the federal civil rights laws have traditionally been viewed in the real estate industry as housing-related, the practices of licensees who deal with nonresidential property are significantly affected by the ADA. Because people with disabilities have the right to full and equal access to businesses and public services under the ADA, building owners and managers must ensure that any obstacle restricting this right is eliminated. The Americans with Disabilities Act Accessibility Guidelines (ADAAG) contain detailed specifications for designing parking spaces, curb ramps, elevators, drinking fountains, toilet facilities, and directional signs to ensure maximum accessibility. These requirements are discussed in detail in Chapter 17.

ADA and the Fair Housing Act.
The ADA exempts the following two types of property from its requirements:
     1) Property that is covered by the Fair Housing Act
     2) Property that is exempt from coverage by the Fair Housing Act
Some properties, however, are subject to both laws. For example, in an apartment complex, the rental office is a "place of public accommodation." As such, it is covered by the ADA and must be accessible to persons with disabilities at the owner's expense. Individual rental units would be covered by the Fair Housing Act. If a tenant wished to modify the unit to make it accessible, he or she would be responsible for the cost.

Issues of housing and disability discrimination are often litigated in the courts. For example, in a 2001 case, Dadian v. Village of Wilmette, homeowners sued the village for discrimination under the ADA and the Fair Housing Act. The elderly homeowners wanted to rebuild their house with an attached garage in front, which required a curb cut to the street. They applied for a permit with the village. The village denied the permit because the new driveway would cause a safety hazard when backing out of it. The court found that the homeowners were disabled with osteoporosis and that the village must issue a permit to allow them to rebuild their house and driveway.

IN PRACTICE    Real estate agents need a general knowledge of the ADA's provisions. It is necessary for a broker's workplace and employment policies to comply with the law. Also, licensees who are building managers must ensure that the properties are legally accessible. However, ADA compliance questions may arise with regard to a client's property, too. Unless the agent is a qualified ADA expert, it is best to advise commercial clients to seek the services of an attorney, an architect, or a consultant who specializes in ADA issues. It is possible that an appraiser may be liable for failing to identify and account for a property's noncompliance.

 FAIR HOUSING PRACTICES
For the civil rights laws to accomplish their goal of eliminating discrimination, licensees must apply them routinely. Of course, compliance also means that licensees avoid violating both the laws and the ethical standards of the profession. The following discussion examines the ethical and legal issues that confront real estate licensees.

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. Blockbusting was a common practice during the 1950s and 1960s, as unscrupulous real estate agents profited by fueling "white flight" from cities to suburbs. Any message, however subtle, that property should be sold or rented because the neighborhood is "undergoing changes" is considered blockbusting. It is illegal to assert that the presence of certain persons will cause property values to decline, crime or anti social behavior to increase, and the quality of schools to suffer.

A critical element in blockbusting, according to HUD, is the profit motive. A property owner may be intimidated into selling his or her property at a depressed price to the blockbuster, who in turn sells the property to another person at a higher price. Another term for this activity is 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.
Steering may be done either to preserve the character of a neighborhood or to change its character intentionally. Many cases of steering are subtle, motivated by assumptions or perceptions about a home seeker's preferences, based on some stereotype. Assumptions are not only dangerous—they are often wrong. The licensee cannot assume that a prospective home seeker expects to be directed to certain neighborhoods or properties. Steering anyone is illegal.

The number of immigrants in the United States continues to increase. After immigrants have lived in the United States for six years, about 67 percent of them buy property. Any person involved in the real estate profession should learn to work and communicate well with buyers and sellers of different nationalities and cultures.

Advertising
No advertisement of property for sale or rent may include language indicating a preference or limitation. No exception to this rule exists, regardless of how subtle the choice of words. HUD's regulations cite examples that are considered discriminatory. (See Figure 20.3.) Note, however, that 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 cannot target one population to the exclusion of others. The selective use of media, whether by Ianguage or geography, may have discriminatory impact. For instance, advertising property only in a Korean-language newspaper tends to discriminate against non-Koreans. Similarly, limiting advertising to a cable television channel available only to white suburbanites may be construed as a discriminatory act. However, if an advertisement appears in general-circulation media as well, it may be legal.

IN PRACTICE    A few years ago the Fair Housing Council of Oregon filed a complaint against a local multiple-listing service (MLS), charging that the phrase "adults only over 40" was included in the "Remarks" section of a condominium listing. While the condominium association's bylaws actually did contain the age restriction, the Fair Housing Council argued that including the phrase in the listing constituted discrimination against families with children in violation of the Fair Housing Act. The MLS paid $30,000 to settle with HUD, $20,000 of which went to support the antidiscrimination efforts of the Fair Housing Council of Oregon. The MLS also agreed to conduct regular computerized searches of its database for 67 different discriminatory words and phrases. 

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 factors that affect value. However, race, color, religion, national origin, sex, handicap, 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 economic qualifications of the applicants is known as redlining. Redlining refers to literally drawing a line around particular areas. This practice is often a major contributor to the deterioration of older neighborhoods. Redlining is frequently based on racial grounds rather than on any real objection to an applicant's creditworthiness, that is, the lender makes a policy decision that no property in a certain area is qualified for a loan, no matter who wants to buy it, because of the neighborhood's ethnic character. 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, however, can refuse a loan solely on sound economic grounds.

The Home Mortgage Disclosure Act requires all institutional mortgage lenders with assets in excess of $10 million and one or more offices in a given geographic area to 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 have unintentional discriminatory effects. Whenever policies or practices result in unequal treatment of persons in the protected classes, they are considered discriminatory regardless of any innocent intent. This effects test is applied by regulatory agencies to determine whether an individual has been discriminated against.

 ENFORCEMENT OF THE FAIR HOUSING ACT
The federal Fair Housing Act is administered by the Office of Fair Housing and Equal Opportunity (OFHEO) under the direction of the secretary of HUD. Any aggrieved person who believes illegal discrimination has occurred may file a complaint with HUD within one year of the alleged act. HUD also may initiate its own complaint. Complaints may be reported to the Office of Fair Housing and Equal Opportunity, Department of Housing and Urban Development, Washington, DC 20410, or to the Office of Fair Housing and Equal Opportunity in care of the nearest HUD regional office. Complaints may also be submitted directly to HUD using an online form available on the HUD Web site.
 
Upon receiving a complaint, HUD initiates an investigation. Within 100 days of the filing of the complaint, HUD either determines that reasonable cause exists to bring a charge of illegal discrimination or dismisses the complaint. During this investigation period, HUD can attempt to resolve the dispute informally through conciliation. Conciliation is the resolution of a complaint by obtaining assurance that the person against whom the complaint was filed (the respondent) will remedy any violation that may have occurred. The respondent further agrees to take steps to eliminate or prevent discriminatory practices in the future. If necessary, these agreements can be enforced through civil action.

The aggrieved person has the right to seek relief through administrative proceedings. Administrative proceedings are hearings held before administrative law judges (ALJs). An AU has the authority to award actual damages to the aggrieved person or persons and, if it is believed the public interest will be served, to impose monetary penalties. The penalties range from up to $10,000 for the first offense to $25,000 for a second violation within five years and $50,000 for further violations within seven years. The AU also has the authority to issue an injunction to order the offender to either do something (such as rent an apartment to the complaining party) or refrain from doing something (such as acting in a discriminatory manner).

The parties may elect civil action in federal court at any time within two years of the discriminatory act. For cases heard in federal court, unlimited punitive damages can be awarded in addition to actual damages. The court can also issue injunctions. As noted in Chapter 5, errors and omissions insurance carried by licensees normally does not pay for violations of the fair housing laws.

Whenever the attorney general has reasonable cause to believe that any person or group is engaged in a pattern or practice of resistance to the full enjoyment of any of the rights granted by the federal fair housing laws, he or she may file a civil action in any federal district court. Civil penalties may result in an amount not to exceed $50,000 for a first violation and an amount not to exceed $100,000 for second and subsequent violations.

Complaints brought under the Civil Rights Act of 1866 are taken directly to federal courts. The only time limit for action is a state's statute of limitations for torts—injuries one individual inflicts on another.

State and Local Enforcement Agencies
Many states and municipalities have their own fair housing laws. If a state or local law is substantially equivalent to the federal law, all complaints filed with HUD are referred to the local enforcement agencies. To be considered substantially equivalent, the local law and its related regulations must contain prohibitions comparable to those in the federal law. In addition, the state or locality must show that its local enforcement agency takes sufficient affirmative action in processing and investigating complaints and in finding remedies for discriminatory practices. It is important for all licensees to be aware of their states' fair housing laws, as well as applicable local ordinances.
 
Threats or Acts of Violence
Being a real estate agent is not generally considered a dangerous occupation. However, some licensees may find themselves the targets of threats or violence merely for complying with fair housing laws. The federal Fair Housing Act of 1968 protects the rights of those who seek the benefits of the open housing law. It also protects owners, brokers, and salespersons who aid or encourage the enjoyment of open housing rights. Threats, coercion, and intimidation are punishable by criminal action. In such a case, the victim should report the incident immediately to the local police and to the nearest office of the Federal Bureau of Investigation.

 IMPLICATIONS FOR BROKERS AND SALESPEOPLE
The real estate industry is largely responsible for creating and maintaining an open housing market. Brokers and salespersons are a community's real estate experts. Along with the privilege of profiting from real estate transactions comes the social and legal responsibilities to ensure that everyone's civil rights are protected. The reputation of the industry cannot afford any appearance that its licensees are not committed to the principles of fair housing. Licensees and the industry must be publicly conspicuous in their equal opportunity efforts. Establishing relationships with community and fair housing groups to discuss common concerns and develop solutions to problems is a constructive activity. What's more, a licensee who is active in helping to improve his or her community will earn a reputation for being a concerned citizen that may well translate into a larger client base.

Fair housing is the law. The consequences for anyone who violates the law are serious. In addition to the financial penalties, a real estate broker's or salesperson's livelihood will be in danger if his or her license is suspended or revoked. That the offense was unintentional is no defense. Licensees must scrutinize their practices and be particularly careful not to fall victim to clients or customers who expect to discriminate.

All parties deserve the same standard of service. Everyone has the right to expect equal treatment, within his or her property requirements, financial ability, and experience in the marketplace. A good test is to answer the question, "Are we doing this for everyone?" If an act is not performed consistently, or if an act affects some individuals differently from others, it could be construed as discriminatory. Standardized inventories of property listings, standardized criteria for financial qualification, and written documentation of all conversations are three effective means of self-protection for licensees.

HUD requires that its fair housing posters be displayed in any place of business where real estate is offered for sale or rent. Following HUD's advertising procedures and using the fair housing slogan and logo keep the public aware of the broker's commitment to equal opportunity.

Beyond being the law, fair housing is good business. It ensures the greatest number of properties available for sale and rent and the largest possible pool of potential purchasers and tenants.

 PROFESSIONAL ETHICS
Professional conduct involves more than just complying with the law. In real estate, state licensing laws establish those activities that are illegal and therefore prohibited. However, merely complying with the letter of the law may not be enough: Licensees may perform legally yet not ethically. Ethics refers to a system of moral principles, rules, and standards of conduct. The ethical system of a profession establishes conduct that goes beyond merely complying with the law. These moral principles address the following two sides of a profession:
     1) They establish standards for integrity and competence in dealing with consumers of an industry's services.
     2) They define a code of conduct for relations within the industry, among its professionals.

Code of Ethics
 One way that many organizations address ethics among their members or in their respective businesses is by adopting codes of professional conduct. A code of ethics is a written system of standards for ethical conduct. The code contains statements designed to advise, guide, and regulate job behavior. To be effective, a code of ethics must be specific by dictating rules that either prohibit or demand certain behavior. Lofty statements of positive goals are not especially helpful. By including sanctions for violators, a code of ethics becomes more effective.

The National Association of REALTORS® (NAR), the largest trade association in the country, adopted a Code of Ethics for its members in 1913. REALTORS® are expected to subscribe to this strict code of conduct. Not all licensees are REALTORS®—only those who are members of NAR. NAR has established procedures for professional standards committees at the local, state, and national levels of the organization to administer compliance. Practical applications of the Articles of the code are known as Standards of Practice. The Code of Ethics has proved helpful because it contains practical applications of business ethics. Many other professional organizations in the real estate industry have codes of ethics as well. In addition, many state real estate commissions are required by law to establish codes or canons of ethical behavior for the states' licensees.

 SUMMARY
The federal regulations regarding equal opportunity in housing are contained principally in two laws. The Civil Rights Act of 1866 prohibits all racial discrimination, and the Fair Housing Act (Title VIII of the Civil Rights Act of 1968), as amended, prohibits discrimination on the basis of race, color, religion, sex, handicap, familial status, or national origin in the sale, rental, or financing of residential property. Discriminatory actions include refusing to deal with an individual or a specific group, changing any terms of a real estate or loan transaction, changing the services offered for any individual or group, creating statements or advertisements that indicate discriminatory restrictions, or otherwise attempting to make a dwelling unavailable to any person or group because of race, color, religion, sex, handicap, familial status, or national origin. The law also prohibits steering, blockbusting, and redlining.
 
Complaints under the Fair Housing Act may be reported to and investigated by the Department of Housing and Urban Development (HUD). Such complaints also may be taken directly to U.S. district courts. In states and localities that have enacted fair housing legislation that is substantially equivalent to the federal law, complaints are handled by state and local agencies and state courts. Complaints under the Civil Rights Act of 1866 must be taken to federal courts.

A real estate business is only as good as its reputation. Real estate, licensees can maintain good reputations by demonstrating good business ability and adhering to ethical standards of business practices. Many licensees subscribe to a code of ethics as members of professional real estate organizations.

RELATED STATE OF TENNESSEE LAWS, RULES, and REGULATIONS
FAQ’s about Fair Housing in Tennessee

What state agency is responsible for enforcing Tennessee’s fair housing laws?
The state agency that handles fair housing complaints is the Tennessee Human Rights Commission. This commission is an independent state agency charged with preventing and eradicating discrimination in employment, public accommodations, housing. and the distribution of federal funds through grants and contracts.

There is no charge for filling out a complaint form. The commission will also cross-file the complaint with the U.S. Department of Housing and Urban Development to protect the individual's rights if federal law covers the situation. A complaint must be filed with the commission within 180 days of the alleged discriminatory incident. Complaints must be filed with HUD within one year, or private court action can be filed within two years.

Is the Tennessee fair housing law similar to the federal fair housing laws?
The Tennessee fair housing law is very similar to the federal law, but there is one addition. The Tennessee law adds creed to the protected category list Tennessee’s protected classes are: race, color, creed, sex, religion, national origin handicap and familial status.

Has Tennessee added other provisions to the federal law?
Yes: Tennessee is more restrictive than the federal law in regard to the owner occupant exemption. Tennessee exempts only owner-occupants of one to two dwelling units as opposed to one to four units in the federal law.

Likewise, the near-elderly exemption is more restrictive. The federal law allows an exemption for housing the near elderly if 80 percent of all units are occupied or intended to be occupied by at least one person per unit who is 55years old or older. Tennessee requires a higher occupancy percentage of 90 percent. to qualify for this exemption.

Also, the Tennessee law mikes it a violation for a real estate operator, broker, or affiliate broker or financial institution to obey a request sought after by a party not subject to the law to violate the provisions of the law, Thus, the broker or affiliate broker cannot use the defense, “My client gave me instructions".

The Tennessee Human Rights Commission must notify the TREC in writing if a broker or affiliate broker fails to comply with any order issued by the Human Rights Commission. The Human Rights Commission must also notify the TREC if a real estate broker or affiliate broker has been found to have committed a discriminatory act in violation of this section or the law.

FAQ’s about. Megan’s Law in Tennessee

Are real estate agents under any obligations regarding Megan’s Law?
Megan’s Laws requires that certain sex offenders, when released from prison must register where they live with the local police. Tennessee’s version does not require that a real estate agent to discover or disclose any information about the location of sex offenders. It is a don't ask, don't tell situation. Agents cannot be held liable for failure to inform prospective buyers of the existence of convicted child molesters in the area.

On the other hand, agents may be held liable by the convicted felon for disclosing such information. If a prospective purchaser asks about such felons living in the neighborhood, the licensee should refer them to the local police department.

This policy is established by the sentence in the "stigmatized" property section of the Residential Property Condition Disclosure Law, which is officially called Conveyances of Property. that says “no action shall arise against an owner or licensee for failure to disclose... that the real property was the site of an act or occurrence which had no effect on the physical structure of the real property, its physical environment or the improvements located thereon."