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Housing Diversity Committee Newsletter: February 2022


Fostering unity, equity, diversity and inclusion in the real estate industry.


An annual celebration of African Americans’ powerful legacy, Black History Month has been honored in California—and nationwide—every February for nearly 100 years, beginning with Carter G. Woodson’s establishment of Negro History Week in 1926. This year, though you’ll find a few parades and festivals remain on pause, there are still plenty of ways to recognize Black excellence in the Golden State and reflect on the continued struggle for racial justice across the country. Click Here to read full article


Upcoming Events & Resources

Housing Diversity Committee Meeting

Open to SRCAR® Members

We invite you to join us the 2nd Thursday of every month at 9:00am via zoom to share ideas and collaborate in bringing forth our mission.

Mission:
To foster unity, equity, diversity and inclusion in the real estate industry.

Meetings are currently online via Zoom

Deliberately Fair Housing

Check out the Deliberately Fair Housing Facebook group. Fair Housing & Equality for All! Please note this group is not monitored by SRCAR®

Click Here to Join

Complete the Fairhaven Training
Show your commitment to fair housing by accessing Fairhaven, NAR’s innovative training platform that uses the power of storytelling to help REALTORS® identify, prevent, and address discriminatory practices in real estate.

Click Here to Start


The COVID-19 Eviction Moratorium Saga


BY: JOHN V. GIARDINELLI, ATTORNEY AT LAW | OF COUNSEL

In March of 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in an attempt to alleviate the many problems unleashed by the rapidly spreading COVID–19 pandemic.1 Among other basic financial programs, the Act provided for a 120-day eviction moratorium for all properties in the U.S. that were involved in federal assistance programs or that were taking advantage of federally backed loans.1 This limited moratorium on evictions ended in July, 2020, and Congress did not renew it or pass any other bill authorizing the approval of such action.

Despite Congress not prioritizing the action legislatively as dictated by the Constitution, the CDC, an Executive Branch
agency, decided to act unilaterally in imposing a new moratorium.1 This moratorium was even more sweeping than
the one passed by the CARES Act and blanketed over every single residential property nationwide.1 It also imposed criminal sanctions on anyone who violated the terms of the moratorium. The CDC’s moratorium was set to extend from July 2020 until December 31, 2020. However, Congress, through another relief bill, extended the CDC moratorium as written for another month.1 When this deadline approached, the CDC once again unilaterally extended its own deadline multiple times all the way until July of 2021.1

The CDC, an agency tasked to deal with disease control, claimed that it had authority to engage in this unilateral action based on §361(a) of the Public Health Service Act for authority to promulgate and extend the eviction moratorium. However, this section of the PHSA only states:

“The Surgeon General, with the approval of the [Secretary of Health and Human Services], is authorized to make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmission, or spread of
communicable diseases from foreign countries into the States or possessions, or from one State or possession
into any other State or possession. For purposes of carrying out and enforcing such regulations, the Surgeon General may provide for such inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings, and other measures, as in his judgment may be necessary.”

Please note that there is no actual mention of anything involving landlords, tenants, mortgages, or rent. In fact, the 1944 Statute was only ever used to quarantine infected individuals and prohibit the import or sale of animals known to transmit disease.1

Needless to say, landlords, REALTORS®, rental property managers, and anyone who made their living through these
means saw this as an extensive overreach of a rouge government agency and legal challenges were brought all over the nation against the CDC moratorium.

In the Moratorium’s first trip to the United States Supreme Court, the emergency application to vacate stay was denied.
While this, on its face, was a victory for the Moratorium, it was clear to many that the CDC action would not last much longer. Justice Kavanaugh, in his opinion, wrote:

“I agree with the District Court and the applicants that the Centers for Disease Control and Prevention exceeded its existing statutory authority by issuing a nationwide eviction moratorium. Because the CDC plans to end the moratorium in only a few weeks, on July 31, and because those few weeks will allow for additional and more orderly distribution of the congressionally appropriated rental assistance funds, I vote at this time to deny the application to vacate the District Court’s stay of its order.”1

In a rather utilitarian manor, and to the horror of many strict Constitutionalists, Justice Kavanaugh justified keeping the order in place for the remining few weeks to give the Government time to set up rental assistance.1
While it survived for a few additional weeks, the writing was on the wall for the Moratorium.


As the Moratorium once again expired on July 31st, the CDC defiantly extended it despite Kavanaugh’s concurrence that clearly signaled its doom in court. Once again, the issue came up before the Supreme Court. However, this time there would be no victory for the Moratorium. In a Per Curiam opinion, the Court wrote:

“Indeed, the Government’s read of §361(a) would give the CDC a breathtaking amount of authority. It is hard to see what measures this interpretation would place outside the CDC’s reach, and the Government has identified no limit in §361(a) beyond the requirement that the CDC deem a measure “necessary.” Could the CDC, for example, mandate free grocery delivery to the homes of the sick or vulnerable? Require manufacturers to provide free computers to enable people to work from home? Order telecommunications companies to provide free high-speed Internet service to facilitate remote work? This claim of expansive authority under §361(a) is unprecedented. Since that provision’s enactment in 1944, no regulation premised on it has even begun to approach the size or scope of the eviction moratorium. And it is further amplified by the CDC’s decision to impose criminal penalties of up to a $250,000 fine and one year in jail on those who violate the moratorium. Section 361(a) is a wafer-thin reed on which to rest such sweeping power.”1

In an opinion that any lay person could have reasoned, the CDC Eviction Moratorium came to an end as the Justices concluded that Congress must specifically authorize any federally imposed eviction moratorium since the CDC had no power to unilaterally do so.1

Commentators were quick to declare the Supreme Court’s ruling as a harbinger for mass evictions and a huge homelessness crisis in the county.1 However, a few months have passed and no such crisis has occurred.1 Many theorize that this lack of a crisis is due to states like California passing their own moratoriums and rental aid1 , or the federal aid Kavanaugh discussed in his first utilitarian opinion. However, with state moratoriums set to expire soon, experts are still worried that a homelessness crisis is looming on the horizon for millions of Americans. Despite many
wishes that the CDC moratorium remain in place, the legal reality of its unconstitutionality was abundantly clear.

How will this situation resolve? Will cities and states continue to shield tenants? Will Congress step in once again?

Only time will tell.

C.A.R. & NAR Business Update Forms Update


At the MLS Marketing and Preview meeting on November 30, 2021, Curtis Doss gave a presentation on the upcoming changes and some new forms that are hitting the transactions suite soon. If you’d like to review these changes, please download the following 4 files. And as always, if you have any questions let us know at [email protected]

No License to Discriminate: 5 Discrimination Laws for REALTORS®


BY: JOHN V. GIARDINELLI, ATTORNEY AT LAW | OF COUNSEL

Avoiding Discrimination in Real Estate
Housing is a necessity for life. It is no wonder that the Government protects individuals from discrimination that would keep them from obtaining this necessity. However, sometimes the interactions of these laws can create a challenging landscape to navigate for brokers, REALTORS®, and other real estate professionals. In many cases, a failure to understand the intricacy of such law can lead to accidental discrimination that was not in the mind of the REALTOR® or broker at the time of listing. A good knowledge of each applicable law will keep REALTORS® out of trouble.

The Laws

  1. Civil Rights Act of 1866
    The Civil Rights Act of 1866 prohibits all racial discrimination in the sale or rental of property on a very basic level.
  2. Fair Housing Act
    The Fair Housing Act enforces a national policy of fair housing throughout the United States for “protected classes.” The FHA makes it illegal to discriminate in the sale, lease, or rental of housing, or making housing otherwise unavailable, because of race, color, religion, sex, handicap, familial status, or national origin.
  3. Americans with Disabilities Act
    The Americans with Disabilities Act prohibits discrimination against disabilities in public accommodations and commercial facilities.
  4. Equal Credit Opportunity Act
    The Equal Credit Opportunity Act makes discrimination unlawful to make any credit application contingent upon any factor that involves the basis of race, color, religion, national origin, sex, marital status, age. It is also illegal to make the application contingent if all or part of the applicant’s income derives from any welfare or public assistance program.
  5. State and Local Laws
    State and local laws often provide even broader coverage than federal law. For example, in California, The Unruh civil rights act extends further protection from discrimination by all business establishments in California, including housing and public accommodations.

What to look for: Responsibilities & Disparate Impact
While each of these laws contains separate provisions for different classes of people, there are general actions that real estate professionals can take to avoid running afoul of any of them.

Real estate professionals and landlords have a responsibility under the combination of all these laws to not discriminate in the sale, rental, and financing of any property based on race, color, religion, sex, handicap, familial status, or national origin. On a basic level, this means that no limitations in the sale or rental can be made before or during the sale that would make it contingent on any of these protected factors of the person looking to buy or rent. This would include denying that housing is available and advertising only to certain classes of people that there is a sale or vacancy. These types of actions and conditions would amount to blatantly discriminatory terms and subject the real estate professional at hand to serious liability.

While following the basic principles of not blatantly discriminating is relatively easy as stated above, there is an area included in the FHA that makes things a bit trickier. In Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc., the U.S. Supreme Court ruled that disparate impact claims are cognizable under the FHA. This means that policies or practices that are even neutral on their face could still violate the FHA because they might have a “discriminatory effect.”

Some of these less obvious forms of discrimination in the real estate arena are as follows:

  • Requiring applicants to have full-time employment. While this seems like a good business decision, court might find that this discriminates against various protected classes including those with disabilities and even veterans. The easiest way to avoid this blunder is to ask for “proof of income” instead, as it includes benefits and not job status.
  • Asking for criminal history is another sticky wicket that could result in disparate impact. The key mistake in this situation is asking for criminal history without allowing for proper clarification from the potential renter or buyer.

In short, the best way to avoid disparate impact claims is to think thoroughly through every requirement you make as a condition of renting or selling a property. Do an analysis of every type of person that may be arguably impacted by it and check to see if they are a protected class. If you find that it does, you may still try to tailor the requirement so that it does not affect the specific class in the same harsh way.

2021 New and Revised C.A.R. Forms


BY: JOHN V. GIARDINELLI, ATTORNEY AT LAW | OF COUNSEL

The California Association of REALTORS® (C.A.R) has released its list of new and revised forms. This list includes three new forms and 11 revised forms. This Courtside Newsletter will discuss what real estate practitioners should be aware of in using the forms for future transactions. Much of the information relating to these forms was obtained from C.A.R.

NEW FORMS

  1. Fire Hardening and Defensible Space Advisory Disclosure and Addendum (FHDS)

This new form modified the already existing Fire Hardening form by requiring it to also address “defensible space” compliance requirements. “Defensible space” describes buffer zones that homeowners create between a structure on the property and any flammable areas (grass, trees, shrubs, wildland) that surround it.

Due to the extreme fire danger present in California, there are many different state and local laws that require property owners to maintain certain amounts of defensible space on their property when the property is surrounded by flammable areas. In addition to the State law, agents should also check any special local ordinances.

On July 15, 2021, sellers will be required to provide documentation that their property fully complies with these various state and local defensible space laws or that buyers agree to obtain such documentation of compliance in the
future. Defensible space laws under California Public Resources Code § 4291 require brush to be removed, trees to be trimmed and other actions taken within a 30-foot (Zone 1) and a 100-foot (Zone 2) radius around a property to minimize the risk of a home catching fire.

This law applies directly to sales of residential properties, condominiums or other common interest development units, and manufactured homes. Sellers should review NHD reports to first determine if the property is in a high or very high fire zone. If the property being sold is in one of these zones, there are two categories and four ways to comply with the law depending on whether local ordinances apply to the property at issue.

  1. Areas without a local ordinance requiring documentation.

In areas with no applicable local ordinance for documentation, there are two options for complying with the new form. Either (1) the buyer must agree to obtain documentation of compliance within one year after closing escrow or (2) if the seller has obtained documentation of compliance within 6 months prior to entering into contact, the seller must provide that documentation to the buyer and provide information on the local agency from which a copy of that documentation may be obtained.

  1. Areas that have enacted a local ordinance requiring an owner to obtain documentation.

In areas with applicable local ordinances requiring documentation, there are two options for complying with the requirement of the local ordinance or (2) the seller shall provide the buyer with a copy of the documentation that complies with the requirements of that local ordinance and information on the local agency from which a copy of that documentation may be obtained.

If you are unsure of whether a property is in a high or very high zone or there are conflicting answers, paragraph 2(a) of the form strongly advises sellers to err on the side of disclosing.

  1. Transfer of Listing Agreement

The new “Transfer of Listing Agreement” form was created to help brokers navigate situations where agents leave one brokerage company for another, yet continue to work on a listing or escrow they were already working on. Failure to document such a transfer to the new broker may now be considered a DRE violation and presents problems for E&O coverage.

The first paragraph of the new form requires an acknowledgement of the transfer from the original broker to the new broker. The second paragraph addresses whether the original broker will be paid for allowing the transfer of the listing. Payment may come from either the seller or the new broker. The third paragraph acknowledges the termination of the agency relationship with the original broker. The fifth paragraph directs the parties to comply with all MLS requirements. The seventh paragraph seems to default to situations where an agent leaves the original broker for the new broker, but it is important to keep in mind that other less common situations are possible.

The new form also makes clear that an agent is not a party to the agreement, as listings belong to brokers. As a result, the three necessary signatures on this form are for the principal, the seller, and the original and new broker. The agent at issue may sign, but the agreement is still valid without the agent’s signature.

REVISED FORMS

  1. Agricultural Addendum
    This form is commonly used when improved property is located on agricultural land. Due to new laws in the state of California and many changing local ordinances regarding the cultivation and growing of marijuana, paragraph 2(m) was added to address hemp and cannabis cultivation. If you are dealing with agricultural land and cannabis cultivation, this is an important addition to make note of.
  2. Cooperating Broker Compensation Agreement and Escrow Instruction
    In this form, some already present paragraphs were shifted around for clarity’s sake, but new language was specifically added to paragraph 8 that now requires management approval from the buyer’s side broker if offered compensation is reduced. If this situation is present in the transaction, the added box at the bottom of page 2 must be signed as well.
  3. Exempt Seller Disclosure
    In the “exempt seller disclosure” form, paragraph 2(b) was modified to reflect that the changing of non-compliant plumbing fixtures applies to multi-family as well as single family properties. It is also minorly important to note that the order of last two paragraphs switched in the new revision which changes the order of the last item to be completed on the form.
  4. Lease Listing Agreement (Exclusive Authorization to Lease or Rent)
    Some minor but important clarifications were added to the “Lease Listing Agreement” form. Paragraph 3(f) now explicitly states that cooperating compensation is based upon the entire commission amount rather than as a percentage of the lease listing broker’s compensation.

    Paragraph 14(f) was also added to clarify and limit the broker’s duties once a lease is entered into between a landlord and tenant. Most importantly, the lease listing client is now informed that the broker is not being hired to perform property management services in any capacity. However, other options are still available for agents who perform various limited services after the signing of the contract occurs.
  5. Property images Agreement
    In the “Property Images Agreement” form, Paragraph 7 was added to address the increasingly more popular situation where drones and ariel photography are used as opposed to only static ground-level photos or videos. These are minor changes, but still important to follow closely.
  6. Referral Fee Agreement
    In the “Referral Fee Agreement” form, the trigger for a referring broker to earn a right to a commission is further specified to come into effect only upon the entering a contract and not at the closing of escrow. Be careful to clearly understand the complex RESPA and State rules for referrals. C.A.R. has an excellent Q & A available.
  7. Residential Listing Agreement – Exclusive, Open, and Seller Reserved (DOJ and NAR still bargaining – these forms may be held back for awhile)
    The “Residential Listing Agreement” form is still in flux due to the November 2020 settlement between the National Association of Realtors (NAR) and the Department of Justice (DOJ). The proposed final judgement requires NAR to take several consumer-friendly actions. The transition of power due to the 2020 election has complicated things a bit more. So far, the following changes have been made.

    Paragraph 7(c) added language that recognizes the absence of a uniform statewide policy on how to handle “Days on Market.” Because of this, the best practice approach is for broker and seller to communicate effectively and establish a proper method together.

    Paragraph 10(c) was added to contractually address the many issues surrounding buyer letters (commonly referred to as “Loot Letters”). Paragraph 10(c)(1) strongly recommends the FHDA form as a resource for any seller interested in fielding buyer letters. This paragraph also mentions ways that buyer letters can be used improperly as in Fair Housing violations, whether intentional or not. Sellers are advised that brokers will not review the letter so the brokers do not have to make any legal judgment on whether the letter contains information that might violate fair housing laws. The responsibility of determining this falls squarely on the seller (NAR and C.A.R. strongly recommend against using these letters).

    10(c)(2) is an instruction from the seller to not to present buyer letters. This instruction when given by the seller should be added into the MLS. However, 10(c)(2)(b) does allow sellers to accept buyer letters if they wish. It is very important to note that it is difficult, but still possible, to accept buyer letters that do not violate fair housing laws. Despite their tentative legality, if a seller chooses to accept buyer letters, they are strongly advised to seek legal counsel in preparation for legal challenges.

    Language was also added to paragraph 10(e) that identifies additional reports sellers might want to order at time of listing. One these listed reports is the NHD report. Before this revision, NHD reports were only provided to buyers. However, this was changed as sellers may now need to review those reports so the seller can determine if a disclosure is required for fire hardening or defensible space. The most critical possible changes to this form may come in paragraph 15 if the DOJ and NAR release the terms of their settlement agreement in time for the revised form’s release. These changes would have a huge impact on the industry as they are rumored to focus on the disclosure of buyer sider broker commissions and granting access to MLS properties by non-MLS members via lockboxes and key safes. These developments will be incredibly important to follow. The same changes and tentative changes apply equally to forms “Residential Listing Agreement – Open” and “Residential Listing Agreement – Seller Reserved” as well.
  8. Statewide Buyer and Seller Advisory (A great Risk Management Advisory)
    In the “Statewide Buyer and Seller Advisory” form, many minor formatting changes were made to improve the clarity of the form. Changes include a listing of the seven broad categories to which the many paragraphs belong and an alphabetical index of each paragraph and the page where the paragraph is found.

    Paragraph A(14) was added to provide further explanations and resources for disclosures in the new “Fire Hardening and Defensible Space Advisory Disclosure and Addendum” form (discussed above). Paragraph C(6) was added to address various wildlife provisions. Lastly, Paragraph C(7) was added to address concerns over coastal property with regards to rising sea levels.
  9. Seller’s Purchase of Replacement Property
    In the “Seller’s Purchase of Replacement Property” form, the only major change recognizes that a seller may satisfy the condition of the replacement property contingency if the seller identifies a new place to move. This “new place” may be a new purchase, a rental, or something else like moving in with a parent or child.

Conclusion

Should you have any questions or concerns regarding these forms, we encourage you seek qualified counsel—either through an attorney or your local REALTOR® Association—for answers.