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Legal Matters
Best of the Legal Hotline
Fair Housing - April is Fair Housing Month
by Debbi Conrad and Tracy
Rucka
The following fair housing questions and answers were recently asked of the Legal Hotline:
| Q. A broker has a client with disabilities who has a dog that is not a service animal. The client bought a condominium and is trying to keep the dog despite the condo's no-pets policy. The client thinks she can call the dog a service animal. She has been in contact with consumer protection agencies. How do you define a service animal-what evidence do you have to show? |
| A. Under Wisconsin law, the client would have to have a vision, hearing or mobility impairment and the dog would have to have certification papers from a school approved by the Wisconsin Department of Workforce Development for training assistance animals. Under Wis. Stat. § 106.50(2r)(bm), the client would have to show the landlord the dog's credentials upon request, the client would be responsible to ensure that the animal's sanitation needs were met and would be liable for any animal damage to the premises.
Under federal law pertaining to reasonable accommodations, if the person with disabilities provides documentation that he or she has a physical or psychiatric disability that substantially limits a major life activity and that because of the person's disability a companion animal is necessary to enable the person to equally enjoy the unit, the companion animal must be allowed. This requires documentation of both the disability and the need for the accommodation.
The client may be referred to the Wisconsin Coalition for Advocacy (414/342-8700 or 1-800/708-3034) or to the Metropolitan Milwaukee Fair Housing Council, Inc. (414/278-1240) for information and assistance. She should also retain an attorney to advise and assist her.
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| Q. The listing broker would like to advertise a house as wheelchair accessible because it is built at ground level. The broker was told that the remainder of the house, especially the bathroom, would also have to be wheelchair accessible. Is this correct? |
| A. The term "accessible" may have many connotations. What may be accessible for certain persons with special needs may not be so for others. To address this issue, the WRA recommends that brokers use the Accessibility Features Report (AFR) to assist them in marketing properties that may be remodeled and retrofitted for persons with special needs. The AFR form may be found in ZipForms, on the WRA Web site at
www.wra.org/Products/Forms/default.asp
or on the WRA Customers with Disabilities Resource page at www.wra.org/resources/resource_pages/disabilities_resources.htm.
In addition, the broker may wish to review Legal Update 01.03 www.wra.org/Legal/Legal_Updates/2001/lu0103.asp, which focuses on providing services to persons with special needs.
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| Q. Does a private landlord have a legal obligation to make improvements to a residence at the landlord's expense to accommodate persons with disabilities? Wouldn't these improvements be made at the tenant's expense? |
| A. Wis. Stat. § 106.50(2r) prohibits discrimination against persons with disabilities. It enables a person with disabilities to make reasonable modifications to a property that the person occupies or will occupy if the modifications are necessary for the person with disabilities to have full enjoyment of the housing. Such modification would be at the expense of the person with disabilities. In the case of rental housing, the landlord may reasonably require the tenant to enter into an agreement to restore the interior of the housing to the condition that existed before the modifications, reasonable wear and tear excepted. The landlord may not increase the amount of any customarily required security deposit, but the landlord may, as part of the restoration agreement, ask the tenant to pay reasonable installments into an interest-bearing escrow account, over a reasonable time period, to cover the cost of restorations. The interest in any such account shall accrue to the benefit of the tenant. Any escrowed funds not used by the landlord for restorations at the end of the tenancy shall be returned to the tenant.
The landlord should be referred to legal counsel for advice about what modifications must reasonably be allowed for the tenant in the particular circumstances.
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| Q. What exactly is steering? If a licensee is working with a buyer and they want to be involved in their church, parish or synagogue and they say they want to look at homes within a one mile radius of it, is this steering if the licensee complies with this request? |
| A. Steering is the illegal activity of directing buyers towards or away from certain areas. This can be distinguished from a situation where the buyer dictates that he or she only wants to see properties within a certain radius of a certain church, synagogue, etc. Based upon the buyer's requirements, a real estate licensee searching for homes that are in that geographic range would not be steering.
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| Q. What should a REALTOR® do if a seller will not accept an offer to purchase from a person of a protected class? |
| A. The broker should first refer the seller to lines 92-95 of the WB-1 Residential Listing Contract regarding fair housing. The seller and broker agree in the listing contract that they will not refuse to sell to or discriminate against any prospective buyer on account of race, color, sex, sexual orientation as defined on Wisconsin Statutes, disability, religion, national origin, marital status, lawful source of income, age, ancestry, familial status or in any other unlawful manner. Carefully review these legal obligations with the seller and recommend that the seller discuss any evidenced intent to reject an offer because of minority status with his or her own attorney.
If the seller persists with his or her discriminatory conduct, the conduct of the parties should be documented and immediately brought to the attention of the broker/ owner. It may be necessary to cancel the listing in order to disassociate the broker and agent from the seller's act of discrimination.
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| Q. Four unrelated Hispanic men want to rent an agent's rental property. Two of the men have filled out applications, but they have no social security numbers, no driver's licenses, no bank accounts, they are paid in cash where they work, and they have no credit references. They cannot read or write English-someone else filled out the applications for them. What criteria can the agent use in deciding whether to accept or deny their applications? |
| A. The agent may need to provide an interpreter in order to effectively communicate with these men. See the
REALTOR® Resource Page for Translation issues www.wra.org/Resources/resource_pages/translation_issues.htm, and
Legal Update 01.03, "Providing Good Customer Service to Persons with Disabilities and/or Special Needs"
www.wra.org/Resources/resource_pages/lu0103.htm.
The fact that they may be illegally employed would be a concern. The Immigration Reform and Control Act made all U.S. employers responsible for verifying the employment eligibility and identity of all employees hired to work in the United States after Nov. 6, 1986. To implement the law, employers are required to complete Employment Eligibility Verification forms (Form I-9) for all employees, including U.S. citizens. See
www.immigration.gov/graphics/howdoi/faqeev.htm
for more information. If the men are illegally employed, then they may have an illegal source of income, which might be grounds for refusing a tenancy. The agent may wish to attempt to speak with the employer, assuming he or she is listed as a reference.
It is a violation of United States Immigration laws to fail to report the arrival of illegal aliens, assist or encourage aliens to come to the United States in violation of the law, harbor an illegal alien, or knowingly employ aliens who do not have permission to work in the United States. It is possible that the employer of these men may be in violation of the law. The agent may wish to speak to an immigration attorney to determine whether the agent would risk any violation of the law if he rents his property to these men. For additional information about immigration, see
www.immigration.gov/graphics/shared/howdoi/illegal.htm.
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Fair Housing Case Law Summaries
Accessible Housing
Former Sheriff's Deputy Randy Perron, 37 and the father of two children, has been paralyzed for seven years since he suffered a stroke related to Hodgkins Disease. His parents decided to build two homes in the Whispering Pines development because Randy could live mostly on his own and his parents wanted to live close to Randy. Randy's sister and her husband also decided to build a home in Whispering Pines so the whole family could live near each other. After arranging lot holds on three lots and drafting home plans, the developer refused to sell the lots, allegedly because the developers did not want a home designed for people with disabilities to be built across the street from their own home. The developers also changed the subdivision covenants shortly after finding out about the plans for the accessible home to prohibit any group home being built in the neighborhood.
The Perrons planned to allow three roommates with similar physical capabilities to live in the house with Randy. A health aide would spend time each day at the house, but no live-in health worker would be there. In Minnesota, up to four non-related people may live in one house together.
The Perrons filed complaints with state and federal agencies, and the U.S. Attorney's District of Minnesota Office filed a complaint against the developers for violation of the Fair Housing Act. After months of mediation, the Perrons and developers agreed that the developers would pay $250,000 to the Perron family, the
REALTOR® and the builder, and sell three lots in Whispering Pines to the Perron family. The developers also must never discriminate in the sale or rental of housing again or retaliate against the Perrons. The developers must file a report every six months detailing information about all lot sales including potential buyers, whether potential buyers wanted to use it for a group home, and copies of all advertisements, which must include the fair housing logo.
Familial Status
In 1998, a woman entered into an agreement to buy a unit in the Westwater Commons Co-op. The Co-op's Board of Directors required potential members to complete an application listing all individuals who would reside in the unit, including the number and ages of any children. Following receipt of her application, the Board requested an interview with the woman and her 14-year-old son (she also had a four-year-old daughter). Her proposed unit was directly above a Board member's unit. Approximately a week after the interview, the woman's application was rejected, even though she was financially qualified to purchase and maintain the unit.
The Board member had opposed the woman's application because she had two children. The president of the Board confirmed that the woman was not treated fairly because of her children. A year later, the Board approved an application of an individual who had no children for the same unit.
The woman filed a complaint with HUD, alleging that the Co-op had discriminated against her based upon her familial status. Based on its investigation, HUD's Secretary issued a Charge of Discrimination notice which stated that the Co-op had discriminated against the woman based on her familial status, in violation of the federal Fair Housing Act. Familial status is defined as "one or more individuals (who have not attained the age of 18 years) being domiciled with ... a parent." The government and the woman filed a lawsuit in the United State District Court, Southern District of New York, against the Co-op. The Co-op settled the case, agreeing to pay the woman $102,000 in damages and to never again engage in familial discrimination.
ADA Requirements
Patricia and Pat Sapp both suffer from medical conditions that require them to use wheelchairs. The Sapps were interested in building a home in the Plantation Homes housing development. Mrs. Sapp called a sales representative for the development who told Mrs. Sapp to come to a model home that she was using as a sales office. The salesperson told Mrs. Sapp that the model home was wheelchair accessible. However, Mrs. Sapp discovered that neither the front nor back door had a ramp making the model home wheelchair accessible. She was able to negotiate the front steps while in her wheelchair and obtain the sales information inside the model home, but on her way out she fell out of her wheelchair and sustained injuries. The Sapps sued the developers for violations of the Americans with Disabilities Act (ADA).
The United States District Court, Northern District of Texas, ruled in favor of the Sapps. The ADA requires that places of public accommodation like a sales or rental establishment must be readily accessible and usable by individuals with disabilities. The court determined that the Sapps were disabled, as defined within the ADA, and that the developer's model home was not accessible. The court ruled that since the model home was used a sales office, the model home was a place of public accommodation and the ADA applied. Model homes are not subject to the ADA unless they are used as a sales office.
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Insurance May Be Barrier to Homeownership
by Debbi Conrad
High insurance premiums, insurance coverage restrictions, and the outright lack of availability of insurance coverage have become significant new barriers to homeownership in many markets, especially for new homebuyers who may have no credit history and for current homeowners who may have filed one or two legitimate water-related claims. According to the Insurance Information Institute, the average cost of homeowners insurance increased eight percent last year and is expected to rise an additional nine percent in 2003. However, some individual homeowners have had premium increases in the 30-70 percent range.
Many factors have contributed to this problem, including increased claims and court judgments due to natural disasters such as wildfires and floods, lead-based paint, mold and terrorism; market share competition and slumping values in insurance investment portfolios. The Insurance Information Institute estimates September 11-related claims will total $40.2 billion, while some estimate it may be as much as $70 billion. The property/casualty insurance industry posted a $7.9 billion net loss in 2001, its first-ever net loss.
Insurers are combating this downfall by declining to write new policies, refusing to renew existing policies, and increasing premiums on existing policies, making property casualty insurance increasingly difficult and more expensive to obtain. They also are instituting new policy exclusions for some hazard claims and tightening their underwriting criteria for both borrowers and properties. For example, State Farm has decided not to write new policies in 30 states and not to insure condominium associations in Florida. Because of the relationship between water damage and mold problems, insurers are refusing to insure a property that has a record of past water damage claims and are instituting exclusions for mold coverage from the basic homeowners policy terms.
Insurers also are increasingly using applicant credit scores and the Comprehensive Loss Underwriting Exchange (CLUE) database to deny property insurance coverage and decline renewal coverage for homeowners who file "too many" claims. While the insurers have not shown a causal relationship between insurance claims and an insurance score based on credit history, they indicate that there is a correlation between the two. One common industry explanation is that individuals who are not careful about paying their bills on time and managing their credit are likely to be similarly careless when it comes to dealing with routine maintenance or how they use their property and, therefore, will generate excessive claims.
The CLUE database is a service of Choice Point, part of the Equifax credit-reporting agency and contains a record of 90 percent of all insurance claims made in the United States. The database contains individuals' names, addresses, telephone numbers, credit reports, any claims filed on individuals or their property in the past five years, and a record of insurance company inquiries from the past two years. Only businesses or individuals with a permissible purpose under the Federal Credit Reporting Act (FCRA) can access a consumer's claim history report from this service. However, the FCRA authorizes a consumer-reporting agency like Choice Point to furnish a consumer report to a company that intends to use the information in connection with issuing insurance quotes, verifying insurance applications or underwriting insurance involving the consumer. A consumer can request a copy of his or her claims history report at anytime through
www.choicetrust.com or by mail.
When it comes to underwriting the physical structures themselves, insurers have slowly tightened their underwriting requirements for structures, for example, bans on wood shake roofs and requirements for circuit breakers rather than fuses. Consumers making a real estate purchase should not take property insurance for granted and must not wait until the last minute to apply for insurance.
For additional information about the insurance issues impacting real estate transactions, see NAR's report at
www.realtor.org/GAPublic.nsf/pages/propcasinsurance, and the Property Insurance Fact Sheet at
www.realtor.org/publicaffairsweb.nsf/pages/InsFactSheet?OpenDocument.
H REALTOR® Practice Tips: Cases have been reported within Wisconsin where buyers could not obtain insurance for properties with 60 amp service or fuses-100 amp service is apparently the minimum for many insurers. Brokers should refer buyers to their insurers early on. It may be necessary to include contingencies in offers to purchase requiring verification that the electrical system meets insurability standards and assigning responsibility for costs if the system must be upgraded.
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Fair Housing Conference is April 3-4
Don't forget to attend the Fair Housing Conference on April 3 and 4 at the Country Inn in Waukesha. On April 4, hear nationally known fair housing experts discuss land use, Smart Growth and affordable housing; how to combat predatory and unfair lending; and fair housing case law and enforcement actions. On April 3, 2003, a free "Fair Housing: You Be the Judge" session will run from 6:30 - 8:00 p.m. The conference fee is $35 in advance (registrations received by 5 p.m. on Tuesday, April 1, 2003) and $40 thereafter, and includes lunch (choice of chicken, beef or vegetarian entrée). For program details or to register, call the WRA at 800/279-1972, or go to
http://www.wra.org/pdf/education/Fair_Housing_Brochure.pdf.
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Forms Task Force
by Rick Staff
WRA Chairman Bob Weber convened the WRA's Forms Task Force last fall to begin a comprehensive review of the DRL-approved forms for the purpose of making recommendations for format and content revisions to future forms. The Task Force has been working on format issues to date. It is hoped that a draft will be available for the WRA Board of Directors to review at the May meetings. WRA members will have ample opportunity to have input on the forms once the first "draft" is completed by the task force and approved by the Directors.
The Task Force started by increasing the font size on the forms to improve readability. The next concept was to pull any provisions not necessary for the contract (e.g. optional contingencies) and move them into addenda which can be added to the form as needed. The draft model currently involves a content reorganization in an attempt to group all of the key transaction issues on page one so that consumers and licensees can find the most important information in one place. In order to ensure that the rest of the form isn't ignored, each page of the form will have initial lines for the parties and delivery of the form will specifically require sending all pages. Some of the more creative ideas being considered include a single DRL-approved or basic offer with addenda, which would be added to make it a farm, vacant land, commercial, residential, or other type of offer. It is not clear which of these concepts will survive the drafting and Director review process, but look forward to an opportunity to review some new ideas sometime this spring.
Although the task force has been focusing on format up to this time, the Task Force has also been asked to make suggestions which will ensure that the offer provides enough flexibility so that it is more usable in markets where the DRL-approved form language has been inconsistent with local practices.
The current process is the first step in what will likely be a two-year process resulting in the next generation of DRL forms.
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