Does an offer to reduce a commission for first responders violate the Fair Housing Act?

QUESTION: Our firm would like to offer a discount or rebate on the commission we charge to first responders. We plan to advertise this offer to first responders alone. Would this violate any Fair Housing laws or the Code of Ethics?

ANSWER: Under the federal Fair Housing Act and North Carolina’s State Fair Housing Act, it is unlawful to discriminate against any person in a real estate transaction based on that person’s race, color, religion, sex, handicap, familial status, or national origin. Use of advertising that expresses a preference for or against certain persons because of their membership in

a particular protected class would qualify as a violation of one or more fair housing laws. If a broker defines first responders as police, firefighters, EMTs, and nurses, there would be no clear violation of any Fair Housing laws.

One issue to consider is that seemingly neutral policies can have a disparate impact that would make the practice unlawful. Under disparate impact liability, no intent to discriminate is required. Instead, a broker may be in violation of fair housing laws based on a facially-neutral policy or practice, which helps or harms a protected class. Again, if the group of first responders being benefited does not benefit or harm any of the protected classes above, there would be no violation. There are many sources for additional information related to fair housing issues for REALTORS®. For example, NAR provides significant guidance to members here and REALTORS® in North Carolina can find more information on fair housing laws here.

Standard of Practice 10-3 of the Code of Ethics states that “REALTORS® shall not print, display or circulate any statement or advertisement with respect to selling or renting of a property that indicates any preference, limitations or discrimination based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity.” A direct or indirect reference to a protected characteristic in an ad raises concerns that the seller, landlord, or their agent may be discriminating either in favor of or against persons possessing that characteristic. As defined in this article, an advertisement and nondiscriminatory offer to provide rebates or discounts on broker compensation to first responders would not violate the Code of Ethics.

Both HUD and the NC Human Relations Commission have authority to enforce the fair housing laws. Penalties for violation of fair housing laws are substantial.  Furthermore, brokers could be subject to severe discipline by the NC Real Estate Commission for the violation of fair housing laws. Simply allowing a broker’s client to discriminate can result in civil and administrative sanctions, which is why brokers must be diligent to ensure that not only their own practices, but those of their clients, remain in compliance with these laws. For example, we previously wrote about risks related to buyer letters sent to sellers along with an offer to purchase.

Release Date: 9/19/2024