Ownership of real property - Fair housing/discrimination

Learning Outcomes

This article explains fair housing and discrimination in the ownership and use of real property, including:

• Identifying which housing transactions are covered by the federal Fair Housing Act (FHA) and spotting when a question is really testing fair housing rather than general property or landlord–tenant rules
• Recognizing all FHA protected classes, what conduct counts as discriminatory treatment or impact, and how seemingly neutral policies can function as pretexts for unlawful discrimination on the MBE
• Distinguishing statutory exemptions (Mrs. Murphy, single-family without a broker, religious organizations, private clubs, senior housing), determining when they apply, and noting when brokers or discriminatory advertising destroy an otherwise available exemption
• Applying FHA standards on disability, reasonable accommodations, reasonable modifications, and service or support animals to complex fact patterns, and evaluating whether a landlord’s refusal or condition violates the statute
• Analyzing how federal fair housing provisions interact with the Civil Rights Act of 1866 and constitutional equal protection principles, including state action requirements and overlapping remedies, in order to choose the best answer among closely worded options

MBE Syllabus

For the MBE, you are required to understand the federal statutory framework governing discrimination in residential real estate transactions, with a focus on the following syllabus points:

• The scope and application of the federal Fair Housing Act (FHA)
• The definition of “dwelling” and the types of transactions covered (sale, rental, financing, brokerage, and certain zoning decisions)
• The protected classes under the FHA and how “sex” is interpreted
• Prohibited discriminatory practices, including refusal to deal, unequal terms, steering, blockbusting, redlining, and discriminatory advertising
• Statutory exemptions (Mrs. Murphy, single-family homes, religious organizations, private clubs, senior housing) and their limits
• FHA rules on disability, reasonable accommodations, and reasonable modifications
• Familial status protection and the senior housing exception
• The relationship between the FHA, the Civil Rights Act of 1866, and constitutional equal protection (state action vs private conduct)

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which of the following is NOT a protected class under the federal Fair Housing Act?
   1. Race
   2. Religion
   3. Sexual orientation
   4. National origin
2. A landlord owns a four-unit building, lives in one unit, and refuses to rent to families with children. She advertises "adults only." Which statement is correct?
   1. The refusal is always prohibited
   2. The refusal is exempt, but the advertisement is not
   3. Both the refusal and the advertisement are exempt
   4. The refusal is allowed only if the landlord is over 62
3. Which of the following is a prohibited practice under the FHA?
   1. Refusing to rent to someone because of their religion
   2. Charging higher rent to out-of-state residents
   3. Refusing to rent to a person with a criminal conviction
   4. Requiring a security deposit from all tenants

Introduction

Federal law prohibits discrimination in most residential real estate transactions. The Fair Housing Act (FHA) is the primary federal statute regulating discrimination in the sale, rental, and financing of dwellings. Knowing what the FHA covers, who is protected, which practices are prohibited, and what exemptions exist is essential for MBE success. Many property questions that look like simple landlord–tenant or conveyancing problems actually turn on fair housing issues.

Key Term: Fair Housing Act (FHA)
A federal statute prohibiting discrimination in the sale, rental, and financing of dwellings—and related services—based on specified protected characteristics.

The Fair Housing Act: Scope and Coverage

The FHA applies broadly to residential housing. It governs:

• The sale and rental of dwellings
• Terms and conditions of occupancy
• Advertising relating to housing
• Provision of brokerage and real-estate services
• Most residential mortgage lending and related financial services
• Certain discriminatory zoning or land-use decisions that restrict housing opportunities for protected groups

Key Term: Dwelling
A building or part of a building occupied or intended to be occupied as a residence, including houses, apartments, condos, mobile homes, and vacant land sold for construction of such housing.

The Act generally does not cover purely commercial property, but mixed-use property is covered to the extent it includes dwelling units. Hotels and short-term lodging used primarily for transient stays may fall outside the FHA, but the MBE usually focuses on traditional residential settings (apartment buildings, single-family homes, condos, subdivisions).

The FHA applies to both public and private actors. Unlike constitutional equal protection claims, state action is not required.

Key Term: State Action
Conduct by government or its agents that is required to trigger constitutional protections. The FHA applies to private conduct; state action is only required for constitutional equal protection claims, not for FHA liability.

Protected Classes

The FHA prohibits discrimination in housing based on:

• Race
• Color
• Religion
• Sex (interpreted to include gender, gender identity, and sexual orientation under current federal enforcement)
• National origin
• Familial status (families with children under 18, including pregnancy)
• Disability (often called “handicap” in the statute)

Key Term: Protected Class
A group shielded from housing discrimination under the FHA: race, color, religion, sex, national origin, familial status, and disability.

On the exam, the protected categories will usually be presented as this enumerated list. Some older questions treat “sexual orientation” as not a separately listed protected class, even though current federal interpretation treats discrimination on that basis as a form of sex discrimination. When in doubt, focus on the statute’s explicit categories.

Key Term: Disability (for FHA)
A physical or mental impairment that substantially limits one or more major life activities, including a record of such an impairment or being regarded as having such an impairment.

How Discrimination Is Proven: Intent and Impact

The FHA can be violated in two main ways:

• Disparate treatment: Intentional discrimination because of a protected characteristic.
• Disparate impact: A facially neutral practice that disproportionately harms a protected class and is not justified by a legitimate, necessary purpose.

Key Term: Disparate Treatment
Intentional differential treatment of a person in a housing transaction because of a protected characteristic.

Key Term: Disparate Impact
A facially neutral policy or practice that has a significant adverse effect on a protected class and cannot be justified by a legitimate, non-discriminatory purpose.

On the MBE, most fact patterns involve clear disparate treatment (e.g., “we do not rent to people of that religion”), but a neutral rule (such as a minimum income threshold) could be challenged as having a disparate impact if used as a pretext.

Prohibited Practices

The FHA makes it unlawful to engage in a wide range of discriminatory conduct in connection with housing. Key categories include:

• Refusing to sell, rent, or negotiate for housing because of a protected class
• Imposing different terms, conditions, or privileges of sale or rental (e.g., higher rent, different rules, different access to facilities) based on a protected class
• Falsely denying that housing is available when it is available
• Refusing to provide mortgage loans, insurance, or other housing-related financial services on equal terms (including redlining)
• Steering prospective buyers or tenants toward or away from certain neighborhoods or buildings because of a protected class
• Engaging in blockbusting—inducing owners to sell by suggesting that members of a protected group are moving in
• Threatening, coercing, or retaliating against anyone for exercising fair housing rights or assisting others in doing so
• Harassing tenants (such as sexual harassment or race-based harassment) that creates a hostile housing environment

Key Term: Discriminatory Housing Practice
Any act prohibited by the FHA, including refusal to sell or rent, applying different terms, falsely denying availability, discriminatory steering, blockbusting, or discriminatory advertising.

Key Term: Steering
Directing prospective buyers or tenants to, or away from, certain properties or neighborhoods based on a protected characteristic.

Key Term: Blockbusting
Persuading owners to sell or rent by suggesting that a protected group’s arrival will lower property values or change neighborhood conditions.

Key Term: Redlining
Refusing to make loans or offering worse terms for properties in certain areas, because of the race or other protected characteristics of residents in that area.

Exemptions and Limitations

Certain small-scale or specialized housing arrangements are partially exempt from the FHA. These exemptions are tested frequently, and the details matter.

• Owner-occupied small buildings (“Mrs. Murphy” exemption)
  Owner-occupied dwellings with four or fewer units are exempt from many FHA provisions. The owner may choose tenants based on protected characteristics in those units. However, this exemption does not extend to discriminatory advertising.

• Single-family homes sold or rented by an owner without a broker
  An owner of a single-family home who sells or rents it without using a real estate broker or agent is generally exempt, unless:

  • The owner owns more than three single-family houses, or
  • The owner uses discriminatory advertising
    Again, discriminatory advertising is never exempt.

• Religious organizations
  A religious organization that owns noncommercial housing may limit occupancy to persons of its own religion, as long as it does not discriminate based on race, color, or national origin in its membership.

• Private clubs
  A private club that is not open to the public may limit occupancy to its members in housing it owns or operates for non-commercial purposes.

• Senior housing
  Certain designated senior communities may lawfully limit occupancy based on age and exclude children, but only as to familial status discrimination.

Key Term: Mrs. Murphy Exemption
An FHA exemption allowing owners of buildings with four or fewer units, if the owner lives in one, to discriminate in choosing tenants, but not in advertising.

Key Term: Religious Organization Exemption
A provision allowing a religious organization that owns non-commercial housing to prefer members of its religion, provided it does not discriminate in membership on the basis of race, color, or national origin.

Key Term: Private Club Exemption
A provision allowing a non-public club to limit occupancy in housing it owns or operates to its members for non-commercial purposes.

Key Term: Senior Housing
Housing that qualifies as “housing for older persons,” typically because it is intended and operated for persons age 55 or older or 62 or older, and thus may lawfully exclude children as to familial status.

Even when an FHA exemption applies, other laws may still prohibit discrimination—most importantly, the Civil Rights Act of 1866, discussed below, which has no small-landlord exemption for race discrimination.

Advertising and Statements

It is unlawful to make, print, or publish any notice, statement, or advertisement that indicates any preference, limitation, or discrimination based on a protected class. This ban applies even if the subject property or transaction is otherwise exempt from the FHA.

Key Term: Discriminatory Advertising
Any notice, statement, or advertisement that expresses a preference, limitation, or discrimination based on a protected characteristic in connection with housing.

Key points:

• Both the person who places the ad and the media outlet that publishes it can be liable.
• Phrases like “no children,” “Christians only,” “adults only,” or “ideal for single professionals—no families” are problematic when they signal a protected-class preference.
• Advertisements describing a property’s physical characteristics or location without reference to protected classes (e.g., “two-bedroom, near park”) are generally acceptable.

Disability and Reasonable Accommodation

The FHA gives particularly strong protection to persons with disabilities. Housing providers must:

• Make reasonable accommodations in rules, policies, practices, or services when necessary to afford a person with a disability an equal opportunity to use and enjoy the dwelling; and
• Allow reasonable modifications of existing premises at the tenant’s expense (subject to certain conditions).

Key Term: Reasonable Accommodation
A change or exception to rules, policies, practices, or services required to give a person with a disability an equal opportunity to use and enjoy a dwelling.

Key Term: Reasonable Modification
A structural change to a dwelling (such as installing grab bars or a ramp) that may be necessary for a person with a disability to fully use and enjoy the premises.

Common exam-type applications:

• A building with a “no pets” policy must allow a service animal or emotional support animal for a tenant with a disability, if necessary for equal use of the premises. The landlord generally cannot charge an extra “pet fee” or “pet deposit” for a bona fide service animal.
• A tenant may install grab bars in a bathroom or a ramp at a private entrance at their own expense. The landlord may require restoration at the end of the tenancy if the modification is interior and would materially affect future use by others.

Familial Status

Familial status protection covers:

• Households with at least one child under 18 living with a parent or legal custodian
• Persons who are pregnant
• Persons in the process of securing legal custody of a child (such as through adoption or state-supervised care)

Key Term: Familial Status
The presence of one or more children under 18 in a household, including pregnancy and persons in the process of obtaining legal custody of a child.

A landlord may not:

• Refuse to rent to families with children
• Segregate families into particular buildings or floors
• Impose unreasonable occupancy limits that effectively exclude families with children
• Advertise “adults only” or “no children,” except in qualified senior housing

The main exception is senior housing, where properly designated 55+ or 62+ communities may lawfully restrict occupancy by children. This exception applies only to familial status, not to race, religion, sex, or other protected classes.

Relationship to Other Laws

The FHA operates alongside other federal civil rights laws and constitutional protections.

• Civil Rights Act of 1866
  This statute prohibits racial discrimination in the sale or lease of real property (and some personal property). It applies to both public and private actors and contains no exemptions for small landlords or single-family homes.

Key Term: Civil Rights Act of 1866
A federal statute that broadly prohibits racial discrimination in property transactions, with no exemptions for small-scale or owner-occupied housing.

• Constitutional Equal Protection
  Equal protection claims under the Fourteenth Amendment (for state action) and Fifth Amendment (for federal action via due process) require state action. The standards of review (strict scrutiny for race, intermediate scrutiny for gender, rational basis for most others) may be tested separately in Constitutional Law questions.

On the MBE, a question about discrimination by a private landlord in a residential rental is almost always about the FHA (and possibly the Civil Rights Act of 1866 if race is involved), not constitutional equal protection.

State Action and Private Conduct

Because the FHA expressly regulates private conduct, a private landlord, broker, homeowners’ association, or seller can be liable under the statute without any government involvement.

By contrast, if a question asks whether discrimination violates the Equal Protection Clause, you must first identify state action (e.g., public housing authority, city zoning board, state university housing). Without state action, there is no constitutional equal protection claim, though there may still be FHA liability.

Enforcement, Testers, and Retaliation (Brief Overview)

While detailed enforcement procedures are less commonly tested, a few points can help with tricky fact patterns:

• Individuals (including “testers” who pose as renters or buyers to investigate discrimination) may file administrative complaints with HUD or bring civil actions.
• Remedies can include actual damages, punitive damages, injunctive relief, and attorney’s fees.
• Retaliation is independently unlawful. A landlord may not evict, increase rent, or otherwise penalize someone for complaining about discrimination or assisting an investigation.

Key Term: Tester
A person who, without intent to rent or buy, poses as a prospective tenant or purchaser to gather evidence of discriminatory housing practices; testers can have standing to sue under the FHA.

Worked Example 1.1

A landlord owns a triplex (three units), lives in one, and refuses to rent to a family with children. She advertises the units as "adults only."

Answer:
The landlord’s refusal to rent to families with children is exempt under the “Mrs. Murphy” exemption because she lives in one of the units and the building has four or fewer units. However, the discriminatory advertisement (“adults only”) is not exempt and violates the FHA’s advertising ban.

Worked Example 1.2

A real estate agent refuses to show homes to a couple because they are of a particular religion. The agent claims the owner is a private individual selling a single-family home.

Answer:
The FHA exemption for single-family homes sold by owners without a broker does not apply when a real estate agent is involved. Because a broker is participating in the transaction, the exemption is lost. The agent’s refusal to deal because of religion violates the FHA.

Worked Example 1.3

An owner lives in one unit of a four-unit building. She refuses to rent a vacant unit to a Black applicant solely because of his race. She does not advertise the vacancy.

Answer:
Under the FHA, the owner-occupied four-unit “Mrs. Murphy” exemption would ordinarily shield her from FHA liability for tenant selection. However, the Civil Rights Act of 1866 independently prohibits racial discrimination in property transactions and has no small-landlord exemptions. The owner is not liable under the FHA but is liable under the Civil Rights Act of 1866 for race discrimination.

Worked Example 1.4

A tenant with a documented psychiatric disability requests to keep an emotional support animal in an apartment complex that has a strict “no pets” policy. The landlord refuses and says the tenant can instead use the complex’s gym to relieve stress.

Answer:
The tenant’s request is for a reasonable accommodation of the landlord’s rules to allow an animal necessary for the tenant’s equal use and enjoyment of the dwelling. The landlord must generally permit such an accommodation unless it would impose an undue burden. Offering alternative amenities is not a substitute. The landlord’s refusal violates the FHA’s disability accommodation requirements.

Worked Example 1.5

A retirement community is properly registered as housing for persons 55 and older. It refuses to sell a unit to a 35-year-old parent with two young children.

Answer:
Qualified senior housing may lawfully discriminate based on familial status (presence of children). Excluding a family with children in a properly designated 55+ community does not violate the FHA’s familial status provision. The community must still refrain from discrimination based on race, religion, sex, etc., but familial status discrimination is permitted in this context.

Worked Example 1.6

A real estate broker routinely shows Black buyers only homes in predominantly Black neighborhoods, even when they express interest in other areas with available homes in their price range.

Answer:
Directing buyers to certain neighborhoods based on race is steering, a discriminatory housing practice prohibited by the FHA. The broker’s conduct violates the FHA even if the buyers ultimately purchase a home and even if the broker never explicitly states a racial preference.

Exam Warning

• The FHA does not protect against discrimination based solely on age, criminal history, or income, unless those criteria are being used as a pretext for discrimination against a protected class.
• Small-landlord exemptions (Mrs. Murphy and single-family without a broker) do not apply to discriminatory advertising.
• Exemptions under the FHA never shield race discrimination from the Civil Rights Act of 1866.
• Be careful when a broker, agent, or property manager is involved—use of a broker often destroys an exemption that would otherwise apply to a small owner.

Revision Tip

• In every MBE housing-discrimination question, first ask:
  • Is the property a dwelling and is the transaction residential?
  • Is there an FHA exemption (owner-occupied ≤4 units, single-family without broker, religious organization, private club, senior housing)?
  • If an exemption appears, check whether a broker or discriminatory advertising is involved (which usually defeats or limits the exemption).
  • If race is involved, remember the Civil Rights Act of 1866 may impose liability even when the FHA exempts the transaction.

Key Point Checklist

This article has covered the following key knowledge points:

• The FHA prohibits discrimination in most residential sales, rentals, and financing of dwellings.
• Protected classes under the FHA are race, color, religion, sex, national origin, familial status, and disability.
• “Sex” discrimination is interpreted to include gender, gender identity, and sexual orientation, though “sexual orientation” is not a separately listed category in the statute.
• Discriminatory housing practices include refusal to sell or rent, different terms and conditions, false denial of availability, steering, blockbusting, redlining, harassment, and discriminatory advertising.
• The “Mrs. Murphy” exemption applies to owner-occupied buildings with four or fewer units, but never to discriminatory advertising.
• Single-family homes rented or sold by owners without brokers may be exempt, but the exemption is lost if the owner owns more than three such homes or uses discriminatory advertising.
• Religious organizations and private clubs may prefer their own members in certain housing, but may not discriminate in membership based on race, color, or national origin.
• Qualified senior housing may lawfully discriminate based on familial status, but not on race, religion, sex, or other protected classes.
• Landlords must provide reasonable accommodations in rules and allow reasonable modifications for tenants with disabilities, subject to limits on cost and restoration.
• Familial status protection extends to households with children under 18, pregnant persons, and those obtaining custody.
• The FHA applies to private conduct; state action is required only for constitutional equal protection claims.
• Race discrimination in property transactions is also prohibited by the Civil Rights Act of 1866, which has no small-landlord exemptions.
• Discriminatory advertising is independently prohibited, and both the advertiser and publisher can be liable.
• Exemptions under the FHA are construed narrowly on the exam; any involvement of a broker or discriminatory advertising usually triggers FHA coverage.

Key Terms and Concepts

• Fair Housing Act (FHA)
• Dwelling
• Protected Class
• Disability (for FHA)
• Disparate Treatment
• Disparate Impact
• Discriminatory Housing Practice
• Steering
• Blockbusting
• Redlining
• Mrs. Murphy Exemption
• Religious Organization Exemption
• Private Club Exemption
• Senior Housing
• Discriminatory Advertising
• Reasonable Accommodation
• Reasonable Modification
• Familial Status
• State Action
• Civil Rights Act of 1866
• Tester