MAR Legal Hotline

Notes from the MAR Legal Hotline: April 2014

April is Fair Housing Month… Questions focus on rentals and discrimination issues.

Q.        We are opening a new rental office, and plan on specializing in vacation rentals. As we were brainstorming to create an office policy, one of my colleagues suggested that we deny applicants who are under the age of 25. Is this a good idea?

A.         No.  Massachusetts Fair Housing laws prohibit discrimination based upon race, religious creed, color, national origin, sex, gender identity, sexual orientation, age, genetic information, ancestry, or marital status. Unlike the laws on Lead Paint and Security Deposits, there is no exemption in the Fair Housing laws for short-term rentals. Therefore, your office should not impose any policy to deny applicants based upon their age. Remember, there are forms of legal discrimination, which would allow a landlord or his agent to deny an applicant based on a reason not set forth in the Fair Housing laws. This includes credit scores, references, statements of income (to verify employment), or the fact that an individual is a student. Just be sure to treat all applicants equally. Office policies should be established to eliminate possible differences in treatment by establishing uniform availability of information and uniform procedures in dealing with prospective tenants and purchasers.

Q.        What are the exemptions for Short-Term Rentals?

A.         The Lead Paint Law provides an exemption from the requirement that a landlord remove or encapsulate lead paint for rentals of 31 days or less for “vacation or recreational purposes.”  For the vacation exemption for short term rentals, the property must be inspected and no chipping or peeling paint be found.  There is also an exemption from the Security Deposit Law for rentals of 100 days or less.

Q:        A landlord recently asked me to market an apartment for her. She told me that she had a “bad” experience with a tenant that received a rental subsidy from the government and that she does not want the apartment shown to someone receiving governmental assistance. I have informed her that I will not work for her with that restriction. Can she rent it herself and exclude prospective tenants who receive assistance?

A:        No. It is illegal under state fair housing law for any person to discriminate against tenants based upon their receipt of housing subsidy or a “section 8” voucher. The fact that the landlord may choose to rent out the property herself without the assistance of a broker does not negate her obligation to comply with the law.

The decision to rent to a prospective tenant should be based on economics, not prejudice. If the tenant is able to establish both a willingness (through prior rental history or other references) and ability (through income, governmental assistance or a combination of the two) to pay the rent and be a responsible tenant, then they should be fairly considered for the apartment. Any landlord or broker failing to treat a prospective tenant fairly may be subject to legal action by the Massachusetts Commission Against Discrimination, as well as through State Court by the aggrieved party.

Notably, one of the common reasons given by some landlords for trying to avoid renting to tenants receiving government assistance is the inspection requirement at the inception of the tenancy that many of the programs include. The concept behind this requirement is very simple: people who receive assistance from the government have the right to live in safe, decent housing and the government has the right to ensure that a landlord who is receiving the financial benefit of that assistance provides it.  Landlords who maintain their properties in accordance with the state sanitary code should not be concerned about the prospect of an inspection of their property.

Q.        I have errors & omissions insurance policy. Even if I get in trouble for discrimination, I am covered under my policy, right?

A.         Probably not. Most errors & omissions insurance policies expressly exclude coverage for discrimination.  Even if the policies do not exclude discrimination, cases interpreting the obligation of insurance companies under E & O policies suggest that it is against public policy for an insurance company to cover a person against claims for intentional discrimination.  Despite these cases, where a broker (who did not personally engage in discrimination) is charged with discrimination due to the alleged misconduct of a salesperson who works for the broker, Massachusetts law would not prevent the insurance carrier from providing coverage to the innocent broker.

The Massachusetts Association of REALTORS® (MAR) Legal Hotline offers Designated REALTORS®, office managers, and other authorized callers access to staff attorneys who can assist members with questions about current state and federal laws and regulations, permissible business practices, and important court rulings affecting real estate practitioners. To take advantage of the Legal Hotline service, members must first complete and sign a Memorandum of Understanding with the MAR Legal Department. Once approved as an authorized caller, MAR members may access the Hotline by: The hours of operation are Monday-Friday, from 9 a.m. to 4 p.m.

Perfect time to remember and review Article 10 of the Code of Ethics!

Article 10: Realtors® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, or sexual orientation. Realtors® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, or sexual orientation. Realtors®, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, or sexual orientation. (Amended 1/11)

Standard of Practice 10-1:   When involved in the sale or lease of a residence, Realtors® shall not volunteer information regarding the racial, religious or ethnic composition of any neighborhood nor shall they engage in any activity which may result in panic selling, however, Realtors® may provide other demographic information. (Adopted 1/94, Amended 1/06)

Standard of Practice 10-2:   When not involved in the sale or lease of a residence, Realtors® may provide demographic information related to a property, transaction or professional assignment to a party if such demographic information is (a) deemed by the Realtor® to be needed to assist with or complete, in a manner consistent with Article 10, a real estate transaction or professional assignment and (b) is obtained or derived from a recognized, reliable, independent, and impartial source.  The source of such information and any additions, deletions, modifications, interpretations, or other changes shall be disclosed in reasonable detail. (Adopted 1/05, Renumbered 1/06)

  Standard of Practice 10-3:  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, or sexual orientation. (Adopted 1/94, Renumbered 1/05 and 1/06, Amended 1/11)

  Standard of Practice 10-4:    As used in Article 10 “real estate employment practices” relates to employees and independent contractors providing real estate-related services and the administrative and clerical staff directly supporting those individuals. (Adopted 1/00, Renumbered 1/05 and 1/06)