PM_14 Instructor Materials PDF

14 Complying with Federal, State, and Local Laws Learning Objectives After completing this lesson, students should be able to… Explain prohibited activities under the Sherman Act Discuss disclosure laws that apply to...

14 Complying with Federal, State, and Local Laws Learning Objectives After completing this lesson, students should be able to… Explain prohibited activities under the Sherman Act Discuss disclosure laws that apply to managers and landlords Identify the manager’s responsibilities under the Fair Credit Reporting Act when screening tenants List prohibited acts under the Fair Housing Act Discuss familial status and the exemption for housing for older persons Describe reasonable accommodations for persons with disabilities in housing and employ- ment under the Americans with Disabilities Act State the minimum wage and overtime rules of the Fair Labor Standards Act Explain the two-prong employment test used to determine if a person is covered under the ADA Discuss the various land use laws that impact a tenant’s use of property Suggested Lesson Plan 1. Give students Exercise 14.1 to review the previous chapter, “Managing Industrial Prop- erty.” 2. Provide a brief overview of Chapter 14, “Complying with Federal, State, and Local Laws,” and review the learning objectives for the chapter. © 2021 Rockwell Publishing  Property Management Instructor Materials 3. Present lesson content: Federal, State, and Local Laws Antitrust Laws – Price fixing – Tie-in arrangements – Market allocation EXERCISE 14.2 Antitrust laws Disclosure Laws – Disclosure of latent defects – Megan’s Law – Lead-based paint disclosures – Other disclosure laws Laws Affecting Tenant Screening – Fair Credit Reporting Act – Patriot Act EXERCISE 14.3 Disclosure laws and laws affecting tenant screening Antidiscrimination Laws – Civil rights laws – Fair housing laws – Americans with Disabilities Act Employment Laws – Fair Labor Standards Act – Occupational Safety and Health Act – Americans with Disabilities Act – Family and Medical Leave Act – Title VII of the Civil Rights Act of 1964 EXERCISE 14.4 Employment laws Land Use Laws – Zoning – Health, safety, and building codes – Common interest development laws Environmental Laws 4. End lesson with Chapter 14 Quiz. 2  Chapter 14: Complying with Federal, State, and Local Laws Chapter 14 Outline: Complying with Federal, State, and Local Laws I. Federal, State, and Local Laws A. Federal laws apply to everyone in the country; state laws apply to everyone in a par- ticular state; and local laws apply only to those in a particular city, county, or other local jurisdiction B. Laws can be classified as statutory laws or administrative regulations 1. Statutory laws: laws enacted by a legislative body (such as the U.S. Congress or a state legislature to govern a particular issue a. Laws enacted by a county or city are called ordinances 2. Administrative regulations: rules adopted by federal, state, or local administrative agencies (such as HUD, state real estate licensing agencies, or the county build- ing department) C. If the same issue is addressed by more than one law or regulation, the more restrictive requirements must usually be followed; similarly, a party can pursue a claim under the law that has the most generous remedy II. Antitrust Laws A. Antitrust laws: federal and state laws intended to encourage competition between businesses 1. The main federal antitrust law is the Sherman Act, which prohibits any conspira- cy or other agreement that unreasonably restrains trade 2. Conspiracy: when two or more business entities participate in a common scheme, the effect of which is the unreasonable restraint of trade 3. A property manager who violates antitrust laws can be fined up to one million dollars and/or sentenced to up to 10 years in prison; a corporation can be fined up to 100 million dollars B. Three types of activities are prohibited by antitrust law: price fixing, tie-in arrange- ments, and market allocation C. Price fixing: the cooperative setting of prices or price ranges by competing firms; managers cannot agree to set minimum rental rates, or to charge a standard manage- ment fee D. Tie-in arrangement: an arrangement in which a buyer must purchase one product or service in order to purchase another product or service 1. List-back agreements violate antitrust law if the listing requirement is a condition of the management agreement E. Market allocation: a prohibited activity that occurs when competing businesses agree not to sell: 1) in specified areas; 2) certain products or services in specified areas; or 3) to certain customers in specified areas EXERCISE 14.2 Antitrust laws 3  Property Management Instructor Materials III. Disclosure Laws A. Under general agency law, a manager owes prospective tenants the duty of good faith and fair dealing, which includes the disclosure of material facts 1. Material fact: any fact that could reasonably be expected to influence the tenant’s decision whether or not to rent 2. Latent defect: a hidden defect that is not discoverable by ordinary inspection B. Megan’s Law: a federal law requiring every state to have a registration program for sex offenders convicted of crimes against children 1. Specific rules vary from state to state; some states require all residential leases to contain a clause disclosing the registered sex offender database 2. If a prospective tenant asks a manager about sex offenders living nearby, the manager should refer the prospect to the state’s sex offender database; if the man- ager knows of a sex offender living in or near the residential building, state law may require the manager to disclose that information C. Lead-based paint disclosures: landlords renting housing built before 1978 must make certain disclosures about the presence of lead-based paint 1. The law requires the landlord to: disclose the location of any lead-based paint that he knows of; provide a copy of any report concerning lead-based paint in the home if it has been inspected; and give tenants a copy of a pamphlet on lead- based paint prepared by the U.S. Environmental Protection Agency (EPA) 2. Specific warnings must be attached to the lease; parties must sign statements ac- knowledging delivery and receipt of the required information D. Depending on state law, landlords may also be required to make disclosures about prior flooding, mold, ongoing pest control problems, and test results for air, water, and soil quality IV. Laws Affecting Tenant Screening A. Fair Credit Reporting Act (FCRA): a federal law intended to improve accuracy and protect privacy of information complied by consumer reporting agencies such as credit bureaus and tenant screening services; applies to both residential and commer- cial lease transactions 1. A manager must obtain consent to do credit check; usually contained in rent ap- plication 2. The manager must also disclose that he will check the applicant’s employment, residence, and criminal history 3. If adverse action is taken based on information contained in the credit report (or criminal record or rental history), the manager must inform the applicant in writing of that fact, and disclose the individual’s rights to obtain additional infor- mation or dispute inaccurate information B. When screening potential tenants, property managers must comply with the federal Pa- triot Act, which is intended to hinder the efforts of terrorist organizations and narcotics traffickers by making it harder to launder the money used to fund such organizations 4  Chapter 14: Complying with Federal, State, and Local Laws 1. U.S. individuals and businesses are prohibited from entering into any type of business transactions with any person, group, or entity listed on the Specially Designated Nationals and Blocked Persons List (SDN list) 2. However, managers are not expected to verify an applicant’s citizenship status; in some states and cities it is illegal to do so EXERCISE 14.3 Disclosure laws and laws affecting tenant screening V. Antidiscrimination Laws A. Civil rights laws include the: 1. Civil Rights Act of 1866: a federal law prohibiting any discrimination, based on race or color, in real estate transactions, including the leasing of residential and commercial property 2. Civil Rights Act of 1964: prohibits discrimination based on race, color, religion, or national origin in many programs and activities for which the federal govern- ment offers financial assistance; limited impact on rental properties 3. Civil Rights Act of 1968: contains the Fair Housing Act B. Fair Housing Act: a law that makes it illegal to discriminate on the basis of race, color, religion, sex, national origin, disability, or familial status in the sale or lease of residential property or in the sale or lease of vacant land for the construction of resi- dential buildings 1. The law also prohibits discrimination in advertising, lending, real estate broker- age, and other services in connection with residential real estate transactions 2. The Fair Housing Act prohibits any of the following acts if they are done on the basis of race, color, religion, sex (including gender identity and sexual orienta- tion), national origin, disability, or familial status: a. refusing to show or rent a residential property b. refusing to negotiate for the rental of residential property, or otherwise mak- ing it unavailable c. changing the terms or conditions of a lease for different potential tenants d. using advertising that indicates a preference or intent to discriminate e. representing that property is not available for inspection or rent when it is in fact available f. coercing, intimidating, threatening, or interfering with anyone over exercising the rights granted by the Fair Housing Act 3. The Fair Housing Act limits discrimination based on criminal history; it prohibits a landlord from refusing to rent to an applicant because of the mere existence of an arrest or conviction record; a landlord must consider such applicants on a case- by-case basis 4. Also prohibited are blockbusting and steering 5  Property Management Instructor Materials a. Blockbusting: when someone tries to induce homeowners to sell or rent their properties by predicting that members of another race (or other protected class) will be moving into the neighborhood, lowering property values b. Steering: channeling prospective buyers or tenants toward or away from spe- cific neighborhoods based on their race (or other protected class) in order to maintain or change the character of those neighborhoods 5. Disability: any physical or mental impairment that substantially limits one or more of the individual’s major life activities a. Includes those suffering from mental illness, chronic alcoholism, and AIDS; doesn’t extend to those who threaten the health or safety of others, or who are currently using controlled substances b. A residential landlord must allow the tenant to make reasonable modifications to the property at the tenant’s expense; the landlord must also make reason- able exceptions to rules 6. Familial status: a protected class defined as having a child under 18 living with you a. Parents, legal guardians, pregnant women, and those in the process of gain- ing custody of a child are all protected, but Fair Housing Act doesn’t override local occupancy laws b. “Adults only” complexes and complexes divided into “adult” and “family” areas are generally forbidden c. There is an exemption for properties that qualify as housing for older persons, which includes properties developed under a government program to assist the elderly; properties intended for and solely occupied by persons 62 and older; or properties that adhere to a policy that demonstrates intent to house persons 55 or older, if at least 80% of the units are occupied by at least one person 55 or older 7. The Fair Housing Act is enforced by HUD through the Office of Fair Housing and Equal Opportunity a. Tester: someone who plays the role of a person wanting to buy or rent hous- ing, and who evaluates compliance with fair housing laws and is allowed to file a complaint if discrimination is found b. A victim of discrimination can file a complaint with HUD, or a lawsuit in fed- eral or state court; the judge may issue injunctive remedies and/or order the violator to pay actual damages, punitive damages, and attorney’s fees to the complainant c. Additionally, someone found to have violated the Fair Housing Act may be ordered to pay a civil penalty from over $20,000 for a first offense to over $100,000 for a third or subsequent offense d. If the case is brought by the Attorney General, the court can order injunctive relief and/or civil penalties 6  Chapter 14: Complying with Federal, State, and Local Laws 8. State and local fair housing laws may provide fewer exemptions or include addi- tional protected classes of people C. Americans with Disabilities Act: a federal law that requires any business or other facility open to the public to be accessible to the disabled (private clubs and religious organizations are exempt) 1. Disability: Under the ADA and the Fair Housing Act, any physical or mental impairment that substantially limits one or more of the individual’s major life activities 2. Public accommodation: a business open to the public, such as a hotel, restaurant, or theater 3. Commercial facility: any private entity with facilities open to the public, as long as the operation of the facility affects commerce 4. Readily achievable: an accommodation is readily achievable if it is one that can be easily accomplished and carried out without much difficulty or expense 5. A victim of discrimination under the ADA may sue the offender (including the manager and owner of rental housing), or file a complaint with the U.S. Attorney General 6. If a tenant runs a business that qualifies as a commercial facility or place of public accommodation, both the landlord and the tenant are responsible for com- plying with ADA requirements VI. Federal Employment Laws A. Fair Labor Standards Act (FLSA): a federal law setting a minimum wage and a maxi- mum number of hours that can be worked without triggering overtime requirements 1. The FLSA is administered by the Wage and Hour Division of the U.S. Depart- ment of Labor, and applies to both part- and full-time workers, and both private and government sectors 2. In 2021, the basic federal minimum wage for employees is $7.25 an hour; indi- vidual states and cities often have higher minimums 3. An employee who works more than 40 hours in a week must be paid at a rate of one and one-half times his regular rate of pay for those additional hours (over- time) 4. Some employees are exempt from FLSA provisions, including commissioned salespeople; executive, administrative, and professional employees; computer professionals; certain farmworkers; persons covered by other laws, such as rail- road workers; and some seasonal and recreational employees 5. The FLSA doesn’t provide for vacation, holiday, severance, or sick pay; it doesn’t require time off for holidays or extra pay for work on holidays or weekends; it doesn’t require meal or rest periods, pay raises, or notice of termination 6. The FLSA requires employers to keep basic records regarding each covered em- ployee’s name and address, birthdate, social security number, and employment information (such as hours worked and rate of pay) 7  Property Management Instructor Materials B. Occupational Safety and Health Act (OSHA): a federal law creating various work- place safety requirements 1. All employers covered by the act must post a federal or state OSHA poster that provides employees with information on their health and safety rights in the workplace 2. Employers with 11 or more employees must keep records of work-related injuries and illnesses (unless they are in a low-hazard industry) 3. All businesses covered by the law must report any work-related fatality, as well as any illness that results in the hospitalization of three or more employees C. The Americans with Disabilities Act makes it illegal to discriminate in employment against an otherwise qualified individual because she has a disability; applies to em- ployers with 15 or more employees 1. Employers may not discriminate in the recruitment, hiring, firing, training, as- signment of jobs, promotions, pay, benefits, layoffs, granting of leave, or any other employment activity 2. Reasonable accommodation: any change or adjustment to a job or work environ- ment that allows a qualified applicant or employee with a disability to participate in the job application process, to perform the essential functions of a job, or to enjoy benefits and privileges of employment equal to those enjoyed by employees without disabilities a. The employer doesn’t have to make an accommodation if he can show that it would pose an undue hardship: the accommodation cannot be achieved ex- cept with significant difficulty or expense 3. To be protected under the ADA, disabled individuals must meet a two-prong test: the individual must be qualified to perform the essential functions of the job, and he must be able to perform the essential functions of the job with reasonable ac- commodation D. Family and Medical Leave Act (FMLA): a federal law that entitles eligible employ- ees to take up to 12 weeks of unpaid, job-protected leave in a 12-month period for specified family and medical reasons 1. FMLA applies to state, local, and federal employers; and private-sector employ- ers who employed 50 or more employees in 20 or more work weeks in the current or preceding calendar year 2. An employee returning from leave under FMLA must be restored to her origi- nal position within the company, or one that is equivalent; and employers must maintain group health coverage for the employee during the leave (although em- ployers can require the employee to pay the premiums) E. Title VII of the Civil Rights Act of 1964: a federal law prohibiting discrimination in employment based on race, color, religion, sex, or national origin 1. Discrimination based on sex includes discrimination due to gender identity, sexual orientation, pregnancy, childbirth, or related medical conditions, as well as sexual harassment, which creates a hostile work environment 8  Chapter 14: Complying with Federal, State, and Local Laws 2. A victim of sexual harassment or another form of employment discrimination under Title VII can file a complaint with the EEOC EXERCISE 14.4 Employment laws VII. Land Use Laws A. Land use controls limit the ways in which private property owners (and tenants) may use property B. Zoning ordinances: laws dividing a community into areas (zones) set aside for spe- cific types of uses, such as residential, commercial, agricultural, or industrial; these laws help ensure that only compatible uses are located in the same area 1. Basic zoning categories may have subcategories (a residential zone may include a single-family housing zone and a multi-family housing zone) 2. Buffer zones: areas separating two different zoning uses, such as a park, play- ground, or open space between a single-family zone and a commercial zone 3. Overlay zoning: zoning which permits a mixture of different zoning uses in a specific area 4. Variance: authorization by the local zoning authority to build or maintain a struc- ture or use that is prohibited by the zoning ordinance; requires a showing that current zoning rules prevent a reasonable use of the land 5. Noncomforming use: a property that doesn’t conform to current zoning requirements, but is allowed to remain (is grandfathered in); however, the non- conforming use cannot be enlarged, resumed if shut down, or rebuilt if destroyed C. Every state (and many county and city governments) has health, safety, and building codes that affect the use of real property; when codes conflict, the more strict law ap- plies 1. Building codes: local ordinances setting standards for construction methods and materials; intended to protect the public from unsafe or unworkmanlike construc- tion 2. Certificate of occupancy: a certificate issued by a local building authority after a new building has been inspected and found satisfactory D. Community associations for common interest developments are governed by state laws; in some states, a person managing a community association may need a real estate license or a community association manager’s license 1. Common interest development regulations may also dictate how records must be kept, how association funds are used, and how dues and assessments are imposed and collected VIII. Environmental Laws A. National Environmental Policy Act (NEPA): a federal law that requires agencies to prepare an environmental impact statement for any private land use or development that requires the approval of a federal agency 9  Property Management Instructor Materials 1. Environmental impact statement (EIS): a report prepared by a federal or state agency that summarizes a proposed project’s probable environmental effects and lists alternatives to the proposed project 2. Many states have similar laws that are often more restrictive B. Endangered Species Act (ESA): a federal law prohibiting any action that kills, in- jures, or harasses an endangered plant or animal, or adversely affects the habitat of an endangered plant or animal; a violation of the ESA is referred to as a “taking” C. Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA): a federal law that authorizes and funds the cleanup of severely polluted sites, and extends liability for remediation costs to owners who took possession after pollution occurred 1. There may be exemptions for an innocent landowner (someone who acquired the property without knowing of the contamination); a contiguous property owner (someone whose adjacent property was contaminated by someone else); or a bona fide prospective purchaser (someone who purchases property knowing, or having reason to know, that the property is contaminated) 2. Many states have laws similar to CERCLA D. Many cities and municipalities have environmental laws that regulate waste disposal, recycling, and energy conservation Exercises EXERCISE 14.1 Review exercise To review Chapter 13, “Managing Industrial Property,” have your students indicate which of the following are, or are not, typical incentives that the government may offer to the industry. 1. Job training programs 2. Anti-union initiatives 3. Property tax breaks 4. Regulatory exemptions 5. Subsidized advertising on billboards on state and federal highways 6. Access to financing at relatively low rates via bonds 7. Exemptions in certain locations from civil rights laws 10  Chapter 14: Complying with Federal, State, and Local Laws Answers: 1. TYPICAL INCENTIVE. Many states participate in job training programs. 2. NOT AN INCENTIVE. The government remains generally neutral regarding unions. 3. TYPICAL INCENTIVE. It’s not unusual for the government to offer industry-dis- counted property tax rates. 4. TYPICAL INCENTIVE. It’s not unusual for the government to offer industry relief from zoning, environmental, or other regulatory requirements. 5. NOT AN INCENTIVE. The government doesn’t get involved in advertising on behalf of industries. 6. TYPICAL INCENTIVE. Industrial bonds are a fairly common incentive that govern- ment offers to industry. 7. NOT AN INCENTIVE. Civil rights laws do not allow exemptions to be offered as incentives to industry. EXERCISE 14.2 Antitrust laws For each of the following descriptions, identify whether the parties have violated antitrust law. If a violation has occurred, explain what type of antitrust violation is involved (price fixing, tie-in arrangement, or market allocation). 1. Hart Properties owns a 60-unit apartment building called Fircrest Manor. A buyer comes along who believes the area around Fircrest Manor will undergo a renais- sance. The buyer has gotten private information that a major software company is moving into the area in a couple of years. The seller, Hart Properties, doesn’t know about the plans of the software company. The buyer proceeds with negotia- tions without mentioning what he’s heard about a big new employer coming. 2. Hart Properties refuses to sell its apartment building unless the buyer hires a property management firm in which Hart owns a majority share. The buyer goes ahead and buys Fircrest Manor and hires the property management firm as part of the deal. 3. During the course of the transaction, Hart provides the new owner with a rental schedule and suggests that the buyer stick with those rental prices because they’re the product of careful market research. 11  Property Management Instructor Materials 4. Fircrest Manor’s new owner does use most of the rental rates that Hart used. However, the new owner also talks with the owner of The Mermaid (the only other apartment building in the area). The two owners agree that there’s been a poor business practice of undercharging for view apartments in their respective build- ings. They both agree that a 6% rent bump on view units is completely reasonable and fair to renters. Further, they agree not to impose the rent increase on existing month-to-month renters of these units. 5. Six months later, the software giant makes public its plans to move into the area. Recognizing this should mean a greater demand for apartments, a developer files plans with the city to build a competing apartment complex. The owner of Fircrest and the owner of The Mermaid speak at city planning meetings urging denial of the building permit application. These two property owners argue that another building will place too much burden on city streets and services. Their objections are not effective. The planned apartment building gets built. 6. The software giant downsizes and opens only a modest facility in the area. The presence of the new apartment building means vacancy rates are slightly higher than they used to be. The owners of Fircrest and The Mermaid happen to run into each other at a restaurant. They are both eager to find a way to reduce their marketing costs, so the Fircrest’s owner proposes that he’ll engage in marketing activities on the west side of town, while the Mermaid’s owner will advertise on the east side. Answers: 1. NO VIOLATION. Antitrust law doesn’t require that a buyer make disclosures to a seller. (State law requires that a seller disclose material defects to a buyer but that doesn’t apply here and does not involve antitrust law.) 2. VIOLATION. Requiring that the buyer use a separate product or service (property management) is a tie-in arrangement. Tie-in arrangements are illegal. 3. NO VIOLATION. Whenever a building is sold, the owner has to provide the buyer with key information about the property, including a rental schedule. 4. VIOLATION. When competitors agree to set rates together, that’s price fixing. Price fixing is illegal. 5. NO VIOLATION. There is no suggestion that the two owners have conspired unfairly to defeat the proposal. The two owners have a right to air their views at a public meeting seeking comment on a project. 6. VIOLATION. When competing businesses agree not to sell their products in speci- fied areas, they are engaging in illegal market allocation. 12  Chapter 14: Complying with Federal, State, and Local Laws EXERCISE 14.3 Disclosure laws and laws affecting tenant screening Have your students answer the following questions Yes or No. 1. Kevin is the property manager for a number of rental houses owned by an out- of-state individual. The owner puts Kevin in charge of selling one of the houses. A few years ago the house had a wet basement during a period of very heavy rains. The problem hasn’t reoccurred. Does Kevin have to disclose this issue to a potential buyer? 2. A renter with children asks Kevin if there are pedophiles living in the neighborhood. Kevin says (honestly) that he has no idea. “I think the lease says something about it,” he adds. He points to a paragraph with a website address for a sex offender registry. Is it likely that Kevin has complied with state law? 3. Kevin is renting a house built in 1979. He gives the tenant a report concerning lead-based paint in the home stemming from an inspection performed ten years ago. He fails to give the tenant the pamphlet on lead-based paint published by the Environmental Protection Agency. Has he violated the law concerning lead-based paint disclosures? 4. Kevin tells a rental applicant that management policy is to run a background check/credit history on everyone and that the applicant has to pay for it. The ap- plicant writes a $40 check to cover the fee. Kevin operates under the assumption that this conversation is adequate disclosure and that the signature on the check constitutes consent to the background search. Is he right? 5. The FCRA governs the situation described in the previous question. Does “FCRA” stand for the Fair Consumer Reporting Act? 6. Kevin manages a large apartment house. Whenever he rejects an applicant, he sends a form letter with checkboxes explaining to the applicant that poor credit resulted in the denial of the application. The owner notices his manager is sending out these notices and says Kevin could save time, office supplies, and postage if he skipped this step. “No can do,” Kevin replies. “The FCRA requires that I notify an applicant in writing if bad credit was the reason for rejecting their application.” Is Kevin right? 7. Kevin is renting out a house. He does not check the tenant’s name against the Specially Designated Nationals and Blocked Persons List (SDN list), believing that the USA Patriot Act contains an exemption for residential units. In other words, it only applies to commercial landlords. Is he correct? Answers 1. YES. The seller of a property, and her real estate agent or other representative, must disclose hidden defects. 13  Property Management Instructor Materials 2. YES. Most states simply require that the web address of the sex offender registry be disclosed to a renter or buyer in writing. 3. NO. The lead-based paint disclosure law applies to buildings constructed before 1978. Kevin does have to disclose any problems with lead paint because of state law requiring disclosure of material facts, but he did that by giving the prospective buyer a copy of the lead paint inspection report. 4. NO. The applicant must sign a consent statement that describes what kind of background check will be run. 5. NO. FCRA stands for Fair Credit Reporting Act. 6. YES. FCRA requires a written notice to the applicant explaining that negative credit history was the cause for a denial of tenancy. 7. NO. The Patriot Act requires both residential and commercial landlords to check the names of tenant applicants against the SDN list. EXERCISE 14.4 Employment laws Have your students select from the following federal employment laws to answer the questions below (some terms may be used more than once): Fair Labor Standards Act (FLSA) Civil Rights Act of 1964 (Title VII) Americans with Disabilities Act (ADA) Family and Medical Leave Act (FMLA) Occupational Safety and Health Act (OSHA) 1. Refusing to hire someone because he is Mormon violates what law? 2. Susan’s daughter is very sick. If necessary, Susan’s employer must give her up to 12 weeks of leave (unpaid) under what law? 3. Under what law would inspectors tell an employer she must add additional lighting in an area where workers use potentially dangerous metal-working tools? 4. Payroll-related records must be kept in accord with which law? 5. An employer passes over a disabled person who applies for a sales job. The employer believes someone in a wheelchair won’t make a good impression on customers. What law does this form of discrimination violate? 6. This antidiscrimination law doesn’t apply to employers with fewer than 15 em- ployees. 7. The concept of a “reasonable accommodation” is central to this law. 8. Under this law, an employer who tolerated sexual harassment among her em- ployees could find herself liable. 9. What law creates a federal minimum wage? 14  Chapter 14: Complying with Federal, State, and Local Laws Answers: 1. CIVIL RIGHTS ACT OF 1964 (TITLE VII). This law prohibits discrimination based on race, color, religion, sex, or national origin. 2. FMLA. The Family and Medical Leave Act guarantees many workers the right to unpaid leave for family or medical reasons, provided the employee has exhausted vacation and sick leave. 3. OSHA. The Occupational Safety and Health Act imposes workplace safety require- ments on employers. 4. FLSA. The Fair Labor Standards Act requires basic wage and hours recordkeeping by employers. 5. ADA. The Americans with Disabilities Act prohibits employment discrimination against the disabled. (If a job genuinely couldn’t be handled by a disabled person, the employer could refuse the hire; however, the facts don’t support that defense in this particular situation.) 6. ADA. The Americans with Disabilities Act doesn’t apply to smaller employers. (Most other employment discrimination laws also exempt smaller companies; the number of employees to qualify for exemption varies.) 7. ADA. The Americans with Disabilities Act requires businesses to make reasonable accommodations in order to enable disabled persons to work and earn a living. 8. CIVIL RIGHTS ACT OF 1964 (TITLE VII). This law prohibits discrimination based on race, color, religion, sex, or national origin. The category “sex” includes harass- ment based on gender (either male or female). 9. FLSA. The Fair Labor Standards Act requires that most employers pay at least the federal minimum wage; states are free to impose a higher minimum wage. 15  Property Management Instructor Materials Chapter 14 Quiz 1. Which of the following categories of laws limits 4. A residential landlord who has inspected for anticompetitive business practices? lead-based paint in the property and is aware a) Antidiscrimination laws of the presence of lead-based paint must do all b) Antitrust laws of the following, except: c) Disclosure laws a) disclose the location of any known lead- d) Land use laws based paint b) give a copy of a pamphlet on lead-based paint prepared by the Environmental Pro- 2. A property manager arranges with the manager tection Agency of a competing property that neither of them c) offer a ten-day period in which the tenant will set rental rates below $1,000 for one- may have property inspected for lead-based bedroom units. Which violation of antitrust paint laws has occurred? d) provide a copy of any inspection report a) List-back agreement concerning lead-based paint b) Market allocation c) Price fixing d) Tie-in arrangement 5. A lease applicant finds that her application has been rejected based on erroneous information contained in her credit report. Under the Fair 3. Which of the following would be an example Credit Reporting Act, she is entitled to all of of illegal market allocation? the following, except: a) A real estate agent agrees to manage a con- a) have inaccurate or unverifiable information dominium association, but only if members deleted from the credit report list their units with him when they decide b) have negative information in her file deleted to sell after a certain number of years b) Red Blazer Realty agrees with Westside c) obtain additional information from the Realty that Red Blazer Realty will manage credit reporting bureau properties on the east side of town while d) receive the lease in question, or a compa- Westside Realty manage properties on the rable unit, from the landlord west side c) Red Blazer Realty states that one of its agents, Cookie, will manage properties on 6. The Patriot Act requires a landlord to: the west side of town while another agent, a) avoid entering into a lease with any person Gil, will manage properties on the east side listed on the Specially Designated Nation- d) Two managers of competing properties als List agree on the rental rates they will charge b) avoid making leasing decisions based on the race or religion of the applicant c) disclose the presence of registered sex offenders known to be living in the neigh- borhood d) verify a lease applicant’s citizenship status 16  Chapter 14: Complying with Federal, State, and Local Laws 7. The Civil Rights Act of 1866 prohibits discrimi- 12. Which of the following does the Fair Labor nation on the basis of: Standards Act require? a) national origin a) Limit of eight hours of work per day b) race b) Payment at overtime rate if employee works c) religion more than 40 hours per week d) All of the above c) Vacation or sick pay d) Valid reason for termination 8. Crown Realty manages a number of apartment buildings around town. When white prospects 13. Which law requires certain employers to keep approach them, they are shown units in pre- records concerning work-related injuries and dominantly white parts of town; when Latino illnesses? prospects approach them, they are shown units a) Americans with Disabilities Act in predominantly Latino parts of town. Which b) Fair Labor Standards Act violation of the Fair Housing Act has been c) Family and Medical Leave Act committed? d) Occupational Safety and Health Act a) Blockbusting b) Redlining 14. A disabled employee at a manufacturing facil- c) Steering ity can perform the essential functions of a d) Using advertising that indicates a prefer- particular job, but requests that he be allowed ence to use a stool at his work station, despite other employees performing the task in a standing 9. An apartment building advertises an “adults position. Under the Americans with Disabilities only” policy. Unless it qualifies as “housing Act, this would be a: for older persons,” this would be illegal dis- a) necessary improvement crimination under the Fair Housing Act, which b) public accommodation prohibits discrimination on the basis of: c) reasonable accommodation a) age d) undue hardship b) familial status c) marital status 15. Which of the following statements concerning d) sexual orientation sexual harassment in the workplace is not true? a) The harasser could be a tenant 10. Who may order punitive damages in a lawsuit b) The victim may be the same or opposite concerning a violation of the Fair Housing Act? sex as the harasser a) Attorney General c) The victim may be either male or female b) federal court d) There must be a showing of economic c) HUD administrative law judge injury d) state court 16. Zoning laws regulate all of the following, ex- 11. Which of the following buildings would not cept: have to comply with accessibility requirements a) amounts of potentially toxic substances that under the Americans with Disabilities Act? may be released a) Church b) distance between building and property b) Elementary school lines c) Real estate firm’s office c) height and shape of buildings d) Warehouse d) placement of only compatible uses in the same area 17  Property Management Instructor Materials 17. A gas station is in a neighborhood that has just been rezoned from mixed use to strictly resi- dential. The gas station may continue operating, though the use cannot be expanded. This is an example of a: a) conditional use b) nonconforming use c) variance d) viable use 18. A building inspector examines a recently com- pleted building, and finds it satisfactory. The building department will issue a: a) building permit b) certificate of compliance c) certificate of habitability d) certificate of occupancy 19. A proposed new development will require the approval of a federal agency, because of its proximity to protected wetlands. The agency must prepare an environmental impact state- ment, according to the: a) Clean Water Act b) Comprehensive Environmental Response, Compensation, and Liability Act c) Endangered Species Act d) National Environmental Policy Act 20. The Walters purchase a home that is down- hill from an abandoned site where electrical equipment was once manufactured. They sub- sequently find that toxic chemicals have migrated through the groundwater and con- taminated the soil on their property. Under CERCLA, they would be considered: a) contiguous property owners b) innocent landowners c) liable for the cleanup of their property d) Both A and B 18  Chapter 14: Complying with Federal, State, and Local Laws Answer Key 1. b) Antitrust laws, such as the Sherman 7. b) The Civil Rights Act of 1866 is limited Act, prevent business arrangements in scope, in that it only prohibits dis- that unreasonably restrain trade. crimination based on race and color. The Fair Housing Act, which came 2. c) Price fixing is the cooperative setting along one hundred years later, also of prices by competing firms, which covers national origin and religion. would include competing property managers agreeing set rental rates. 8. c) Steering refers to channeling prospec- tive tenants toward or away from 3. b) When two competing firms agree not particular neighborhoods because of to operate in certain geographic areas, their race, national origin, or other allocating business between them, it’s characteristics. a Sherman Act violation. It’s not a vio- lation for one firm to allocate different 9. b) The Fair Housing Act prohibits dis- territories to two agents that work for crimination based on familial status, that same firm, though. which covers parents, legal guard- ians, pregnant women, and persons in 4. c) A landlord does not need to offer a ten- the process of obtaining custody of a day period for a tenant to inspect the child. property for lead-based paint. (A resi- dential seller must offer this to a buyer, 10. b) A federal court may order a violator to however.) pay punitive damages to a complainant under the Fair Housing Act. 5. d) While a tenant whose lease is rejected because of faulty information in a 11. a) A religious organization is exempt credit report has the right to challenge from ADA requirements. A warehouse and correct that information under the is not likely to see visitors, but is likely Fair Credit Reporting Act, she can’t to still fall under the definition of use that to force the landlord to turn “commercial facility” and be subject to around and rent to her. the ADA. 6. a) The Patriot Act prohibits U.S. busi- 12. b) The Fair Labor Standards Act requires nesses from entering into any overtime pay if an employee works transaction (including a lease) with a more than 40 hours per week. person or entity listed on the Specially Designated Nationals and Blocked 13. d) The Occupational Safety and Health Persons List. Act requires many employers to keep records of work-related injuries and illnesses. Low-hazard industries (like real estate) are usually exempt. 19  Property Management Instructor Materials 14. c) A reasonable accommodation is a 20. d) Under CERCLA, the Walters would change to a job or work environ- not be liable for remediation; they ment that allows a qualified employee would be considered both innocent with a disability to perform the job in landowners (because they didn’t know the same manner as a non-disabled about the contamination) and contigu- employee. The stool wouldn’t be ex- ous owners (since the contamination pensive or difficult for the employer, originated on an adjacent property). so it’s not an undue hardship. 15. d) There is no requirement that the vic- tim was fired, or any other showing of economic injury, to find that sexual harassment occurred. 16. a) Release of potentially harmful sub- stances would be regulated through environmental laws. Zoning laws would regulate where a factory might be located in the first place, though. 17. b) An existing use that may continue, even though it would not be allowed under current zoning laws, is known as a nonconforming use. 18. d) A certificate of occupancy is given by the building department once a com- pleted building has been inspected. A building permit, by contrast, is given before a construction or remodel- ing project begins, based on building plans. 19. d) The National Environmental Policy Act (NEPA) requires an environmental impact statement when a private devel- opment will require the approval of a federal agency. 20  Chapter 14: Complying with Federal, State, and Local Laws PowerPoint Thumbnails Use the following thumbnails of our PowerPoint presentation to make your lecture notes. Property Management Lesson 14: Complying with Federal, State, and Local Laws © 2021 Rockwell Publishing 1 Introduction This lesson addresses laws concerning: ⚫ antitrust ⚫ disclosures ⚫ tenant screening ⚫ antidiscrimination ⚫ employment ⚫ land use ⚫ environment © 2021 Rockwell Publishing 2 Federal, State, and Local Laws Laws affecting property managers are mostly state laws, but important laws also include: ⚫ federal environmental and civil rights laws ⚫ local zoning and subdivision laws © 2021 Rockwell Publishing 3 21  Property Management Instructor Materials Federal, State, and Local Laws Laws can be classified as: Statutory: Laws enacted by legislative body. ⚫ Congress, state legislature. ⚫ City or county (known as ordinances). Administrative regulations: Rules adopted by officials in charge of federal, state, or local administrative agency. ⚫ Department of Housing and Urban Development (HUD). © 2021 Rockwell Publishing 4 Antitrust Laws Antitrust laws: Laws intended to encourage competition between businesses. Sherman Act: Federal antitrust law that prohibits any agreement that has the effect of unreasonably restraining trade. © 2021 Rockwell Publishing 5 Antitrust Laws Conspiracy: When two or more business entities participate in a common scheme that unreasonably restrains trade. States also have antitrust laws; this lesson focuses on federal antitrust laws. © 2021 Rockwell Publishing 6 22  Chapter 14: Complying with Federal, State, and Local Laws Antitrust Laws Prohibited activities Three types of activities prohibited by antitrust law: ⚫ price fixing ⚫ tie-in arrangements ⚫ market allocation © 2021 Rockwell Publishing 7 Prohibited Activities Price fixing Price fixing: The cooperative setting of prices or price ranges by competing firms. Property managers should not: ⚫ set minimum rental rates with competing property owner or manager ⚫ agree with competing managers on standard management fees © 2021 Rockwell Publishing 8 Prohibited Activities Tie-in arrangement Tie-in arrangement: Arrangement in which buyer must purchase one product or service in order to purchase another product or service. Property managers shouldn’t use list-back agreements where listing agreement is requirement of management agreement. © 2021 Rockwell Publishing 9 23  Property Management Instructor Materials Prohibited Activities Market allocation Market allocation: Competing businesses agreeing not to sell: ⚫ in specified areas; ⚫ certain products or services in specified areas; or ⚫ to certain customers in specified areas. © 2021 Rockwell Publishing 10 Prohibited Activities Market allocation Perfectly fine to allocate territory, customers, or clients among employees within a firm. ⚫ Problem is only with allocation between competing firms. © 2021 Rockwell Publishing 11 Summary Antitrust Laws – Sherman Act – Conspiracy – Price fixing – Tie-in arrangement – List-back agreement – Market allocation © 2021 Rockwell Publishing 12 24  Chapter 14: Complying with Federal, State, and Local Laws Disclosure Laws State and federal laws require property managers to make disclosures about property and its condition to prospective tenants. Includes: ⚫ latent defects ⚫ Megan’s Law ⚫ lead-based paint © 2021 Rockwell Publishing 13 Disclosure Laws Disclosure of latent defects General agency law imposes duty of good faith and fair dealing on property manager. ⚫ Requires manager to disclose material facts to prospective tenants. Material fact: Any fact that could reasonably be expected to influence tenant’s decision whether or not to rent. © 2021 Rockwell Publishing 14 Disclosure Laws Disclosure of latent defects Latent defect: Hidden defect that is not discoverable by ordinary inspection. ⚫ Latent defect is a material fact. ⚫ Manager who fails to disclose known latent defect may be liable for loss suffered by tenant as result of defect. © 2021 Rockwell Publishing 15 25  Property Management Instructor Materials Disclosure Laws Disclosure of latent defects Written disclosure: ⚫ usually not required for prospective tenants ⚫ but still a good idea to disclose latent defects in writing © 2021 Rockwell Publishing 16 Disclosure Laws Megan’s Law Megan’s Law: Federal law that requires every state to have a registration program for sex offenders convicted of crimes against children. © 2021 Rockwell Publishing 17 Disclosure Laws Megan’s Law Rules differ between states, but all states must make database of registered offenders available to public. Some states require residential leases to disclose existence of state’s registered sex offender database. © 2021 Rockwell Publishing 18 26  Chapter 14: Complying with Federal, State, and Local Laws Disclosure Laws Megan’s Law When prospective or current tenant asks about sex offenders in area, manager should refer them to state agency. ⚫ State law may require manager to disclose if she knows for a fact that sex offender lives nearby. Some states make it illegal to deny housing based on tenant’s registered offender status. © 2021 Rockwell Publishing 19 Disclosure Laws Lead-based paint disclosures Lease transactions involving property built before 1978 are subject to federal laws concerning lead-based paint. Lead paint: ⚫ not usually dangerous if properly maintained ⚫ can cause brain and organ damage in young children who ingest paint flakes or inhale paint dust © 2021 Rockwell Publishing 20 Disclosure Laws Lead-based paint disclosures Residential landlord must: ⚫ disclose known locations of lead-based paint ⚫ provide copy of reports concerning lead- based paint if property has been inspected ⚫ give tenants copy of pamphlet on lead- based paint prepared by U.S. EPA © 2021 Rockwell Publishing 21 27  Property Management Instructor Materials Disclosure Laws Lead-based paint disclosures Manager must attach to lease: ⚫ specific warnings ⚫ signed statements from parties acknowledging delivery, receipt of disclosures Signed copies must be kept for at least three years. © 2021 Rockwell Publishing 22 Disclosure Laws Lead-based paint disclosures Law gives exemptions for transactions involving: ⚫ zero-bedroom units ⚫ leases for less than 100 days ⚫ housing for elderly or disabled (unless young children live there) ⚫ housing that’s been inspected by certified inspector and found lead-free ⚫ foreclosure sales © 2021 Rockwell Publishing 23 Disclosure Laws Other disclosure laws Depending on state law, other disclosures may be required. Examples: ⚫ history of flooding or in flood zone ⚫ ongoing mold or pest control problems ⚫ indoor air quality testing ⚫ groundwater and soil testing © 2021 Rockwell Publishing 24 28  Chapter 14: Complying with Federal, State, and Local Laws Summary Disclosure Laws – Material fact – Latent defect – Megan’s Law – Lead-based paint © 2021 Rockwell Publishing 25 Tenant Screening Laws Federal and state laws affect how property manager screens rental applications. Includes: ⚫ Fair Credit Reporting Act ⚫ USA Patriot Act/Exec. Order 13224 ⚫ state laws governing inquiry into citizenship status © 2021 Rockwell Publishing 26 Tenant Screening Laws Fair Credit Reporting Act Fair Credit Reporting Act: Federal law intended to: ⚫ improve accuracy of information collected, and ⚫ protect privacy of individuals whose information is compiled by credit bureaus. © 2021 Rockwell Publishing 27 29  Property Management Instructor Materials Tenant Screening Laws Fair Credit Reporting Act FCRA applies to any transaction in which consumer report on a prospective tenant is obtained. Consumer report includes credit report, rental history report, criminal background check. Includes both residential and commercial lease transactions. © 2021 Rockwell Publishing 28 Tenant Screening Laws Fair Credit Reporting Act Manager must inform prospective tenant that manager will check: ⚫ credit history ⚫ other aspects of background (employment, residence, criminal history) FCRA applies even if investigation of criminal or rental history is on form separate from consumer report. © 2021 Rockwell Publishing 29 Tenant Screening Laws Fair Credit Reporting Act Manager must make disclosure in writing. ⚫ Disclosure usually contained in application along with space for applicant to sign acknowledgement. © 2021 Rockwell Publishing 30 30  Chapter 14: Complying with Federal, State, and Local Laws Tenant Screening Laws Fair Credit Reporting Act Under FCRA, if any adverse action taken based on information in credit report (or criminal, rental history), manager must: ⚫ inform applicant in writing ⚫ notify applicant that she’s entitled to: ⚫ obtain additional info from credit bureau ⚫ dispute inaccurate info in report ⚫ have inaccurate, incomplete, unverifiable info in report corrected or deleted © 2021 Rockwell Publishing 31 Tenant Screening Laws Fair Credit Reporting Act ⚫ Under FCRA, rejected applicant is entitled to (continued): ⚫ have access to her file limited to those with a valid need ⚫ have negative info in file deleted after a certain number of years © 2021 Rockwell Publishing 32 Tenant Screening Laws Fair Credit Reporting Act Adverse action usually results in rejection of application, but may also include: ⚫ requiring higher rents or fees, or ⚫ requiring a co-signer. © 2021 Rockwell Publishing 33 31  Property Management Instructor Materials Tenant Screening Laws USA Patriot Act/Exec. Order 13224 USA Patriot Act/Exec. Order 13224 (together referred to as the Patriot Act): ⚫ intended to hinder efforts of terrorist organizations and narcotics traffickers by making it harder to launder money ⚫ prohibits U.S. individuals and businesses from entering into transactions with any person or entity listed on SDN list © 2021 Rockwell Publishing 34 Tenant Screening Laws USA Patriot Act/Exec. Order 13224 Specially Designated Nationals and Blocked Persons (SDN) List: List of persons, groups, and entities that U.S. individuals and businesses are prohibited from entering into any transaction with, including leases. ⚫ Managers should check names of all prospective tenants and clients against the SDN list, not just those of certain race, religion, background. © 2021 Rockwell Publishing 35 Tenant Screening Laws USA Patriot Act/Exec. Order 13224 Manager who finds match should verify identity of person and notify Office of Foreign Assets Control to officially verify match. ⚫ If confirmed, any funds held on behalf of person or entity must be frozen. © 2021 Rockwell Publishing 36 32  Chapter 14: Complying with Federal, State, and Local Laws Tenant Screening Laws Citizenship status inquiries Managers are not expected to verify prospective tenant’s citizenship status. ⚫ Some states have laws prohibiting citizenship inquiries. © 2021 Rockwell Publishing 37 Summary Tenant Screening Laws – Fair Credit Reporting Act – Patriot Act/Exec. Order 13224 – SDN List – Citizenship status inquiry © 2021 Rockwell Publishing 38 Antidiscrimination Laws Antidiscrimination laws include: ⚫ general civil rights laws ⚫ Fair Housing Act ⚫ Americans with Disabilities Act © 2021 Rockwell Publishing 39 33  Property Management Instructor Materials Antidiscrimination Laws Civil rights laws Civil Rights Act of 1866: Federal law prohibiting any discrimination based on race or color in real estate transactions. ⚫ Includes leasing of residential and commercial property. © 2021 Rockwell Publishing 40 Antidiscrimination Laws Fair Housing Act Civil Rights Act of 1968 contains federal Fair Housing Act. Federal Fair Housing Act: Federal law prohibiting discrimination on the basis of race, color, religion, sex, national origin, disability, or familial status in sale or lease of: ⚫ residential property ⚫ vacant land for construction of residential buildings © 2021 Rockwell Publishing 41 Antidiscrimination Laws Fair Housing Act Prohibition against sex discrimination includes discrimination based on sexual orientation, gender identity. Fair Housing Act also limits discrimination based on criminal history. ⚫ Existence of criminal history alone is not reason to discriminate. ⚫ Must consider on case-by-case basis. © 2021 Rockwell Publishing 42 34  Chapter 14: Complying with Federal, State, and Local Laws Antidiscrimination Laws Fair Housing Act In residential transactions, Fair Housing Act prohibits discrimination in: ⚫ advertising ⚫ lending ⚫ real estate brokerage Also: ⚫ applies only to residential transactions ⚫ exemptions never apply to property managers © 2021 Rockwell Publishing 43 Fair Housing Act Prohibited acts Fair Housing Act prohibits the following acts in connection with residential property if done on basis of race, color, religion, sex, national origin, disability, or familial status: ⚫ refusing to show or rent ⚫ refusing to negotiate for rental ⚫ changing terms of lease for different tenants © 2021 Rockwell Publishing 44 Fair Housing Act Prohibited acts Prohibited acts (continued): ⚫ using advertising indicating preference or intent to discriminate ⚫ representing that property is unavailable when in fact available ⚫ coercing, intimidating, threatening, or interfering with anyone on account of his enjoyment or assistance to others in enjoying rights granted by the act © 2021 Rockwell Publishing 45 35  Property Management Instructor Materials Fair Housing Act Prohibited acts Also prohibits blockbusting and steering. Blockbusting: Trying to induce homeowners to sell or rent their properties by predicting that members of another race (or other protected class) will be moving into neighborhood, lowering property values. © 2021 Rockwell Publishing 46 Fair Housing Act Prohibited acts Steering: Channeling prospective buyers or tenants toward or away from specific neighborhoods based on their race (or religion, national origin, etc.) in order to maintain or change character of those neighborhoods. © 2021 Rockwell Publishing 47 Fair Housing Act Prohibited acts Law prohibits discriminatory behavior against protected classes throughout entire tenancy, not just leasing process. Protected class: Group of people protected by a civil rights law and who share a certain feature or characteristic, such as race or disability. © 2021 Rockwell Publishing 48 36  Chapter 14: Complying with Federal, State, and Local Laws Fair Housing Act Disability and familial status Disability: Any physical or mental impairment that substantially limits one or more major life activities. ⚫ Includes those suffering chronic alcoholism, mental illness, AIDS. ⚫ Does not extend to those who threaten health, safety of others. © 2021 Rockwell Publishing 49 Fair Housing Act Disability and familial status Residential landlord must allow disabled tenant to make reasonable modifications. ⚫ Must be necessary for tenant’s full enjoyment of premises. ⚫ Modifications are at tenant’s expense. ⚫ Landlord can require tenant to restore premises at end of tenancy. Includes reasonable exceptions to rules (even if “no pet” policy, still allow service animals). © 2021 Rockwell Publishing 50 Fair Housing Act Disability and familial status Familial status: Discrimination based on familial status refers to discrimination against a person because he has a child under 18 living with him. ⚫ Includes parents, legal guardians, pregnant women, and those in process of obtaining custody. ⚫ Act doesn’t override local laws limiting number of occupants in unit. © 2021 Rockwell Publishing 51 37  Property Management Instructor Materials Fair Housing Act Disability and familial status Illegal to have: ⚫ “adults only” complex ⚫ complex divided into “adult” and “family” areas Exemption: properties qualifying as “housing for older persons.” © 2021 Rockwell Publishing 52 Fair Housing Act Disability and familial status Housing for older persons: ⚫ developed under gov’t program to assist elderly; or ⚫ intended for and solely occupied by persons 62 yrs. or older; or ⚫ has policy of housing persons 55 yrs. or older and at least 80% of units are actually occupied by at least one person 55 or older. © 2021 Rockwell Publishing 53 Fair Housing Act HUD and enforcement Fair Housing Act enforced by HUD through Office of Fair Housing and Equal Opportunity. HUD also issues regulations to promote purpose of Fair Housing Act. ⚫ Brokers, others involved in real estate transactions must display fair housing poster at place of business. © 2021 Rockwell Publishing 54 38  Chapter 14: Complying with Federal, State, and Local Laws Fair Housing Act HUD and enforcement HUD sometimes uses testers as part of enforcement efforts. Testers: Individuals who play role of someone wanting to buy or rent housing. ⚫ Evaluate compliance with fair housing laws. © 2021 Rockwell Publishing 55 Fair Housing Act HUD and enforcement Someone who feels discriminated against can: ⚫ file complaint with HUD ⚫ file lawsuit in federal court If violation found, court may order violator to: ⚫ stop discriminatory conduct ⚫ take steps to correct violation © 2021 Rockwell Publishing 56 Fair Housing Act State and local fair housing laws Many states, counties, cities also have antidiscrimination laws. May be more strict than federal law: ⚫ fewer exemptions ⚫ protection for more classes © 2021 Rockwell Publishing 57 39  Property Management Instructor Materials Summary Fair Housing Act – Blockbusting – Steering – Protected class – Disability – Familial status – HUD – Testers © 2021 Rockwell Publishing 58 Antidiscrimination Laws Americans with Disabilities Act Americans with Disabilities Act (ADA): Federal law that requires any business or other facility open to the public to be accessible to the disabled. ⚫ Private clubs, religious organizations are exempt. © 2021 Rockwell Publishing 59 Americans with Disabilities Act Properties covered ADA prohibits discrimination on the basis of disability in any commercial facility or place of public accommodation. Public accommodations: Establishments open to the public, such as hotels, banks, property management offices. © 2021 Rockwell Publishing 60 40  Chapter 14: Complying with Federal, State, and Local Laws Americans with Disabilities Act Properties covered Commercial facility: Any private entity with facilities open to the public, as long as operation of facilities affects commerce. Includes not just offices, but also factories, warehouses, and so forth. ⚫ Commercial property managers must advise clients of ADA’s requirements and help ensure buildings comply. © 2021 Rockwell Publishing 61 Americans with Disabilities Act Requirements ADA requires all of the following, as long as they are readily achievable (can be carried out without much difficulty or expense): ⚫ modifications to policies, practices, procedures to make goods, services accessible to disabled ⚫ removal of architectural, structural, and communication barriers so goods, services accessible to disabled © 2021 Rockwell Publishing 62 Americans with Disabilities Act Requirements ADA requires (continued): ⚫ auxiliary aids and services provided so disabled not excluded or denied services ⚫ new commercial construction accessible to disabled © 2021 Rockwell Publishing 63 41  Property Management Instructor Materials Americans with Disabilities Act Enforcement Individual whose ADA rights have been violated (or who reasonably believes they will be violated) may: ⚫ sue property owner and/or manager ⚫ file complaint with U.S. Atty. General © 2021 Rockwell Publishing 64 Americans with Disabilities Act Property manager’s role If tenant runs business that qualifies as commercial facility or place of public accommodation: ⚫ both landlord and tenant are responsible for complying with ADA requirements Lease should specify whether landlord or tenant responsible for compliance within the rental unit or space. ⚫ Even if tenant responsible, manager should inspect and verify compliance. © 2021 Rockwell Publishing 65 Summary Americans with Disabilities Act – Disability – Public accommodation – Commercial facility – Readily achievable © 2021 Rockwell Publishing 66 42  Chapter 14: Complying with Federal, State, and Local Laws Federal Employment Laws Most federal employment laws apply only to firms with a minimum number of employees. States may have more stringent employment laws. ⚫ More strict law usually applies. © 2021 Rockwell Publishing 67 Federal Employment Laws Important federal employment laws include: ⚫ Fair Labor Standards Act (FLSA) ⚫ Occupational Safety and Health Act (OSHA) ⚫ Americans with Disabilities Act (ADA) ⚫ Family and Medical Leave Act (FMLA) ⚫ Title VII of Civil Rights Act of 1964 © 2021 Rockwell Publishing 68 Federal Employment Laws Fair Labor Standards Act (FLSA) FLSA sets rules for: ⚫ minimum wage ⚫ overtime ⚫ recordkeeping Applies to both private and government employers. © 2021 Rockwell Publishing 69 43  Property Management Instructor Materials Federal Employment Laws Fair Labor Standards Act (FLSA) Also sets rules for full- and part-time employees regarding: ⚫ minimum wage ⚫ overtime ⚫ recordkeeping Applies to both private and government employers. © 2021 Rockwell Publishing 70 Fair Labor Standards Act (FLSA) Basic wage requirements 2021 minimum wage $7.25 per hour. ⚫ Individual states and cities may have higher minimums. ⚫ Cannot deduct for equipment, uniforms, or even stolen funds if it would bring total wages due below $7.25 per hour. ⚫ Must pay all wages due on scheduled payday for pay period worked; partial payments not allowed. © 2021 Rockwell Publishing 71 Fair Labor Standards Act (FLSA) Overtime Overtime pay required at 1.5 times for any hours worked over 40 in one week. ⚫ Deductions for shortages, other items cannot be used to reduce amount of overtime pay due under FLSA. © 2021 Rockwell Publishing 72 44  Chapter 14: Complying with Federal, State, and Local Laws Fair Labor Standards Act (FLSA) Exempt employees FLSA excludes: ⚫ some employees from overtime provision ⚫ some employees from both minimum wage and overtime provisions Examples: ⚫ commissioned salespeople ⚫ executive and professional employees © 2021 Rockwell Publishing 73 Fair Labor Standards Act (FLSA) Recordkeeping requirements For each covered employee, employer must keep record of: ⚫ name, address, birthdate and SSN ⚫ wage and occupation ⚫ total hours worked each day/week ⚫ total regular and overtime hours ⚫ earnings deductions ⚫ total wages (regular and overtime) ⚫ date of payment and period covered © 2021 Rockwell Publishing 74 Federal Employment Laws Occupational Safety and Health Act Occupational Safety and Health Act: Federal law imposing workplace safety requirements to limit work-related injuries, illness, and death. ⚫ Enforced through Occupational Safety and Health Administration (OSHA). ⚫ Carries out research, inspection, training, education. ⚫ OSHA poster required in workplace. © 2021 Rockwell Publishing 75 45  Property Management Instructor Materials Federal Employment Laws Occupational Safety and Health Act Employers with 11 or more employees must keep records of all work-related injuries and illnesses. ⚫ Employers in low-hazard industries generally exempt from recordkeeping. ⚫ Covered businesses must report: ⚫ any work-related fatality ⚫ any illness that results in hospitalization of three or more employees © 2021 Rockwell Publishing 76 Federal Employment Laws Americans with Disabilities Act (ADA) Americans with Disabilities Act (ADA) makes it illegal to discriminate in employment against otherwise qualified individual because she has a disability. ⚫ Enforced by Equal Employment Opportunity Commission (EEOC) in conjunction with state, local agencies. © 2021 Rockwell Publishing 77 Federal Employment Laws Americans with Disabilities Act (ADA) ADA: ⚫ applies to employers with 15 or more employees ⚫ protects those who are: ⚫ currently disabled ⚫ disabled in past ⚫ not disabled, but employer believes them to be © 2021 Rockwell Publishing 78 46  Chapter 14: Complying with Federal, State, and Local Laws Federal Employment Laws Americans with Disabilities Act (ADA) Employers cannot discriminate in: ⚫ recruitment ⚫ hiring and firing ⚫ training ⚫ assigning of jobs ⚫ promotions ⚫ pay and benefits ⚫ layoffs, granting of leave ⚫ any other employment activity © 2021 Rockwell Publishing 79 Americans with Disabilities Act Reasonable accommodations Employer may have to help disabled workers by making reasonable accommodations. Accommodations: Changes to job or work environment that allow qualified applicant or employee with disability to participate in job application process, perform essential job functions, or enjoy benefits of employment equal to those without disabilities. © 2021 Rockwell Publishing 80 Americans with Disabilities Act Reasonable accommodations Examples of accommodations: ⚫ providing/modifying equipment ⚫ job restructuring ⚫ part time/modified work schedules ⚫ adjusting/modifying applications, exams, training materials, policies ⚫ providing readers or interpreters ⚫ making workplace readily accessible © 2021 Rockwell Publishing 81 47  Property Management Instructor Materials Americans with Disabilities Act Reasonable accommodations To be reasonable, changes can’t cause employer undue hardship (significant difficulty or expense). © 2021 Rockwell Publishing 82 Americans with Disabilities Act Who is covered For ADA protection, disabled individuals must be: ⚫ qualified to perform essential job functions, AND ⚫ able to perform essential job functions with reasonable accommodation. © 2021 Rockwell Publishing 83 Federal Employment Laws Family and Medical Leave Act (FMLA) Family and Medical Leave Act (FMLA): Requires employers to give unpaid time off to employees under certain circumstances. ⚫ 12 weeks unpaid, job-protected leave for family and medical reasons. © 2021 Rockwell Publishing 84 48  Chapter 14: Complying with Federal, State, and Local Laws Federal Employment Laws Family and Medical Leave Act (FMLA) FMLA applies to: ⚫ government employers ⚫ private-sector employers with at least 50 employees (for at least 20 weeks in past year) Employee covered if he worked total of 12 months, and at least 1,250 hours over previous 12 months. © 2021 Rockwell Publishing 85 Federal Employment Laws Family and Medical Leave Act (FMLA) Employee returning from FMLA leave must be restored to original or equivalent position. Employer must maintain group health coverage during leave, if provided before leave. ⚫ Employer can require employees to pay premiums while on leave. © 2021 Rockwell Publishing 86 Federal Employment Laws Title VII of Civil Rights Act of 1964 Title VII prohibits employment discrimination based on race, color, religion, sex, and national origin. © 2021 Rockwell Publishing 87 49  Property Management Instructor Materials Federal Employment Laws Title VII of Civil Rights Act of 1964 Discrimination based on sex includes: ⚫ discrimination due to pregnancy, childbirth, or related medical conditions ⚫ gender identity, sexual orientation ⚫ sexual harassment Sexual harassment can occur in variety of circumstances. ⚫ Common thread is creation of hostile work environment. © 2021 Rockwell Publishing 88 Federal Employment Laws Title VII of Civil Rights Act of 1964 Sexual harassment: ⚫ victim/harasser can be male or female ⚫ victim can be same sex as harasser ⚫ harasser can be victim’s supervisor, co- worker, tenant, or visitor ⚫ victim can be anyone affected by offensive conduct ⚫ doesn’t require firing ⚫ harasser’s conduct must be unwelcome © 2021 Rockwell Publishing 89 Summary Federal Employment Laws – Fair Labor Standards Act – Minimum wage – OSHA – Americans with Disabilities Act – Reasonable accommodation – Family and Medical Leave Act – Sexual harassment © 2021 Rockwell Publishing 90 50  Chapter 14: Complying with Federal, State, and Local Laws Land Use Laws Land use laws limit ways private property owners and tenants may use property. These laws include: ⚫ zoning ordinances ⚫ health, safety, and building codes ⚫ subdivision/condominium laws ⚫ environmental laws © 2021 Rockwell Publishing 91 Land Use Laws Zoning Local governments enact zoning ordinances in order to: ⚫ limit sprawl ⚫ control population density ⚫ provide aesthetic guidelines ⚫ help preserve open space, daylight access © 2021 Rockwell Publishing 92 Land Use Laws Zoning To help accomplish goals, areas (zones) are set aside for specific types of uses: ⚫ residential ⚫ commercial ⚫ agricultural ⚫ industrial Each basic zoning category may have subcategories (residential divided into single- family, multi-family zones). © 2021 Rockwell Publishing 93 51  Property Management Instructor Materials Land Use Laws Zoning Incompatible uses separated by buffer zones. Buffer zones: Areas (such as parks, playgrounds, open space) that separate zones of incompatible uses. Some places have overlay zoning. Overlay zoning: Zoning which permits a mixture of different zoning uses in an area. © 2021 Rockwell Publishing 94 Land Use Laws Zoning Zoning regulations may also impose rules on: ⚫ business signage and displays ⚫ number of parking spaces ⚫ handling and storing hazardous material ⚫ size, height, architectural style of buildings ⚫ use of buildings ⚫ setback and sideyard minimums © 2021 Rockwell Publishing 95 Zoning Exceptions Owner, developer, city or local government can request zoning exception or rezone. ⚫ Local zoning board hears request. ⚫ Exceptions include: ⚫ variances ⚫ nonconforming uses © 2021 Rockwell Publishing 96 52  Chapter 14: Complying with Federal, State, and Local Laws Zoning Exceptions Variance: Allows property owner to build or maintain structure or use that would otherwise be prohibited by zoning ordinance. Owner must show: ⚫ she faces undue hardship or practical difficulties created by zoning ⚫ zoning prevents reasonable use of land (not most profitable use) © 2021 Rockwell Publishing 97 Zoning Exceptions Nonconforming use: Allows old use to remain when new zoning rules applied. Nonconforming use is not perpetual; cannot be: ⚫ enlarged ⚫ resumed if shut down ⚫ rebuilt if destroyed © 2021 Rockwell Publishing 98 Land Use Laws Health, safety, and building codes Health, safety, building codes set standards for: ⚫ garbage removal ⚫ pest control ⚫ use of smoke, carbon monoxide detectors ⚫ electrical safety © 2021 Rockwell Publishing 99 53  Property Management Instructor Materials Land Use Laws Health, safety, and building codes Some states address every issue; others set minimums, let agencies work out details. ⚫ If local code conflicts with state code, stricter law applies. ⚫ Local codes can be quite comprehensive. ⚫ Example: apartment buildings must maintain temperature of at least 68 degrees 7:30 a.m. – 10:30 p.m. Owner may have to update older building. © 2021 Rockwell Publishing 100 Health, Safety, & Building Codes Building codes and construction Permit usually required by city or county before construction of new building or remodeling of old one. ⚫ Allows officials to review plans and ensure construction satisfies building codes and zoning ordinances. Certificate of occupancy: Certificate issued by local building authority after new building has been inspected and found satisfactory. © 2021 Rockwell Publishing 101 Health, Safety, & Building Codes Building codes and construction City and county inspectors periodically inspect multi-family residential and commercial properties for code violations. ⚫ Property manager responsible for ensuring building in compliance. © 2021 Rockwell Publishing 102 54  Chapter 14: Complying with Federal, State, and Local Laws Land Use Laws Common interest development laws States have laws governing creation and operation of community associations. Laws often dictate how: ⚫ records must be kept ⚫ association funds are used ⚫ assessments are imposed, collected © 2021 Rockwell Publishing 103 Land Use Laws Common interest development laws If manager responsible for collecting, handling association assessments, must also comply with state law regarding trust funds. In some states, person managing community association may need real estate license or community association manager’s license. © 2021 Rockwell Publishing 104 Land Use Laws Common interest development laws Owner of apartments who wants to convert complex to condominiums: ⚫ must comply with laws to protect renters who will be displaced ⚫ may have to give tenants advance written notice of conversion under state or local law © 2021 Rockwell Publishing 105 55  Property Management Instructor Materials Summary Land Use Laws – Zoning – Buffer zones – Overlay zoning – Variance – Nonconforming use – Building codes – Certificate of occupancy – Conversion © 2021 Rockwell Publishing 106 Environmental Laws Local, state, and federal environmental laws affect ways owners and tenants can use property. Examples: ⚫ restrictions on development ⚫ regulations on waste disposal, recycling ⚫ regulations on energy use © 2021 Rockwell Publishing 107 Environmental Laws Environmental imp