Summary of Federal Laws
Regarding Real Estate
Transactions
Civil
Rights Act of 1866
The first
significant federal law
regarding real estate
transactions occurred on April
9, 1866 following the Civil War.
This law established the right
to own and convey property to
all U.S, citizens, stating the
following:
“All
citizens of the United States
shall have the same right, in
every state and territory, as is
enjoyed by white citizens
thereof to inherit, purchase,
lease, sell, hold, and convey
real and personal property.”
This law
prohibited discrimination based
on race. It was vague and
therefore to difficult to
enforce.
Sherman
Antitrust Act (1890)
The purpose
of the antitrust act is to
promote open market competition.
In the real estate industry,
price fixing can be an area of
concern. This law provides that
the real estate broker’s
compensation is negotiable
between the broker and the
client. A broker may establish
their fees as a percentage
amount, a flat fee, or a
combination of the two.
Civil
Rights Act of 1968, Title VIII
The second
significant federal law
regarding discrimination passed
102 years after the original.
This act expanded the 1866 law
beyond making it unlawful to
discriminate based merely on
race to include national origin,
color, religion and sex. No
longer could someone refuse to
sell, rent or negotiate to one
of these five protected classes.
Property owners could not alter
the terms of the sale or rental
agreement, advertise in a manner
to exclude the protected classes
or deny them the opportunity to
inspect the property.
Federal
Consumer Credit Protection
Act--Truth in Lending or
Regulation Z (1968)
This act
protects consumers in obtaining
loans by requiring lenders to
disclose the true cost of the
credit extended by the lender.
Lenders must disclose in writing
within 3 business days of
application the total dollar
amount of the finance charges,
the annual percentage rate
(APR), the number or payments,
the amount of the payments, the
timing of the payments and the
total payoff amount. Borrowers
hold the right of rescission for
3 business days to cancel the
loan.
Equal
Credit Opportunity Act of 1974 (ECOA)
This
federal law disrupted the
practice of lenders from
discriminating in the granting
of credit on the basis of age or
marital status. This act also
applied to property managers who
discriminated by checking the
credit of certain prospective
tenants.
The
Real Estate Settlement Procedure
Act (RESPA) (1974)
The need to
protect consumers from lenders
brought this law into existence.
It stipulates that the lender
must provide within 3-days of
the borrowers application for a
loan an informational booklet
entitled “Settlement Costs and
You” and a good faith estimate
of the settlement or closing
costs. The lender must provide
to the borrower upon request the
settlement form (HUD 1 form) no
later than one business day
prior to the date of closing.
Fair
Housing Amendments Act (1988)
This act
broadened the protected classes
of the Civil Rights Act to
include age and the handicapped.
Americans
with Disabilities Act (ADA)
(July 6, 1990)
The ADA
provides protection to those
with disabilities. The act makes
it unlawful to discriminate
against someone with
disabilities. It provides for
the full and equal enjoyment of
goods, services, facilities or
privileges of private entities
serving the public. This act
includes owners, lessors,
lessees, and operators of places
of public accommodation.
Environmental
Protection Agency
(EPA)—Lead-Based Paint
Disclosure (March 6, 1996)
This EPA
requirement provides for the
disclosure of lead-based paint
in residential dwellings built
prior to 1978. Infants are
attracted to the taste of lead
in paint. Chewing on a baseboard
or other lead-based painted item
can lead to serious health
issues for the young. The law
requires that prospective home
buyers and renters be provided a
pamphlet “Protect Your Family
From Lead in Your Home.” Buyers
get a 10-day period to conduct
an inspection at their own
expense if desired to determine
if there is lead contamination.
The law does not require any
testing, removal or abatement on
the part of the owner.
This
summary is not a replacement for
anyone needing legal counsel. We
recommend that you seek legal
counsel from a licensed
attorney.
