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Chap02
 

Chap02

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    Chap02 Chap02 Presentation Transcript

    • ETHICS, FAIR HOUSING & TRUST FUNDS CHAPTER 2
    • ETHICS Ethics is a should. The Law is a must. Jointly together, ethics and the law create protection for buyers, sellers and licensees.
    • DEFINITION OF ETHICS Ethics is the study of moral conduct. Ethics is a moral standard for life (living). Ethics precede the law. THE GOLDEN RULE “ Do unto others as you would have them do unto you.”
    • THE LAW The law forms the foundation for standard of care, all licensees are obligated to follow the law. Laws set minimum standards for what a society regards as acceptable behavior. Violation of the law is an illegal act for which the state has set penalties (monetary, loss or restriction of license, and/or jail).
    • FAIR HOUSING & ANTIDISCRIMINATION Fair housing legislation and practices involve almost every activity in real estate. Agents use these laws in everyday real activity and should be aware of them and their penalties.
    • FEDERAL LAWS The Thirteenth Amendment This amendment abolished slavery, but did not specifically address the right of former slaves.
    • The Civil Rights Act of 1866 This act was intended to provide equal treatment for former slaves. “… all citizens of the United States shall have the same rights in every state or territory as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold and convey real and personal property.”
    • The Fourteenth Amendment This amendment was written to support the Civil Rights Act of 1866. The Fourteenth Amendment did not limit itself to race. The Fourteenth Amendment attempted to offer a comprehensive Civil Rights protection.
    • The Civil Rights Act of 1870 After the Fourteenth Amendment some thought the Act of 1866 was no longer valid. Therefore the Civil Rights Act was passed make sure the rights of 1866 would remain valid. The new act as well as the fourteenth amendment, were ineffective in providing equal rights for approximately one hundred years.
    • Executive Order 11063 On November 21, 1962 President John F. Kennedy issued an order that prohibited discrimination in housing wherever federal funds were involved. It affected FHA, VA and government subsidized loan.
    • Civil Rights Act of 1968 This made the Executive Order 11063 law, and the following actions illegal: Discrimination Refusal to show, rent or sell through false representation Discrimination as to access to MLS
    • Discriminatory Sales or Loan Terms Steering , which is directing people of different races, religions, etc., away from or toward particular areas. Blockbusting , which is inducing panic selling by representing that prices will drop, or crime will increase because of the possible entrance of minority group members to the area.
    • Redlining , which is the refusal to loan within an area. Retaliatory acts against persons making fair–housing complaints. Discriminatory advertising, which is prohibited even when related to activities exempt from the act.
    • Civil Rights Act of 1968 It prohibited discrimination in housing based on national origin, race, religion and color. (Sexual discrimination was added in 1974). This act prohibits discrimination by brokers toward clients and customers.
    • It is Illegal to Discriminate Against Any Person Because of Race, Color, Religion, Sex, Handicap, Familial Status, or National Origin.
    • There are exceptions: Religious groups, which can discriminate in providing nonprofit housing, provided that the religion is open to all, regardless of race, sex, color, or national origin. Private clubs, which can discriminate or give preference to members when selling or leasing housing for noncommercial purposes.
    • Owners of single–family homes, who can discriminate when selling or renting without an agent, provided that they do not own more than three such homes and are not in the business of renting. Owners of one–to–four residential units who occupy a unit, who can discriminate, provided an agent is not used in renting.
    • 1988 Fair Housing Amendments Act This law extended federal protection against housing discrimination to include familial status and handicapped persons. Exception: Housing units where 80 percent of the units are occupied by at least one person aged 55 years or older are subject exemption.
    • AMEICANS WITH DISABILITIES ACT The Americans With Disabilities Act (ADA) prohibits discrimination that would deny the equal enjoyment of goods services, facilities and accommodations in any existing place of public accommodation, based on an individual’s physical or mental disabilities.
    • The act provides for civil penalties of $50,000 for the first discriminatory act and $100,000 for each subsequent violation, including compensatory damages and attorneys fees.
    • California has several fair housing laws as well as administrative regulations dealing with discrimination . CALIFORNIA FAIR HOUSING LAWS
    • UNRUH ACT The Unruh Act prohibits discrimination in all business establishments. This act to real estate brokers, sales persons and anyone who manages apartments. Noncompliance with this act includes personal damages plus $250.
    • RUMFORD FAIR HOUSING ACT The Fair Employment and Housing Act, also known as the Rumford Act, prohibits discrimination in supplying housing accommodations on the basis of sex, color race, religion, marital status, ancestry or national origin.
    • THE HOLDEN ACT The Holden Act prohibits financial institutions from engaging in discriminatory loan activities or practices.
    • COMMISSIONER’S RULES AND REGULATIONS Article 10 of the Real Estate Commissioner’s Rules and Regulations concerns the discriminatory activities of real estate licensees. It lists unacceptable discriminatory practices by licensees. Regulation 2780 indicates that discriminatory conduct by real estate licensees is a basis for disciplinary action by the Commissioner.
    • Licensees must be color-blind in their relations with owners as well as prospective buyers and tenants. Anything less is a violation of the law as well as just “bad business.”
    • SEXUAL HARASSMENT In today’s workplace, you must be cognizant of what could be regarded by others as being sexual harassment . Sexual harassment can be defined by how your actions are viewed by others, not necessarily by your intent.
    • Charges of sexual harassment could result in legal expenses and significant damage awards or settlement costs. Avoid sexually oriented jokes and anecdotes. Don’t use “cute” double-meaning terms. Never discuss your love life or that of others in the workplace.
    • Avoid patting, hugging and touching others. What you might regard as a sign of “friendship” might be regarded differently by others. While in some cultures it is acceptable to talk to others with your face just inches from the other person, many people regard this closeness as intimidating and/or sexual harassment.
    • Avoid romantic overtures or entanglements in the workplace. Asking a coworker for a date, if repeated on numerous occasions, could be regarded as harassment. If a romantic relationship gets started in the workplace, a difficult working relationship will normally be the result should it end.
    • Sexual Harassment If a buyer or seller seems to be inviting sexual advances, ignore the signals. You could be wrong, and if you are, you could find yourself facing a charge of sexual harassment.
    • Trust Funds
      • When a broker receives funds for a transaction, the broker must, within three days of receipt of the funds, do one of the following:
      • 1. Give the funds to the principle.
      • 2. Deposit the funds directly into escrow.
      • 3. Place the funds in the broker’s trust account.
      • Holding the funds without authorization would be commingling , a violation of the real estate law.
      • It is important that trust funds be handled properly. Improprieties regarding trust funds are the number one reason for disciplinary action against real estate licensees. Some general rules include the following:
      • Accounts must be balanced daily and reconciled with bank records monthly
      • Accounts must be demand deposits with the exception that accounts may be kept in an interest-bearing account with a federally-insured lender at the direction of the owner of the funds.
      • A broker may keep no more than $200 of broker funds in the trust account.
      • Earned commission must be withdrawn from the account within 30 days.
      • Columnar records must be kept with separate records for each beneficiary and transaction.
      • Records must be kept for three years.