Real Estate Law

Steering Discrimination against minority homebuyers or renters can take many forms (Turner and Mikelsons, 1992). One important form of housing market discrimination is steering, in which minority homebuyers are shown houses, but in systematically different neighborhoods than those shown to white homebuyers. Steering is hard for individual homebuyers or renters to detect, since minorities do not know about the houses they are not shown.

However, if minorities are systematically steered away from predominantly white neighborhoods, this type of discrimination places a limit on their choice of housing and neighborhood and may play a role in residential segregation. Cleveland study reported that during the early 1970's, nearly 70% of companies participated in some form of racial steering; and a study of realtors in metropolitan Detroit during the mid-1970's revealed that, compared to whites, blacks were shown homes in cheaper areas that were located closer to black population centers (Delaware County, 2000).

A similar study in Cincinnati and Memphis revealed that racial steering occurred in about 50% of the transactions sampled during the mid-1980's (Delaware County, 2000). As in the Detroit study, homes shown to blacks were in racially mixed areas and were more likely to be near neighborhoods with a high percentage of black residents. Sales agents also made positive comments about white neighborhoods to white clients but did not encourage black homebuyers to buy the same homes. These studies show that racial steering poses a major threat to the African-American community.

An Alabama real estate company that was recently sued by the Justice Department for refusing to refer African-Americans to properties in predominantly white parts of town was ordered to pay $30,000 in damages (U.S. Department of Justice, 1996). The 1996 case accused Hamilton Realty rental agents of failing to tell African-Americans about properties located in predominantly white areas of Montgomery, Alabama, while whites were told. It also charged that agents would steer African-Americans toward properties located in predominantly minority areas of Montgomery and whites toward predominantly white areas.

The case was uncovered by the Justice Department's nationwide fair housing testing program. Under the program, trained pairs of African-Americans and whites posing as prospective tenants inquire about the availability of rental units. By comparing the experiences of the testers, investigators can find out if minorities are treated less favorably than whites. The agreement, which was filed in U.S.

District Court in Montgomery, resolves Justice Department allegations that rental agents at Hamilton Realty Company based in Montgomery, steered African-Americans toward properties located in predominantly minority areas of the city and whites toward predominantly white areas. Under the agreement, Hamilton Realty had to create a $30,000 fund to compensate any identified victims of the alleged discriminatory practice. Any money not paid to identified victims was paid to the government as a civil penalty.

This lawsuit and the Consent Order entered today signal our continuing commitment to the principle that equal rights in housing for all people is a basic right of citizenship," said Redding Pitt, U.S. Attorney in Montgomery, following the decision. Similar cases of steering have occurred across the nation. In a recent case, a court held the owner of a real estate firm liable for his sales agents' discriminatory practices (Nicolai Law Group, 1998).

The agents participated in racial steering by encouraging buyers to buy homes in neighborhoods that were predominantly their own race group. The owner was found liable even though "the agents were independent contractors, he did not know what they were doing, and the company had an anti-discrimination policy." This case shows that realty owners must demonstrate greater care regarding their agents' practices. The owner was liable because the brokers were his agents, and the owner had general control of the office.

In this light, real estate owners are responsible for monitoring the activities of the agents who represent them instead of simply relying on written policies. In racial steering cases, white and black home seekers are guided to neighborhoods that differ with respect to social and economic characteristics, especially racial composition. As a result, minority groups suffer. While fair housing laws reduce some forms of.