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Today we are going to do a full real estate exam crash course on fair housing. Fair housing and fair lending is a massive portion of the real estate exam so it's vital to understand it all before test day.
The topic of fair housing is massive as it covers a wide variety of topics. Luckily In this video we will go over every single essential you need to know. We will go over fair housing law, fair lending law, antitrust law, all of the important amendments, exemptions, protected classes, violations, and more. This is going to be your ticket to completely understanding this section of your real estate exam and crushing it on your test.
Check out our fully comprehensive real estate exam prep packages here, along with premium exams, flashcards, and more: http://bit.ly/3z0WH2o
Here are the chapters for this video, feel free to jump around accordingly:
0:00 How it Works
0:39 Fair Housing Crash Course FAQs
1:02 Fair Housing Basics
2:00 What is the Civil Rights Act of 1866?
4:38 What is the Civil Rights Act of 1964?
5:11 Civil Rights Act of 1968 + Fair Housing Act
6:05 What is the Housing and Community Development Act of 1974?
6:35 What is the Fair Housing Amendments Act 1988?
7:20 Protected Classes
8:01 Why the Fair Housing Act is Important
8:36 Fair Housing Act Coverage
9:38 FHA Violations
Show More Show Less View Video Transcript
0:00
hello everybody it's Zach here from real estate license wizard.com today we're doing a full real estate exam crash
0:05
course on Fair Housing fair housing and fair lending is a massive portion of the real estate exam so it's essential you
0:11
understand it come exam day now fair housing as a whole covers a wide variety of topics luckily in this video we're
0:17
going to go over every single essential that you need to know we will go over fair housing law fair lending law Anti-Trust law all the important
0:24
amendments exemptions protected classes violations and more this is going to be
0:29
your ticket to completely understanding the section of the real estate exam and crushing your test now a couple quick
0:34
things I want to go over before we get started one these are topics that will be featured on the national portion of the exam so yes guys this video is good
0:41
in all 50 states two all this information is located on our website realestatelicensewizard.com there if you
0:47
want to study at your own pace check out our highly rated Prep course our free practice exam all that stuff check it
0:52
out link down below and then lastly three if you're new to the Channel please consider subscribing if you really want to pass your exam this is
0:59
the number one place to do so alright without further Ado let's get started alright so let's start with the basics
1:04
fair housing is an important topic on the real estate exam real estate professionals including agents Brokers
1:10
property managers are required to adhere to fair housing laws and regulations to ensure that they do not engage in
1:17
discriminary practices in their work therefore understanding fair housing law and their application is critical for
1:23
passing the real estate exam and for practicing real estate ethically and professionally moreover fair housing
1:29
laws are an essential component of the real estate industry and real estate professionals must be knowledgeable about these laws to avoid violating them
1:36
violating fair housing laws can lead to Serious consequences including legal action losing your license and even
1:43
potentially jail time thus the real estate exam includes fair housing questions to test a candidate's
1:48
understanding of these laws and their significance in real estate practice to understand fair housing we have to
1:54
understand where it all began and that is with the Civil Rights Act of 1866 the
2:00
Civil Rights Act of 1866 declared that all persons born in the United States are created equal by the law this Civil
2:08
Rights bill protected the rights of freed slaves ensuring that they had full and equal benefits of the same laws as
2:14
white people African Americans could no longer face discrimination because of their race color or previous slavery or
2:20
involuntary servitude but to which personal freedoms did Black citizens finally gain access to well most notably
2:27
the Civil Rights Act of 1866 said that recently enslaved people had the right to do these four things one make and
2:35
enforce contracts two soon be sued three give evidence in court and then four purchase lease sell hold and convey real
2:43
and personal property now among the many benefits of this act one of the most important was that any person born in
2:50
the United States could own property regardless of their color or race this new law greatly impacted the real estate
2:57
World opening the door for conversations about Fair housing and housing discrimination in many ways the Civil
3:03
Rights Act of 1866 was revolutionary the national government finally recognized
3:08
African Americans as citizens who deserved equal rights but in terms of real estate specifically the
3:14
ramifications of this act was enormous the decision that former slaves could own property was not only a step in
3:22
Racial equality but equality for all types of minorities who fair housing laws would later protect unfortunately
3:29
the passage of this Civil Rights bill did not immediately ensure peace and equality for all sure black citizens
3:36
could finally own property in the United States but racial discrimination and segregation were still rampant it's also
3:42
worth noting the laws created in the Civil Rights Act of 1866 were not always adequately enforced so housing
3:49
discrimination was still a massive issue even when black citizens could Access housing opportunities many white
3:56
citizens were less than welcoming to their neighbors to make matters worse black citizens were also fighting voter
4:02
suppression their ability to vote for a more stringent fair housing laws was compromised as they were intimidated at
4:09
polling places and turned away considering all of this it's safe to say that African Americans received only
4:14
nominal Freedom due to the 1866 act it's also important to note that this act was
4:19
primarily focused on ending discrimination against formerly enslaved people in terms of housing there were
4:25
still other groups being discriminated against including women and minorities with different religions the Civil
4:31
Rights Act of 1866 was groundbreaking for its time but it was clear that there was still a long way to go nearly a
4:38
century after the first President Johnson signed the Civil Rights Act of 1964. like the Civil Rights Act of 1866
4:47
the bill ensured protection for people of all Races and colors but added a few other categories into the mix creating
4:54
something called a protected class the Civil Rights Act of 1964 prohibited
4:59
discrimination against the following protected classes race color national
5:04
origin religion and sex this was a good start for discrimination but some improvements were still needed the Civil
5:11
Rights Act of 1968 expanded on previous acts and notably prohibited discrimination concerning the sale
5:18
rental and financing of housing this was introduced by Title VII of the ACT also
5:24
known as The Fair Housing Act of 1968. the Fair Housing Act of 1968 protects
5:30
buyers and renters from discrimination when looking for housing when the Fair Housing Act was first enacted it
5:36
included the following protected classes race color national origin and religion
5:41
since 1968 more protected classes have been added to the list and a few have
5:46
had their definition expanded upon today there are seven protected classes which include the following race color
5:53
national origin religion sex including sexual orientation gender identity familiar status and disability now it's
6:00
essential to know when these highlighted classes were added and why sex was added
6:05
by the Housing and Community Development Act of 1974. the Housing and Community Development act amends the Fair Housing
6:12
Act by adding sex as a protected characteristic and provided funding to low-income families before 1974 housing
6:19
providers could legally discriminate against and deny housing to women since 1974 the definition of sex has expanded
6:26
to include sexual orientation and gender identity this means that same-sex couples and transgender individuals are
6:33
now protected under the Fair Housing Act but what about familiar status and disability well it took 14 years to get
6:39
those added to the list they did this by amending the Fair Housing Act creating the fair housing amendments Act of 1988.
6:46
the fair housing amendments Act of 1988 strengthened the original Fair Housing Act and extended its protection to two
6:53
additional groups thanks to this amendment the federal government had more power to enforce anti-discriminary
6:59
laws and combat discriminary housing practices this act also gave power to
7:04
more home buyers and renters than the first FHA as its safety net covered families with children and individuals
7:10
with disabilities to this day real estate professionals and landlords are required to abide by the fair housing
7:17
act or the fair housing Amendment Act of 1988 and that gave us our seven
7:22
protected classes and here's the list now it's worth mentioning states and cities have their own housing laws many
7:29
of which are not backed by the fair housing act some of these include age citizenship status lawful occupation
7:37
source of income marital status partnership status status as a veteran or military military service member
7:42
status as a domestic violence or stalking victim and more if any of these
7:48
protected classes are facing housing discrimination the federal fair housing act does not cover them but your
7:54
state-specific fair housing law May so it's essential as a real estate professional to understand your State's
8:00
Civic fair housing law so why is all of this so important well fair housing is important for several reasons first it
8:07
promotes equal opportunity and helps to eliminate discrimination in housing which is a basic human right secondly it
8:13
helps to create diverse and inclusive communities which can lead to Greater social cohesion and stronger
8:18
neighborhoods third it benefits the real estate industry by promoting professionalism and ethical behaviors
8:24
among real estate agents landlords and lenders finally fair housing laws help to ensure that people are able to access
8:31
safe and affordable housing so now that we covered the Fair Housing Act its amendments and protected classes we have
8:37
to talk about what the FHA specifically covers the Fair Housing Act protects most types for home Seekers with
8:43
protected characteristics these examples would include single family homes multi-family homes apartments condos
8:49
mobile homes and even nursing homes essentially if a property constitutes a dwelling or place of residence there's a
8:56
strong chance that interested buyers and renters are protected under the FHA so who does the FHA not protect well the
9:04
fair housing act and its amendments does cover a lot of ground but it's important to note that this act doesn't cover all
9:10
housing types so some examples not covered by the FHA would include apartment buildings with less than five
9:16
units single family homes sold without a real estate agent housing for religious
9:22
organizations hotels and motels and even private clubs now real estate professionals must understand which
9:28
behaviors violate the fair housing act and contribute to housing discrimination that's why I put up a list and you can
9:35
see it right here of an example of FHA violations so maybe refusing to show
9:41
manure 40s houses in a certain neighborhood charging renters with children additional fees refusing to
9:48
repair a tenants unit because of their sexuality suggesting that minorities live in an area with other minorities
9:54
harassing a home buyer because of their religious beliefs and more now Within These violations there's a few specific
10:01
ones that we must cover for the exam blockbusting steering and redlining
10:06
students miss these up all the time so listen up redlining is the denial of goods or services to people of a
10:12
protected class redlining in real estate commonly involves lending which is where its origin actually began during the
10:19
1920s Banks would literally draw red lines on maps defining safe and unsafe
10:24
areas to invest or Grant loans the majority of these red areas that they would not allow people to get loans in
10:31
were in minority areas now it's worth mentioning that redlining for the real estate exam will likely refer to the
10:37
Discrimination in The Lending industry by not granting loans to people of a protected class now steering is a
10:45
illegal practice of guiding or steering someone to purchase or rent a home in a specific area or community based on
10:51
their race religion gender or really any protected class so steering is a form of
10:56
redlining in that you deny a service to someone based on their race religion or protected class so that's the difference
11:02
there blockbusting is another form of discrimination but slightly different than steering and redlining blockbusting
11:08
involves convincing sellers that the socio-economic areas of an area is quote-unquote changing or maybe moving
11:15
in an unfavorable Direction therefore enticing them into selling their homes it can be as obvious as telling someone
11:21
that minorities are moving into a neighborhood and if they don't sell now the property values will decrease this
11:28
is also known as Panic selling now understanding these violations is essential also remember that these
11:35
practices were made illegal by the fair housing act so that's why there's all this relation to this
11:40
now let's cover penalties for violating the fair housing act so why should a future real estate professional such as
11:47
yourself avoid violating the FHA well according to the Department of Housing and Urban Development penalties for
11:52
violating the FHA include a sixteen thousand dollar first time violation fine a 37 500 fine if previous
12:01
violations have occurred in the last five years and then sixty five thousand dollars if two previous violations have
12:07
occurred in the last seven years in cases where home providers use force or threat Force to violate the FHA
12:13
penalties are even more serious and can include possible time in prison so who
12:19
enforces these acts and laws well the FHA is enforced by the U.S Department of
12:24
Housing and Urban Development HUD which investigates complaints of housing discrimination and takes legal action
12:31
against violators HUD also provides education Outreach programs to promote fair housing awareness and compliance
12:38
among housing providers and consumers additionally HUD funds state and local agencies enforced fair housing laws that
12:44
are substantially equivalent to the FHA now we must discuss fair housing exemptions the Fair Housing Act has
12:51
certain exemptions where housing providers can actually discriminate the three exemptions to the fair housing act
12:56
that you need to know for the real estate exam are one the Mrs Murphy exemption to the single-family home
13:02
exemption and three Affinity housing so what is the Mrs Murphy exemption well the Mrs Murphy exemption states that if
13:08
an owner-occupied dwelling has four or fewer rental units it is exempt from the fair housing act that means that if a
13:15
property owner lives in a home with three other rented rooms they can technically discriminate against certain
13:21
protected classes the Mrs Murphy exemption Works differently now than it did way back in the day for example Mrs
13:27
Murphy said the world can no longer discriminate based on race because of the Civil Rights Act however property
13:33
owners who fall under this exemption can still discriminate based on sex religion familiar status and disabilities if Mrs
13:40
Murphy prefers renting to female tenants or fellow widows to support her limited income this exemption gives her the
13:46
right to turn down other applicants if you think this exemption sounds problematic you're not alone many fair
13:52
housing groups have called for its repeal these organizations argue that Mrs Murphy exemption encourages housing
13:58
discrimination by denying equal opportunities to protect classes some states even have systems that limit or
14:03
completely override this discriminary loophole but still you need to be aware of this exemption no matter what state
14:09
you're in now what is the single family home exemption will the single-family home exemption states that any single
14:14
family dwelling sold without an agent is exempt from the FHA this means single-family homeowners can be more
14:20
discriminary when selling their homes themselves what classifies as a single family home why single family home is a
14:26
residential property not attached to any other units these homes are for only one
14:31
family to live in at a time so some examples of non-single family homes would be Apartments townhouses condos
14:38
duplexes mobile homes things like that the single family exemption does not cover multi-family homes and other
14:45
property types homeowners selling multi-family homes must follow all fair
14:50
housing laws now there are five conditions that need to be met in order to use the single family home exemption
14:57
and they are I'll put them on the screen one the homeowner is not using a licensed real estate agent or broker two
15:04
the homeowner owns fewer than three other single-family homes three the homeowner is not living on the property
15:10
during the sale four no discriminant advertising is used for the sale and then five the exemption has not been
15:15
used in the previous 24 months the sale or rental of the home must meet all of
15:20
these conditions for it to be exempt from fair housing laws so when does this
15:26
act specific typically not applied well it doesn't allow homeowners to discriminate based on race they can only
15:32
discriminate against characteristics such as sex religion or familiar status in fact there is no exemption to the
15:38
federal fair housing act that allows housing providers to discriminate racially this is all thanks to the Civil
15:44
Rights Act this act asserts that citizens must be treated equally regardless of race so hopefully you
15:50
understand that exemption it can be a little bit confusing but essentially an example of how this would work is let's
15:56
say there's a family that they're super religious and maybe they you know they feel obligated to sell their home their
16:04
family home to that same religion or some member of their like religious community you know maybe there's
16:10
multiple offers but maybe they go with the one in the religious community because they feel like they're obligated to do that but yeah that's that's kind
16:17
of how it works and essentially again you know we have to remember it it's not when a real estate agent is included it
16:25
is only only if there do doing a for sale by owner so you as an agent if you
16:30
come in and someone's like hey I only want to sell to like a b or c you you cannot do that and you you cannot
16:36
because again you're an agent you have your own code of ethics completely different the single family home exemption is only applied for for sale
16:43
by owners um yeah so just remember that next is Affinity housing Affinity housing is
16:48
another exemption to the fair housing act this type of housing allows protected classes to live in exclusive
16:54
communities the purpose of these communities is to create a safe space where tenants with shared cultures can
17:00
live together examples of affinity housing include black Affinity communities on college campuses same-sex
17:06
dormitories on college campuses senior housing communities housing for religious organizations or even private
17:13
clubs offering housing as amenities Affinity housing is not housing discrimination because it's purely
17:19
optional protected classes do not have to live in Affinity communities if they
17:24
did that would be segregation affinity communities only exist to give marginalized groups the option to live
17:30
among like-minded tenants so those are your three FHA exemptions that you need to know for the real estate exam so
17:37
hopefully now you understand those and we can move forward now there's one other fair housing law that I wanted to
17:43
cover before we move into Fair lending it's not part of the fair housing act
17:48
but it's also super important to know it's called the American with Disabilities Act of 1990. the American
17:54
Disabilities Act or Ada protects people with disabilities against discrimination in housing this federal law states that
18:02
housing providers must provide equal opportunities for persons with physical or mental impairments the American
18:07
Disabilities Act of 1990 plays a significant role in real estate under this act housing providers must make
18:14
reasonable accommodations and modifications to ensure disabled people they can live comfortably in their units
18:20
if such accommodations are not made housing providers can face severe legal repercussions now what type of property
18:27
is not covered by the Ada while the Ada doesn't cover Residential Properties religious organizations or private clubs
18:34
this means that privately owned homes churches and clubs do not have to comply with the Ada now obviously that doesn't
18:41
mean that they shouldn't comply with the Ada obviously they can but it just means
18:46
that they're not legally obligated to at this time now the Ada was expanded in 2008 and it created the Ada amendments
18:53
Act of 2008. the Ada amendments Act of 2008 empowered the Ada to protect more people with disabilities before this
19:00
amendment the Supreme Court had interpreted the definition of disability very narrowly this meant that
19:06
individuals with certain disabilities were not winning their cases against housing discrimination the Ada
19:11
amendments act expanded the definition of disability so that more people with physical or mental impairments were
19:17
protected under the law now that we've covered the specific Fair Housing Act and everything that accompanied with it
19:22
we have to talk about Fair lending which is a significant chunk of fair housing so what is Fair lending well Fair
19:28
lending covers a wide variety of things as well like all of these topics but pretty much it starts with the
19:34
individual laws that pretty much promote Fair lending and that's going to start us with the truth and lending acts the
19:39
truth and lending act protects consumers against unfair and predatory lending practices from credit companies this act
19:46
passed in 1968 requires that lenders fully explain to Consumers the terms and conditions of their loans the truth and
19:52
lending act prohibits unfair credit practices that are designed to put more money in mortgage brokers Pockets this
19:59
act protects consumers who are taking out home mortgage loans and home equity lines of credit the truth and lending
20:04
act ensures that lenders provide consumers with a closing disclosure explaining all mortgage loan details and
20:11
these are the details that must be included loan terms purchase price monthly payment amount closing costs and
20:17
other fees now there are penalties for violating the truth and lending act if a creditor violates the truth Lending Act
20:24
for any reason they maybe fined 5 thousand dollars face one year of imprisonment or both in severe cases now
20:31
there are a few amendments to the truth and lending act throughout the years that we need to know now there was a Fair Credit billing act while the truth
20:38
and Landing act played a massive role uh the Fair Credit billing act took it a step further enacted in 1974 the fcba
20:47
amends the t-i-l-a by ensuring creditors cannot negatively impact an individual's
20:53
credit before an investigation is done the Fair Credit billing act allows consumers to dispute credit billing
20:59
errors including unauthorized charges finance charges with incorrect amounts incorrect dates charges for items or
21:06
services that were not delivered and even questionable charges furthermore the fcba demands a fair and timely
21:13
resolution for credit billing disputes so that the offering lenders right their wrongs as soon as possible as long as
21:21
borrowers dispute credit billing errors within 60 days from the time they receive their bill the fcba has their
21:26
back and will protect their credit next is the Dodd-Frank truth and lending act now this is another notable act that you
21:33
need to know that amended the truth and lending act the Dodd-Frank truth and lending act enacted in 2010 requires the
21:40
following extra protections from lending companies one mortgage loan officers need a license to offer credit loans two
21:46
lenders must adjust the dollar threshold for exempt Consumer Credit annually and then three lenders must make reasonable
21:53
determinations of a consumer's ability to pay back the credit for a home the last Amendment listed is among the most
21:59
important as it means creditors cannot give out loans to borrowers who cannot repay them we know that credit checks
22:06
are now required to determine a borrower's ability to repay but this was not always the case before acts like the
22:13
Dodd-Frank truth and lending act were enacted now that we cover the truth and Landing act and its amendments we need
22:18
to talk about another essential Fair Lending Act the Equal Credit Opportunity Act the Equal Credit Opportunity Act or
22:24
the ecoa prohibits discrimination against Borrowers applying for home loans per The ecoa Lending institutions
22:30
cannot treat protected classes differently than anyone else so who are the protected classes under the ecoa
22:36
well I'm going to put them on the screen for you it's race color religion national origin sex including gender
22:41
identity and sexual orientation age receipt of income from a public assistance program and the applicants
22:47
exercise of any right under the credit consumer protection act so what is that last one what is the consumer credit
22:53
production act well this protects consumers from abusive lending practices this act encompasses the Equal Credit
23:00
Opportunity Act or title VI so what housing loans does the ECO cover well under the consumer credit protection act
23:06
the Eco covers mortgage loans Home Improvement loans and home equity loans so why is this Act important how is it
23:12
applied how was it applied and how is it applied today well we have to kind of take a step back a little bit and we
23:17
have to talk about why the Equal Credit Opportunity Act was passed in the first place so women back then were regularly
23:23
facing discrimination from mortgage lenders before the Eco way these lenders often refuse to considered a married
23:29
woman's income when giving out loans they also denied credit loans to single women more often than other applicants
23:35
the Equal Credit Opportunity Act was created to prohibit this type of discrimination based on sex and marital
23:41
status however it wasn't very long after that the Congress amended the ACT to include the other protected classes that
23:48
I talked about before now there are penalties for the ecoa and they are as follows actual damages punitive damages
23:54
of up to ten thousand dollars for individual lawsuits and then five hundred thousand dollars or one percent
23:59
of their net worth for class action lawsuits now another essential Fair Lending Act you need to understand for
24:05
the real estate exam is the real estate settlement procedures act so what is the real estate settlement procedures act
24:11
well respa or the real estate settlement procedures act requires that lenders and mortgage brokers provide home buyers
24:18
with disclosures regarding the real estate settlement process this act also known as regulation X protects home
24:25
buyers from predatory lending agreements so what do real estate settlement services do if you guys don't know
24:31
obviously you need to know to understand this well a real estate settlement service helps home buyers with the closing process after purchasing a home
24:38
these organizations generally provide title insurance or offer Escrow Services before respa there were very few laws
24:46
regulating these types of services this meant that lenders could get away with abusive behaviors including Doling out
24:52
predatory loan terms that's why respo was passed in 1974 to protect borrowers from these practices and support a fair
24:58
housing market so what does respa do to protect home buyers well it protects
25:03
home buyers from unjust practices and surprise fees and mortgage loans under respa lenders have to be upfront about
25:09
their costs of their real estate settlement Services they must disclose a good faith estimate of how much the
25:15
borrower will pay this allows consumers to make informed decisions and shop for the best deal respa also prohibits
25:21
mortgage companies from adding Kickbacks and referral fees to the cost of the real estate settlement service this
25:26
saves home buyers money by ensuring the only have to pay for the cost of the actual work being done finally respa
25:32
allows home buyers to seek help if a mortgage company over charges or takes advantage of them if a lender includes
25:38
hidden fees in a home loan home buyers are protected under federal law and will not have to pay these charges so what
25:44
specifically does respa cover well respa covers all federally related mortgage
25:49
loans for one to four Family Properties a federally related mortgage loan is a loan for a residential property insured
25:56
by the government so this would include Home Loans Home Improvement loans refinances equity lines of credit
26:01
reverse mortgages and lender approved assumptions now examples of loans that respa does not apply to would be
26:08
extensions of credit from the government loans for businesses loans for commercial purposes and even loans for
26:14
agricultural purposes now respa prohibits predatory lending tactics that Force home buyers to pay more for real
26:21
estate settlement Services examples of respite violations include offering Kickbacks and referral fees requiring
26:28
large account balances inflating costs of services bribing in exchange for
26:33
referrals and not disclosing good faith estimated settlement costs and then demanding title insurance now I want to
26:40
highlight violations on this list specifically Kickbacks and you trade it what is a kickback well kickback is when
26:47
a real estate agent receives Financial benefits or items of value for referring clients to a business or service this
26:53
practice is called a kickback because it kicks some of the profit gained from referrals back to the agent who helped
26:58
them get it Kickbacks are illegal because real estate agents are responsible for being transparent with their clients when an agent only refers
27:05
a business to home buyers because they are incentivized to it's a conflict of interest real estate agents should make
27:12
referrals based on the best options for home buyers not themselves the second one I wanted to talk about is usury
27:18
usury is the act of lending money at unreasonably High interest rates usually laws protect home buyers from taking out
27:24
home loans with exorbitant interest rates states each have their own usury laws that set a maximum interest rate
27:31
limit for lenders to follow these laws prohibit discriminary lending practices and ensure that home buyers pay interest
27:38
at a reasonable rate State usually laws vary so real estate professionals need to be familiar with their own maximum
27:43
interest rate for their estate so now who enforces Fair lending laws like the truth and lending act the ecoa
27:49
and respa well there's really three different agencies enforcing Fair lending laws and safeguarding consumers
27:55
from corrupt creditors these agents are the FTC the Federal Trade Commission the
28:01
consumer protection Financial Bureau and then the office of Comptroller of currency now that we've covered fair
28:07
housing and fair lending we need to cover Anti-Trust laws like Fair lending Anti-Trust laws Encompass fair housing
28:14
and that all starts with the Sherman Antitrust Act so the Sherman Antitrust Act is the First Federal Law prohibiting
28:20
contracts conspiracies or agreements that restrain trade antitrust laws are collection of federal and state
28:26
government laws that regulate conduct and organization of business corporations these laws typically aim to
28:32
promote Fair competition for the benefit of consumers now there are three major
28:37
antitrust laws the Sherman Antitrust Act The Clayton Act and the Federal Trade
28:42
Commission act but you might ask why are there multiple inter press slacks well don't worry I'll cover that so the
28:49
Sherman Antitrust app prohibits several behaviors that compromise a fair housing market including price fixing bid
28:56
ranking group boycotting Market allocation and tie-in Arrangements these
29:01
are all examples of Anti-Trust violations in real estate they show up on the exam all the time which is why
29:07
we're talking about them but I really want to highlight these because again a common question that is seen all the
29:12
time and you know after you guys take the test you can come back and comment on this video if you had a question like
29:17
this but essentially they'll ask you what this Anti-Trust violation is and they'll essentially explain it and then
29:24
you have to say Yep this was price fixing or Yep this was group boycotting things like that anyways let's take a
29:29
look at these so price fixing is the practice of setting the price of good or service to make a particular price a
29:35
standard any agreement even if just implied with other brokerages to set a standard commission rate violates
29:42
antitrust law one example of price fixing would be maybe two Brokers getting together and agreeing to offer
29:48
their clients the same price or commission rate this interferes with the fair market and means that clients will
29:53
have to pay higher prices next is Bid rigging bid rigging is an illegal
29:58
practice where competitors agree in advance on who will win on a bid on a property this creates higher pricing
30:04
that would normally have occurred under a free market effectively cheating consumers and paying more for example if
30:11
two competing real estate agents agree to take turns being the lowest bidder to drive up the price on a home sale that
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would be considered bid rigging next would be group boycotting group boycotting is when two or more people
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conspire against another business by no longer working or supporting it for example if two Brokers agreed never to
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conduct business with a third broker to have less competition that would be a clear violation of the Sherman Antitrust
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Act next is Market allocation Market allocation is when real estate brokers divide the market amongst themselves so
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they don't have to compete with each other this behavior is considered engaging in monopolistic practices and
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violates antitrust laws one example of Market allocation is if Brokers decide to split up their area into different
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regions designating a different real estate agent for each spot this means that within each region there is no
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competition and home buyers will end up having to pay more then there's tie-in Arrangements a Time Arrangement is when
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a seller requires the purchase of another separate product or service for the sale of the first an example of
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Italian Arrangement would be if a real estate agent agreed to sell a property but only if the buyer agrees to list the
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property with their firm so what are the penalties for violating antitrust laws well today penalties for breaking
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Anti-Trust laws include Hefty fees and even jail time but back in the day many people didn't really pursue legal action
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against offenders as the cost and time that went into a court case were not
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really deemed worth it so why wasn't it worth the trouble will the Supreme Court severely limited the power of the
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Sherman I trust act many consumers didn't feel they could win antitrust cases against big businesses new acts
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have been since created to uphold Anti-Trust legislation and ensure fair business competition this brings us to
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the new and improved version of the Sherman Antitrust Act The Clayton Act The Clayton Act Like the Sherman
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Antitrust Act was designed to break up monopolies and ensure Fair competition in the market now what does the
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antitrust law offer that the Sherman Act didn't well The Clayton Act strengthened the original Anti-Trust law explicitly
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listing business practices that would compromise a fair market no longer could businesses find loopholes around the
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Sherman Act these new antitrust laws were clear and Final in fact we still operate under these laws today and then
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of course there was the Federal Trade Commission act or the FTC and essentially that enforced The Clayton
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Act and ensured fair business practices in all markets including housing any
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real estate business must ensure they are meeting the legal standards of the FTC by not breaking antitrust laws the
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FDC act also declared that strikes boycotts and labor unions would be legal under federal anti-just laws this gave
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consumers even more power as big businesses couldn't take advantage of them without the threat of repercussions
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if a company were unethical in some way consumers could stop buying its goods and support the competition instead if a
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business wasn't treating its employees well it could organize within its labor union and go on strike essentially acts
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like The Clayton Act and the Federal Trade Commission act are the new and improved versions of the Sherman
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Antitrust Act and that's everything that you need to know for the real estate exam about fair housing we covered a lot
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hopefully it was informative to you hopefully you enjoyed hopefully maybe you had a little bit of fun that's what
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I like to hear I know this stuff can be a little bit tough to chew on for a lot of people so if you enjoyed please let
33:42
me know please leave us with a thumbs up and consider subscribing Channel and also give yourself a pat on the back
33:48
because listen I know this stuff is tough I know sometimes you don't want to be here and you're still grinding out
33:54
and I respect that I do so much I really really appreciate you spending time with me today every second that you're here I
34:01
feel blessed so thank you so much that's gonna be it so for more videos click
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here and click here again to subscribe thank you guys have a fantastic amazing day as always see you next time make
34:15
today magical bye
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