2009 Agency - Fair Housing - A Legal Update

2009 Agency/Fair Housing:
A Legal Update
c o n t i n u i n g e d u c a t i o n
2009 Agency / Fair Housing:
A Legal Update
TABLE OF CONTENTS
COURSE INTRODUCTION....................................................................................................................................1
SECTION 1: LEGISLATIVE AND COMMERCE DEPARTMENT UPDATE ................................................2
SECTION 2: UNDERSTANDING AGENCY .................................................................................................... 11
SECTION 3: THE CHALLENGES OF FAIR HOUSING ................................................................................. 24
2809.0140 NOTICE TO STUDENTS: This educational offering is recognized by the Minnesota Commissioner of
Commerce as satisfying 3.75 hours of credit toward real estate continuing education requirements.
These materials were prepared solely as educational materials for Kaplan Professional Schools classes. The
information provided should not be considered a substitute for appropriate legal advice.
www.kaplanprofessionalschools.com
©2008 DF Institute, Inc. All rights reserved. RC09AGFH.1008

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COURSE INTRODUCTION
Real estate agents continuously must deal with ever-increasing

regulations. This is your chance to get up to speed with on the changes
made by state legislative and other timely issues, such as disclosure,
agency and fair housing.
This fast-paced and informative class takes a new look at the most
common shortcoming, lack of disclosure and misrepresentation of
material facts about the property. Using case studies, you’ll examine
some of the legal implications for agents, sellers and buyers. The course
also covers relevant rulings from the Department of Commerce and
looks at ways to respond to protect yourself and your client.
Fair housing issues are an ongoing concern. The course provides agents a
new look at diversity including prohibited conduct and offers some
practical applications. Down-to-earth and loaded with examples, this
course gives you the know-how and the tools to stay in compliance.
Today’s topics include:
• Legislative update
• Disclosure update
• Agency update
• Fair housing update
y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

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SECTION 1: LEGISLATIVE AND COMMERCE DEPARTMENT UPDATE1
I. INTRODUCTION
A. The following is excerpted from the Minnesota REALTORS® 2008

Legislative Update.
The 2007-08 Legislative biennium adjourned May 19, 2008, with over 8,200 bills
introduced between the House and the Senate. The session posed additional challenges
for legislators facing a $935 million budget shortfall as a result of a slow economy.
Minnesota had declining state revenues mostly from lower corporate tax revenues. This is
reflected in low employment growth which in turn affects the housing downturn and
lower property values.
The State of Minnesota is budgeted to spend approximately $55 billion on its five million
residents in the 2008-09 biennium. Approximately 66% of the state budget is spent on
two categories: K-12 education and Health & Human Services. The remaining 34% of the
budget must cover all other expenses including items such as Transportation, Higher
Education, Environment, Public Safety, etc. The largest budgetary item is Health &
Human Services costing the state over $21billion of which 76% is spent on Medicaid. It is
projected that Medicaid spending alone will double by 2016 due to Minnesota’s aging
population. It is also projected that Minnesota will have significant loss in labor-force
population by 2015. These dynamics will create significant stress on Minnesota’s budget
leaving Legislators to face the probability of having to cut promised services or look for
creative ways to generate new revenues. As an example, this year again the Legislature
seized $850,000 from your Real Estate Research and Recovery Fund to balance the
General Fund budget deficit and proposed Mortgage Registry and Deed Tax surcharges to
be utilized for local government spending.
When the Legislature reconvenes in 2009, it is projected to have a $2 billion budget deficit
which is why MNAR maintains the position that the state should “Live within its Means.”
MNAR continues to urge the Legislature to keep the aggregate state budget within the
limits of the aggregate state revenues generated by Minnesota’s economy.
In addition to budgetary negotiations, the MN Legislature debated and passed numerous

bills regulating mortgage foreclosures, property disclosures and numerous bills of interest
to the real estate industry summarized in this 2008 Legislative Update.
Susan Dioury Christine Berger

Sr. Vice President & Chief Lobbyist V.P. Govt. Affairs & Regulatory Issues
1
Source: Minnesota Association of REALTORS®. Printed with permission.

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II. BUDGET
A. Proposals
The House proposed to seize $1.35 million from the Real Estate Research & Recovery
Fund (RRRF), to be used to help balance the state’s $935 million budget deficit. The
RRRF is generated by fees paid by licensees at license renewal. The fund is for real estate
related educational programs to benefit real estate licensees, to be used as a consumer
protection fund to pay costs and reimbursements to consumers as a recovery and to
provide information to the public on housing issues. MNAR staff urged legislators not to
support the taking of these funds and argued that the fund should only be used for
purposes that are currently authorized by MN Stat. 82.43. There was an attempt to
remove the provision in House Finance Committee, but the majority voted it down and
the provision stayed in the bill as it went to conference committee with the Senate. The
Senate version of the bill also contained a provision that MNAR actively worked to
oppose. The Senate proposed to add a statewide electronic licensing system surcharge.
The language proposed to mandate all state agencies to:
• Impose a surcharge of $10 through June 30, 2011, on each business or

commercial license.
• Impose a surcharge of $5 on each professional or occupational license, issued or
renewed by the agency.
• In the first year, the receipts would be credited to the general fund (to help
balance the state’s budget deficit). In the years following until 2011, the funds
would be deposited in the Electronic Licensing System account for the purpose of
building the licensing systems.
Real estate licensees (and insurance agents and appraisers) already agreed last year to pay
the Dept. of Commerce a $40 technology fee for the technology they had already
implemented at the Dept. of Commerce. This new fee would be In addition to the current
$40 fee. The MNAR lobbyists attempted to amend this provision to exempt real estate
licensees from paying this additional technology fee. Such an amendment would have
created a hole in their budget proposal and was not considered.
B. Final Budget Balancing Bill
Chapter 363 HF 1812 (Carlson) / SF 3813 (Cohen)
Both the House and Senate bills were considered in the Joint Budget Conference
Committee. MNAR’s continued opposition, lobbying and testimony resulted in the
Conference Committee reducing the amount taken from the Real Estate Research and
Recovery Fund to $850,000, a reduction of a half-million dollars. The additional
technology fee was NOT included in the final bill.

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III. FORECLOSURE
A. The Minnesota legislature introduced, debated and passed numerous

legislative proposals pertaining to residential home foreclosures. Following
is a summary of those bills that passed.
Chapter 341: HF 3420 (Hilstrom) /SF 3239 (Moua) includes HF 3475-Mullery/SF 2912-
Scheid
The primary foreclosure bill (SF2912) included a compilation of provisions that came
forward after many meetings in the summer of 2007 by a group of interested parties
brought together at Representative Mullery’s (DFL-Minneapolis) request. The bill
contains numerous foreclosure provisions as well as other real estate related items
summarized below.
• Before a lender is entitled to foreclose on a property consisting of one to four

family dwelling units, the lender is required to provide a notice of opportunity for
counseling to borrowers in default. The bill requires the notice include
information that 1) foreclosure prevention counseling services provided by an
authorized foreclosure prevention counseling agency are available; and 2) notice
that the lender will transmit the homeowner’s name, address and telephone
number to an approved foreclosure prevention agency.
o The lender, within one week of sending the above notice to borrower,
must send the borrower’s name, address and telephone number to the
appropriate authorized foreclosure prevention agency.
o An authorized foreclosure prevention agency that either contacts or is
contacted by a borrower and agrees to provide foreclosure prevention
services, must provide a Preforeclosure Notice (prescribed in the bill) to
the lender indicating the borrower is receiving foreclosure prevention
assistance from the agency.
o The lender is then required to return the Preforeclosure Notice to the
foreclosure prevention agency within 15 days of receipt with the name
and telephone number of the lender’s agent. The lender’s agent specified
must be authorized to 1) discuss the terms of the mortgage with the
foreclosure prevention agency and 2) negotiate any resolution to the
borrower’s default.
o Requires that lenders serve the notice of opportunity for counseling and
the foreclosure advice notice for tenants simultaneously with the notice
of foreclosure required under statute.
Effective: The majority of the provisions are effective August 1, 2008 with some variances.

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B. Regulating Borrower’s Ability to Pay
Chapter 241: HF 3829 (Lillie) / SF 3154 (Scheid)
• This bill expands the list of “reasonably reliable methods and documentation”
mortgage originators may use to determine whether a borrower has a reasonable
ability to repay the mortgage loan.
• The statute previously limited this to tax returns, payroll receipts, bank records or
other similarly reliable documents.
• The mortgage originator’s analysis of the borrower’s reasonable ability to repay

may now include consideration of the following items, if verified:
1. the borrower’s current and expected income;

2. current and expected cash flow;
3. net worth and other financial resources other than the consumer’s equity
in the dwelling that secures the loan;
4. current financial obligations;
5. property taxes and insurance;
6. assessments on the property;
7. employment status;
8. credit history;
9. debt-to-income ratio;
10. credit scores;
11. tax returns;
12. pension statements; and
13. employment payment records
• No mortgage originator shall disregard facts and circumstances that indicate that
the financial or other information submitted by the consumer is inaccurate or
incomplete.

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C. Foreclosure Data Practices Requirements and Study
Chapter 238: HF 3516 (Davnie) / SF 2914 (Rest)
• Provides that a notice of pendency, notice of sale, and the certificate of sale must
include the following information, to the best of the foreclosing party’s
knowledge:
1. The physical address of the mortgaged premises;

2. The name of the transaction agent, residential mortgage servicer, and
lender or broker
3. The tax parcel identification number of the mortgaged premises;
4. The transaction agent’s mortgage identification number, if stated on the
mortgage;
5. The name of the mortgage originator, if stated on the mortgage.
• The party foreclosing the mortgage is not liable for de minimis, good faith, or
commercially reasonable errors in information.
• The omission of all or some of the information from the notice shall not
invalidate the foreclosure.
• Requires the Secretary of State to convene a Statewide Foreclosure Data

Collection group to study the development and implementation of an electronic
system for the submission, collection, entry and management of foreclosure data.
• Requires the group report its recommendations to the state legislature by

February 15, 2009.
• MNAR staff has been invited to participate in the work group.
D. Providing Evidence to Shorten the Redemption Period for Abandoned

Properties
Chapter 178: HF 3473 (Hilstrom) / SF 2918 (Higgins)
• The bill amends current law pertaining to foreclosure of abandoned properties.
• Specifically, this legislation clarified that a borrower’s failure to appear at the

hearing after service of process is conclusive evidence of abandonment by the
defendant.
• Current law remains allowing a lender to bring a petition to the court for a
reduced redemption period of five weeks for abandoned properties.

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E. Landlord Tenant: Providing Certain Notices Relating to Foreclosure
Chapter 177: HF 3476 (Kohls) / SF 2908 (Higgins)
• Amends current law: once a landlord receives notice of a contract for deed
cancellation or mortgage foreclosure sale, the landlord may only enter into a
periodic residential lease agreement with a term of not more than two months or
the time remaining in a contract cancellation period or the borrower’s
redemption period, whichever is less.
• Requires landlord to notify the prospective tenant in writing that the landlord has
received notice of contract for deed cancellation or mortgage foreclosure before
landlord can enter into a lease and accept any rent or security deposit from a
tenant.
F. Utility Disconnections
Chapter 253: HF 3229 (Nelson) / SF 2775 (Foley)
• Requires a cooperative electric association or municipal utility to provide notice

to a city of disconnection of a customer’s gas or electric service.
• Requires utilities to provide a report including addresses of properties currently

disconnected and the date of the disconnection upon written request from a city.
• Requires utilities to provide a report of the addresses and dates of any newly
disconnected properties upon written request from a city.
IV. REAL ESTATE
A. Death Deeds
Chapter 341: HF 3420 (Hilstrom) / SF 3239 (Moua) includes HF 3134 (Thissen) / SF 2795
(Latz)
This legislation created the ability to establish a property transfer which a grantor, in an
estate plan, may execute a deed transfer that is not effective until death. The transfer
must comply with Minnesota probate law and laws pertaining to real property deeds.
• Exempts this transfer from the requirement that the deed may not be transferred
unless there is a certificate of no delinquent taxes.
• Exempts this deed transfer from imposition of the deed tax.

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B. Real Estate Recording Fees
Chapter 341: HF 3420 (Hilstrom) /SF 3239 (Moua)
County recorders and users sought clarification on the current statutory language
pertaining to fees charged for filing of units in a condominium. This new language
clarifies the following filing fees:
Minn. Stat. Chapter 515
• For any document affecting two or more units in a condominium governed by

Chapter 515 the cost is $46 for the first certificate upon which the document is
registered and for multiple certificate entries, $20 for each additional certificate
upon which the document is registered.
• An amendment to the declaration governed by Chapter 515 and a related

amendment to the condominium floor plans shall be considered a single
document and fee shall be $56 for the first certificate and $20 for each additional
certificate.
C. Limited Broker License Modification for Timeshares
Chapter 344: HF 3783 (Atkins) / SF 3467 (Scheid)
Section 54 of the Miscellaneous Commerce Provisions bill
Under current law, (Minn. Stat. §82.34, Subd. 13) a limited real estate broker’s license
authorizes the licensee to engage in transactions only as a principal. Furthermore, the
subsection in statute states that an officer of a corporation or partner of a partnership
licensed as a limited broker may act on behalf of that corporation or partnership without
being subject to the licensing requirements. This bill modified chapter 83 (subdivided
lands statute) to state that an individual acting on behalf of a limited broker licensee
issued a license under Minn. Stat. §82.34, Subd. 13, is not required to be an officer of a
corporation or a partner of a partnership if:
(1) the individual is solely engaged in the business of selling a timeshare interest as
defined under Minn. Stat. §83.20, Subd. 13;
(2) the individual is adequately supervised by the limited broker licensee; and
(3) the limited broker licensee maintains a roster of individuals selling a timeshare
interest.
Effective: May 19, 2008.

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D. Minnesota Real Property Electronic Recording Act
Chapter 238: HF 3516 (Davnie) / SF 2914 (Rest)
This new law officially allows an “electronic document” to satisfy any law requiring a
document to be an original, on paper or another tangible medium, as a condition for
recording.
• If a law requires or refers to something related to tangible media such as a book,

certificate, floor plan, etc. the requirement or reference can also be satisfied by an
electronic document.
• If a law requires a document be signed as a condition of recording, this law allows

an electronic signature to satisfy that requirement.
• If a law requires a document or signature be attested, acknowledged, verified,

witnessed or made under oath, an electronic signature of the person authorized
to perform that act along with all other required information is attached or
logically associated with the document satisfies the requirement. A stamp,
impression or seal need not accompany the signature.
Provisions above effective: July 1, 2008
V. DISCLOSURE
A. Omnibus Environment Policy Bill: Underground Storage Tanks
Chapter 357: HF 3625 (Hansen) / SF 3056 (Anderson)
There was an amendment placed on the Senate Environment Omnibus Finance bill that
would have required all tank owners (including residential property owners) to notify
residents within 1,000 feet of their property whether they have any change in use, new
findings, problems, etc. with their underground storage tank. The intent of the
amendment was to require gas stations to notify residents if they had leaks in their fuel
tanks however the amendment was drafted very broadly.
MNAR staff, with the help of Senator Tom Bakk – Cook, MN worked to amend the
adopted language exempting tanks consisting of 1,100 gallons or less.

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However, the above Committee amendments were stripped from the bill in the final
negotiations and revised language was adopted. The language that passed requires that
when a potential “receptor survey” is conducted for a petroleum tank release, the tank
owner (whether commercial or residential) must provide information to residents
contacted in the survey on
• the results of the survey,
• reports of all releases; and
• any corrective actions that are related to the petroleum tank release.
The information may be provided through personal contact, mail or e-mail. The
legislation allows the tank owner to delegate the notification responsibilities to a
consultant, contractor or to the operator of the tank.
Effective: August 1, 2008
B. State Building Code Enforcement
Chapter 322: HF 3574 (Juhnke) / SF 3291 (Bakk)
Under this bill, state building code (Code) enforcement is required of any municipality
having an ordinance adopting the Code in effect as of January 1, 2008, except
municipalities with populations under 2,500 located outside the seven-county
metropolitan area. This changes the means of determining whether a municipality must
administer and enforce the Code within its jurisdiction. Also under this bill, a
municipality not otherwise required to enforce the Code may choose to do so within its
jurisdiction by adopting the Code by ordinance. Furthermore, it states that a municipality
must not require building code provisions that are different from any provision of the
state Code. The bill also contains:
Effective date: various

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SECTION 2: UNDERSTANDING AGENCY
What do consumers want and who watches out for them?
I. REPRESENTATION HAS DIFFERENT LEVELS
A. The Debate: How Do We Represent Others—Or Do We?
1. Seller’s broker
2. Subagent
3. Buyer’s broker
4. Dual agency—broker representing both seller and buyer
5. Facilitator
6. Single representation
7. Dual agency
B. L C D O R A Defined
1. Loyalty. Is it always total?
2. Confidentiality. Does it last forever?
3. Disclosure. What don’t I disclose?
4. Obedience. Will I do everything you ask of me?
5. Reasonable care. “The neighbors said the house never had water problems!”
6. Accounting. “I will hold your check until the contingent house sells.”

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C. Who Gets What?
Listed in no particular order…
Accounting? Prompt offer presentation?
Good service? Disclosure?
Obedience? Loyalty?
Honesty? Fairness?
Confidentiality? Reasonable care and skill?
D. Which Fiduciary Responsibility is Referred to Below?
1. “I used to have that listing. I know the seller’s motivation.”
2. “My agent and I measured the lot ourselves”
3. “Don’t tell them I had a bankruptcy”
4. “I always do what my client says.”
5. “I have a goat instead of earnest money.”
6. “Money always speaks the loudest.”
E. New Rules for Disclosure
1. What are material facts?
2. What kind of property?
Single-family residences including common interest communities
3. Sellers must disclose all material facts pertaining to adverse physical condition of
the home to the buyer they normally would be aware of
a. What about “as is?”
b. Exceptions: buyer and seller could agree to waive the requirement

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4. What if the seller or agent learns of additional adverse conditions after the
purchase agreement is signed but before the closing?
5. Seller and agent are not required to disclose:
a. Home was occupied by a person with human immunodeficiency virus or

syndrome
b. Site of suicide, accidental death, natural death, perceived paranormal

activity
c. Located in a neighborhood containing an adult family home,

community-based facility, or nursing home
d. No need to disclose information regarding an offender if the buyer is

provided information regarding the predatory offender registry
e. A seller and agent must disclose to the buyer material facts that
contradict information by a third party. The agent must review the
report.
f. Rules for accounting relating to the listing agreement
Code of Ethics: Standard of Practice 1-12 was modified and now requires
each individual real estate company, at the time of entering into a listing
contract with a seller, to not only disclose the company’s policy regarding
cooperation, but also mandates that the amount(s) of any compensation
offered to cooperating companies also be disclosed
g. Rules regarding obedience and multiple offers
Code of Ethics: Standard of Practice 1-15 required that the listing

company have the seller’s consent before multiple offers can be divulged
to cooperating brokers or buyers
h. Penalties for breach of fiduciary duties
i. Rescission of the contract
ii. Forfeiture of all commissions
iii. May be required to compensate the principal for damages
iv. Possible suspension or revocation of license
It’s not what you sign, but what you say

and how you act that makes the difference.

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II. DEPARTMENT OF COMMERCE REAL ESTATE ENFORCEMENT ACTIONS
(NAME), (Lic. ###) (NAME), (Lic. ###)

Against: Real Estate Agent Against: Real Estate Agent
Action: Suspension/Consent Action: Censure/Consent, $1000 Fine
Allegation: Resp accepted a commission Allegation: Resp failed to disclose a material
without an effective listing agreement, failed to fact to a purchaser, failed to properly supervise
respond to a department request for
a salesperson, and engaged in fraudulent,
information, and failed to return another's
deceptive and dishonest practices.
money.
(NAME), (Lic. ###) (NAME), (Lic. ###)

Against: Real Estate Agent Against: Real Estate Agent
Action: Censure/Consent, $2000 Fine Action: Censure/Consent, $1500 Fine
Allegation: Allege Resp advertised properties Allegation: Resp, during the process of the
without obtaining a signed listing agreement, offer/sale of a property, made a material
advertised properties listed with another omission regarding building code violations of
company and advertised properties for sale which he was aware
that were already sold.
(NAME), (Lic. ###)
(NAME), (Lic. ###)
Against: Real Estate Agent Against: Real Estate Company
Action: Order for Hrg/Statement of Charges Action: Censure/Consent, $2000 Fine
Allegation: Applicant for a real estate Allegation: Resp failed to adequately supervise
salespersons license has demonstrated that he the activity of its salesperson.
is untrustworthy, financially irresponsible, or
otherwise incompetent due to the seriousness (NAME), (Lic. ###)
of numerous criminal convictions. Against: Real Estate Company
Action: Censure/Consent, $15000 Fine
(NAME), (Lic. ###)
Allegation: Resp failed to properly supervise
Against: Real Estate Agent
its salespersons.
Action: Revocation/Consent
Allegation: Resp was convicted of a felony and
thus was subject to Dept review of his license (NAME), (Lic. ###)
status. Against: Real Estate Agent
Action: Revocation/Consent
(NAME), (Lic. ###) Allegation: Resp forged the signature of his
Against: Real Estate Agent client on a form related to the transfer of real
Action: Censure/Consent, $2000 Fine estate.
Allegation: Resp failed to disclose all material
facts pertaining to a property. (NAME), (Lic. ###)
Against: Real Estate Agent
(NAME), (Lic. ###) Action: Censure/Consent, $2000 Fine
Against: Real Estate Agent Allegation: Resp engaged in a fraudulent,
Action: Censure/Consent, $5000 Fine deceptive or dishonest practice by instructing
Allegation: Resp made a material and/or allowing a party to a real estate
misrepresentation in the advertisement of the transaction to sign someone else's name to a
sale of real property. document.

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III. REVIEW QUESTIONS
1. Under what circumstance is a listing broker 7. Is it acceptable to tell a prospective buyer at

allowed to pay a fee to a buyer broker? an open house or on an ad call that a certain
income is required to purchase the property?
2. Is every buyer required to sign a Buyer

Representation Agreement? 8. Are there limits as to what you can disclose to
your associates regarding a seller or buyer
you are representing?
3. What is the latest point at which the buyer

must sign either a Disclosure to Customer or
a Buyer Representation Agreement? 9. As a buyer representative is it acceptable to
write a back-up offer but present only the one
that is most favorable to your buyer?
4. Is a broker required to disclose that (s)he is

receiving compensation from both the buyer
and the seller? 10. When your front desk sets up a showing
appointment, is it necessary to know whom
the agent represents?
5. As a buyer representative, is it safe to assume

that MLS or the listing broker’s information
sheet is accurate? 11. Is there a difference between a “one-time
showing” versus a “one-time listing”?
6. How do you deal with a buyer when your

brokerage only represents sellers? / Are there 12. Do you need the seller to sign an Agency
potential problems? Addendum prior to performing a market
analysis?

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13. Under what circumstances are you required 20. One franchisee sells the listing of a similar
to have an Agency Addendum when listing franchisee. Does this constitute a dual
vacant land? agency?
14. If you are representing a buyer who shows an 21. What shortcoming might a buyer or seller
interest in a For Sale By Owner, how do you experience in a dual agency versus sole
treat the FSBO? representation?
15. Is there some potential liability for a seller 22. You are a broker who has listed a property.
who authorizes the listing broker to offer You wish to show the property to your
subagency to other brokers? brother. Whom do you represent?
16. Does an Agency Addendum to Listing 23. How does the lack of dual agency affect in-
Agreement have to be signed even though house sales of listed property?
your brokerage exclusively represents sellers?
24. Must you disclose known defects about a

17. In what circumstance is dual agency illegal? home to a buyer even though you represent
the seller?
18. Does a dual agency exist in every in-house

transaction? 25. How can you be assured of receiving a
commission?
19. What information must you disclose to

parties regardless of whom you represent? 26. What can you do on behalf of a customer?

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27. What happens if a customer, having signed a

Disclosure to Customer, shares confidential
information with you and you are a seller’s
representative?
28. A customer wants to make an offer on your

listing, and would also like you to do a
market analysis on his home. Should you do
so?

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IV. CURRENT STATUTORY REQUIREMENTS
Subd. 8. Material facts. (a) Licensees shall disclose to any prospective purchaser all material
facts of which the licensees are aware, which could adversely and significantly affect an ordinary
purchaser's use or enjoyment of the property, or any intended use of the property of which the
licensees are aware.
(b) It is not a material fact relating to real property offered for sale the fact or suspicion that the
property:
(1) is or was occupied by an owner or occupant who is or was suspected to be infected with
human immunodeficiency virus or diagnosed with acquired immunodeficiency syndrome;
(2) was the site of a suicide, accidental death, natural death, or perceived paranormal activity; or
(3) is located in a neighborhood containing any adult family home, community-based residential
facility, or nursing home.
(c) A licensee or employee of the licensee has no duty to disclose information regarding an
offender who is required to register under section 243.166, or about whom notification is made
under that section, if the broker or salesperson, in a timely manner, provides a written notice that
information about the predatory offender registry and persons registered with the registry may be
obtained by contacting local law enforcement where the property is located or the Department of
Corrections.
(d) A licensee is not required to disclose, except as otherwise provided in paragraph (e),
information relating to the physical condition of the property or any other information relating to
the real estate transaction, if a written report that discloses the information has been prepared by a
qualified third party and provided to the person. For the purposes of this paragraph, "qualified
third party" means a federal, state, or local governmental agency, or any person whom the broker,
salesperson, or a party to the real estate transaction reasonably believes has the expertise necessary
to meet the industry standards of practice for the type of inspection or investigation that has been
conducted by the third party in order to prepare the written report and who is acceptable to the
person to whom the disclosure is being made.
(e) A licensee shall disclose to the parties to a real estate transaction any facts known by the broker
or salesperson that contradict any information included in a written report, if a copy of the report
is provided to the licensee, described in paragraph (d).
(f) The limitation on disclosures set forth in paragraphs (b) and (c) shall modify any common law
duties with respect to disclosure of material facts.
HIST: 1986 c 444; 1993 c 309 s 9; 1994 c 461 s 1; 1996 c 439 art 3 s 5-8; 2001 c 208 s 11-13; 2002 c 286 s 2-4; 2004 c 203
art 2 s 22,61
Copyright 2004 by the Office of Revisor of Statutes, State of Minnesota.

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V. STATUTORY REQUIREMENTS FOR SELLER
A. 513.52 Definitions.
Subdivision 1. Scope. For purposes of sections 513.52 to 513.60, the terms defined in
this section have the meanings given them.
Subd. 2. Prospective buyer. "Prospective buyer" means a person negotiating or offering

to acquire for value legal or equitable title, or the right to acquire legal or equitable title, to
residential real property.
Subd. 3. Real estate licensee. "Real estate licensee" means a person licensed under
chapter 82.
Subd. 4. Residential real property or residential real estate. "Residential real property"
or "residential real estate" means property occupied as, or intended to be occupied as, a
single-family residence, including a unit in a common interest community as defined in
section 515B.1-103, clause (10), regardless of whether the unit is in a common interest
community not subject to chapter 515B.
Subd. 5. Seller. "Seller" means a person who owns legal or equitable title to residential
real property.
B. 513.53 Applicability.
The seller disclosure requirements in sections 513.52 to 513.60 apply to the transfer of any
interest in residential real estate, whether by sale, exchange, deed, contract for deed, lease
with an option to purchase, or any other option.
C. 513.54 Exceptions.
The seller disclosure requirements in sections 513.52 to 513.60 do not apply to any of the
following:
(1) real property that is not residential real property;
(2) a gratuitous transfer;
(3) a transfer pursuant to a court order;
(4) a transfer to a government or governmental agency;
(5) a transfer by foreclosure or deed in lieu of foreclosure;

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(6) a transfer to heirs or devisees of a decedent;
(7) a transfer from a cotenant to one or more other cotenants;
(8) a transfer made to a spouse, parent, grandparent, child, or grandchild of the seller;
(9) a transfer between spouses resulting from a decree of marriage dissolution or from a
property settlement agreement incidental to that decree;
(10) a transfer of newly constructed residential property that has not been inhabited;
(11) an option to purchase a unit in a common interest community, until exercised;
(12) a transfer to a person who controls or is controlled by the grantor as those terms are
defined with respect to a declarant under section 515B.1-103, clause (2);
(13) a transfer to a tenant who is in possession of the residential real property; or
(14) a transfer of special declarant rights under section 515B.3-104.
D. 513.55 General Disclosure Requirements.
Subdivision 1. Contents. (a) Before signing an agreement to sell or transfer residential

real property, the seller shall make a written disclosure to the prospective buyer. The
disclosure must include all material facts of which the seller is aware that could adversely
and significantly affect:
(1) an ordinary buyer's use and enjoyment of the property; or
(2) any intended use of the property of which the seller is aware.
(b) The disclosure must be made in good faith and based upon the best of the seller's
knowledge at the time of the disclosure.
Subd. 2. Disclosure to licensee. A seller may provide the written disclosure required
under sections 513.52 to 513.60 to a real estate licensee representing or assisting the
prospective buyer. The written disclosure provided to the real estate licensee representing
or assisting the prospective buyer is considered to have been provided to the prospective
buyer. If the written disclosure is provided to the real estate licensee representing or
assisting the prospective buyer, the real estate licensee shall provide a copy to the
prospective buyer.

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E. 513.56 Disclosure Not Required.
Subdivision 1. General. Section 513.55 does not create a duty to disclose the fact that
residential property:
(1) is or was occupied by an owner or occupant who is or was suspected to be infected

with human immunodeficiency virus or diagnosed with acquired immunodeficiency
syndrome;
(2) was the site of a suicide, accidental death, natural death, or perceived paranormal
activity; or
(3) is located in a neighborhood containing any adult family home, community-based

residential facility, or nursing home.
Subd. 2. Offenders. Section 513.55 does not create a duty to disclose information
regarding an offender who is required to register under section 243.166, or about whom
notification is made under that section, if the seller, in a timely manner, provides a
written notice that information about the predatory offender registry and persons
registered with the registry may be obtained by contacting the local law enforcement
agency where the property is located or the department of corrections.
This section does not create a duty to disclose any facts described in subdivision 1 and
this subdivision for property that is not residential real property.
Subd. 3. Inspections. (a) Except as provided in paragraph (b), a seller is not required to
disclose information relating to the physical condition of the real property if a written
report that discloses the information has been prepared by a qualified third party and
provided to the prospective buyer. For purposes of this paragraph, "qualified third party"
means a federal, state, or local governmental agency, or any person whom the seller, or
prospective buyer, reasonably believes has the expertise necessary to meet the industry
standards of practice for the type of inspection or investigation that has been conducted
by the third party in order to prepare the written report.
(b) A seller shall disclose to the prospective buyer material facts known by the seller that
contradict any information included in a written report under paragraph (a) if a copy of
the report is provided to the seller.
Subd. 4. Effect on common law. The limitation on disclosure in subdivisions 1 and 2

modifies any common law duties with respect to disclosure of material facts.

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F. 513.57 Liability for Error, Inaccuracy, or Omission.
Subdivision 1. No liability. Unless the prospective buyer and seller agree to the
contrary in writing, a seller is not liable for any error, inaccuracy, or omission of any
information delivered under sections 513.52 to 513.60 if the error, inaccuracy, or
omission was not within the personal knowledge of the seller, or was based entirely on
information provided by other persons as specified in section 513.56, subdivision 3, and
ordinary care was exercised in transmitting the information. It is not a violation of
sections 513.52 to 513.60 if the seller fails to disclose information that could be obtained
only through inspection or observation of inaccessible portions of the real estate or could
be discovered only by a person with expertise in a science or trade beyond the knowledge
of the seller.
Subd. 2. Liability. A seller who fails to make a disclosure as required by sections 513.52
to 513.60 and was aware of the condition of the real property is liable to the prospective
buyer. A person injured by a violation of this section may bring a civil action and recover
damages and receive other equitable relief as determined by the court. An action under
this subdivision must be commenced within two years after the date on which the
prospective buyer closed the purchase or transfer of the real property.
Subd. 3. Other actions. Nothing in sections 513.52 to 513.60 precludes liability for an
action based on fraud, negligent misrepresentation, or other actions allowed by law.
G. 513.58 Amendment to Disclosure.
Subdivision 1. Notice. A seller must notify the prospective buyer in writing as soon as
reasonably possible, but in any event before closing, if the seller learns that the seller's
disclosure required by section 513.55 was inaccurate.
Subd. 2. Failure to notify; liability. A seller who fails to notify the prospective buyer of
any amendments to the initial disclosure required under subdivision 1 is liable to the
prospective buyer as provided in section 513.57.
H. 513.59 Transfer Not Invalidated.
A transfer subject to sections 513.52 to 513.60 is not invalidated solely because of the
failure of any person to comply with a provision of those sections. This section does not
prevent a court from ordering a rescission of the transfer.

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I. 513.60 Waiver.
The written disclosure required under sections 513.52 to 513.60 may be waived if the
seller and the prospective buyer agree in writing. Waiver of the disclosure required under
sections 513.52 to 513.60 does not waive, limit, or abridge any obligation for seller
disclosure created by any other law.
Copyright 2004 by the Office of Revisor of Statutes, State of Minnesota.
J. Inaccurate or Incomplete Disclosure
A partial or incomplete disclosure of a material fact is a misrepresentation
K. Innocent Misrepresentation
A person who makes a statement of fact, without knowing whether it is true or false, has
made a misrepresentation if the representation is false
L. Broker Liable for Seller’s Misconduct
Does the broker or salesperson have a duty to correct information if the seller’s disclosure
is partial or misleading?

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SECTION 3: THE CHALLENGES OF FAIR HOUSING
I. OVERVIEW
A. Cultural Diversity
B. Aging Population
C. Land and Construction Costs
D. Americans with Disabilities
E. Housing Preferences
F. Financing and Mortgage Regulation
G. Occupancy Regulations
H. Political Challenges
I. Age-Restricted Communities
J. Multigenerational Families
K. Homeless People
L. Generational Differences

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II. FAIR HOUSING AND THE REAL WORLD OF RESPONSIBILITY AND OPPORTUNITY
A. Opening Your Eyes to “One America”
1. Hmong story
8% on welfare – down from 36% in 1990; gains made in education; jobs and
income levels-high school age kids staying in school at a higher rate than other
minorities – overcoming the past
Star Tribune
2. GLBT market
a. $500 billion in buying power
b. Market segment contains 15 million affluent buyers

Ssaurage@saurageResearch.com
3. Affordable housing bulldozed in Maplewood
a. Wanted 100 units “workforce housing” – denied – Council said

environmental concerns drove the negative vote.
b. “Everyone wants affordable housing – somewhere else”

Star Tribune
4. Some pay more for closing costs
a. Fees are $500 higher for African Americans and $275 higher for
Hispanics
b. High school versus college results in $1,500 extra costs

www.sandhillecon.com/mortgage
5. House buyers sue because homicide was not disclosed
Minneapolis house was sold four months after killing – buyer believed in
religious customs concerning the place of violent deaths – buyer had a ritual
cleansing of the home – TV reporter informed the buyers.
Star Tribune
6. Fair housing deal struck with developer
Developer pays $250,000 and proceeds to build an accessible home for family
with a disabled son and three others with disabilities. Developer charged with
rewriting the covenants to prohibit group homes. Family, agent and builder were
compensated.
Star Tribune

Page 26
B. Responsibility
Freedom of housing choice means that prospective home seekers, regardless of race,
religion, color, sex, handicap, familial status, national origin, marital status, sexual
orientation, or public assistance, have the right to make an informed choice.
C. Definition of Diversity
Definition of diversity: the state of being or fact of being diverse, different, unlikeness,
variety, a point of difference

Page 27
III. WHAT HAVE WE DONE TO ACCOMMODATE DIVERSITY?
A. The Laws Evolve:
1866 Recognized the rights and needs of those removed from the
bonds of slavery by prohibiting both public and private
Civil Rights Act of 1866 racial discrimination in the sale or rental of property.
(race only) Upheld in l968 Jones v. Mayer (392 U.S. 409)
1868
Adopted in 1868 this amendment extended the rights of
equal protection and due process to include laws imposed
14th Amendment to
by each state.
the Constitution
1964
Prohibited discrimination in employment based on race,
color, religion, sex, or national origin.
Title VII of Civil Rights Act of 1964
1968
Prohibited discrimination in housing based on race, color,
Title VIII of Civil Rights Act of 1968 religion or national origin.
(Federal Housing Laws)
1973
Provided the first step toward full recognition of the rights
of the disabled.
Rehabilitation Act of 1973
1974
Added sex as another basis on which discrimination is
Housing and Community Development prohibited.
Act of 1974
1988
Added persons with handicaps and families with children
as another basis on which discrimination is prohibited.
Fair Housing Amendment Act of 1988
A disabled individual is defined as (1) anyone with a
physical or mental impairment that substantially limits a
major life activity, (2) anyone who has had such an
impairment, or (3) anyone perceived as having such an
impairment. Major life activities include caring for one’s
self, performing manual tasks, walking, seeing, hearing,
1990 speaking, breathing, learning, working.
Americans with Disabilities Act ADA covers all impairments including vision, hearing,
(ADA) of 1990 learning, speech, neuromuscular, emotional, mental
retardation, drug and alcohol and mobility, as well as such
chronic conditions as AIDS, HIV infection, cancers, heart
disease, diabetes and mental illness. ADA does not cover
homosexuality or bisexuality; transvestitism,
transsexualism, pedophilia, exhibitionism, voyeurism,
gender identity disorders not resulting from physical

Page 28
impairments, or other sexual behavior disorders;

compulsive gambling, kleptomania, or pyromania; or
psychoactive substance use disorders resulting from current
illegal use of drugs (controlled substances as defined in the
Controlled Substances Act, 21 U.S.C. 812).
A physical or mental impairment is:
any physiological disorder or condition, cosmetic

disfigurement or anatomical loss affecting one or more of
the following body systems—neurological, musculoskeletal,
special sense organs, respiratory (including speech organs),
cardiovascular, reproductive, digestive, genito-urinal, hemic
and lymphatic, skin and endocrine; or
any mental or psychological disorder, such as mental

retardation, organic brain syndrome, emotional or mental
illness and specific learning disabilities.

Page 29
IV. A LOOK AT IMMIGRATION IN THE PAST
If you had immigrated to the United Stated in the 1800s, you would not have needed any
documentation. The ship captain kept a list of passengers.
Until 1965 there was no limit on immigrants from all of North and South America.
The National Origins Act of 1924 imposed limits of immigrants from certain countries.
At the beginning of the 1900s, one in three patients on government healthcare was an
immigrant.
A century ago, there were 10,000 foreign language newspapers in the U.S. Minnesota had
over 100.
The 1900s immigrants were mostly farmers. Today one-third are professionals.
Benjamin Franklin write in 1751: “Why should Pennsylvania, founded by the English,
become a colony of aliens that will shortly Germanize us? They will never learn our
language and customs.”
After 1917 an immigrant age sixteen or older only had to show that he/she could read
their native language.
The Chinese Exclusion Act passed in 1882, banning immigration of Chinese laborers and
denying citizenship to those already in the U.S. This was a result of an outcry from U.S.
citizens saying, “They are stealing our jobs, depressing our wages and sending our gold to
China.” This act was not repealed until 1940.

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U.S. POPClock Projection
According to the U.S. Bureau of the Census, the resident population of the United States, projected to
(today’s date) ____________________ is:
________________________________________
Component settings as of Fall 2008:
One birth every .................................................................... 7 seconds

One death every ................................................................. 13 seconds
One international migrant (net) every............................ 30 seconds
Net gain of one person every............................................ 11 seconds
Visit www.factfinder.census.gov

Page 31
V. HISTORY OF FEDERAL LAWS
A. Civil Rights Act of 1866
The efforts of the federal government to guarantee equal housing opportunities to all U.S.
citizens began 126 years ago with the passage of the Civil Rights Act of 1866. This law, an
outgrowth of the Fourteenth Amendment, prohibits any type of discrimination based on
RACE.
"All citizens of the United States shall have the same right in every State and Territory, as
is enjoyed by the white citizens thereof to inherit, purchase, lease, sell, hold, and convey
real and personal property."
B. Federal Fair Housing Act of 1968
The scope of the federal government's fair housing regulation was expanded by two major
events which occurred in 1968. The first of these was the passage of the FEDERAL FAIR
HOUSING ACT which is contained in Title VIII of the Civil Rights Act of 1968. This law
makes it illegal to discriminate based upon race, creed, color, sex, or national origin in
connection with the sale or rental of housing.
The following acts are prohibited (based upon race, creed, color, sex, or national origin):
1. Refusal to rent to, negotiate, or deal with any competent person.
2. Offering different terms or conditions for buying or renting.
3. Advertising housing as available only to persons of a certain race, creed, color, sex
or national origin.
4. Making false statements regarding the availability of housing; i.e., steering.
5. Inducing panic selling in a neighborhood; i.e., blockbusting.
6. Denying credit or setting different loan terms or conditions.
A real estate licensee provides less than favorable treatment under the Federal Fair
Housing Act in the following ways:
1. Ignoring the customer
2. Failing to use best efforts
3. Failing to submit an offer

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4. Delaying submission of an offer
5. Inducing a seller to reject an offer
6. Excluding protected people from certain neighborhoods or directing them to

minority or racially changing neighborhoods (steering).
7. Inducing owners to sell by stating that an impending change in neighborhood

composition will cause values to fall, school quality to decline, crime to increase,
etc. (blockbusting).
8. Refusing to make loans or issue insurance policies in specific areas without regard
to the financial qualifications of the applicant (redlining).
NOTE: There are many exceptions to the Federal Fair Housing Act. Rather than cite the
exceptions, we will focus on the more stringent Minnesota Human Rights Act which
mandates equal housing opportunities in Minnesota.
C. Jones v. Mayer
The second significant fair housing development of 1968 was the Supreme Court decision
in the case of "Jones v. Alfred H. Mayer Company, 392, U.S. 409 (1968)". In its ruling, the
Court upheld the Civil Rights Act of 1866, which "prohibits all racial discrimination,
private or public, in the sale and rental of property."
The importance of this decision rests in the fact that while the Federal Fair Housing Act
exempted individual homeowners and certain groups, the 1866 law "prohibits all racial
discrimination without exception." So despite any exemptions in the 1968 law, an
aggrieved person may seek a remedy for racial discrimination against any homeowner.
D. Amendments To Federal Fair Housing Act
Subsequent amendments to the Federal Fair Housing Act have extended the prohibitions
to discrimination to include familial status and disability status. In addition, the use of a
HUD Equal Housing Opportunity poster is required. When HUD investigates a broker
for discriminatory practices, it may consider failure to display the poster prima facie
evidence of discrimination.

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E. Minnesota Human Rights Act
Minnesota's Human Rights Act (MSA 363) is broader and more restrictive than the
Federal Fair Housing Act. Individual property owners, as well as real estate licensees and
financial institutions, are specifically prohibited from discriminating against those within
a protected classification.
It should be noted that certain Minnesota Municipalities have local ordinances

prohibiting discrimination on grounds in addition to the ten classifications listed below.
It is important to be aware of all local human rights laws in your area.
F. Ten Protected Classifications
1. Race
2. Creed or Religion
3. Color
4. Sex. This includes pregnancy, childbirth and disabilities related to pregnancy or

childbirth.
5. National origin. This means the place of birth of the individual or their families.
6. Marital status. This means whether a person is single, married, remarried,

divorced, separated, or a surviving spouse.
7. Status with regard to disability. A disabled person has (or has a record of) a
physical, sensory, or mental impairment which materially limits one or more
major life activities.
8. Status with regard to public assistance. This means the condition of receiving
federal, state or local assistance (including medical assistance), or rental
assistance or rent supplements.
9. Familial status. This is the condition of one or more minors living with a parent
or legal guardian or their designee. Protections apply to pregnant women and
those persons in the process of securing legal custody.
10. Sexual orientation. Gays, lesbians, trans-gender, and heterosexuals are protected.
EXCEPTION: Owner occupied residences of two units or less.

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G. Broad Prohibited Actions
The following actions are considered unfair discriminatory practices when performed by
an owner, lessee, sublessee, assignee, managing agent, real estate broker, real estate
salesperson or employee:
1. Refusal to
a. sell, rent, or lease; or

b. offer for sale, rental, or lease; or
c. negotiate for the sale, rental or lease of any real property to any person or
group of persons in a protected classification.
2. Steering. Represent that real property is not available for inspection, sale, rental
or lease when in fact it is available; or deny or withhold any real property or
facilities from any person or group of persons in a protected classification
(steering).
3. Discriminate against any person in a protected classification in:
a. the terms, conditions or privileges of the sale, rental, or lease; or

b. the furnishing of facilities or services.
Property owners and managing agents, however, may adopt reasonable rules to
protect the safety of minors in their use of the property, facilities, or services.
4. Express directly or indirectly any limitation, specification, or discrimination

regarding any protected classification in the following ways:
a. printing, circulating or posting any advertisement or sign; or

b. using any form of application for the purchase, rental or lease of real
property; or
c. making any record or inquiry in connection with the prospective
purchase, rental, or lease of real property. "Adults-only" advertising is
allowed if the property qualifies for an exemption from the familial status
provisions listed later.
5. Blockbusting. Represent, for the purpose of inducing a sale from which a licensee
will benefit financially, that a change has occurred or will occur in the
composition of the block, neighborhood, or area in which the property is located
which has or will result in undesirable consequences. Examples of undesirable
consequences include (but are not limited to):
a. lowering of property values

b. increase in criminal or antisocial behavior
c. decline in the quality of schools or other public facilities

Page 35
6. Coerce, intimidate, threaten, or interfere with any person who:
a. exercises their own rights under the law; or

b. aids or encourages another to exercise their rights under the law
H. Questions and Answers
1. Seller questions
a. “Which buyer is this contract from?”
The agent has shown this house five times, once to a single mother, once
to two black males, once to a Hispanic family with eight children, once to
an elderly couple and once to a white family of four. It is the Hispanic
family that has made the offer.
Suggested answer:
“This offer is from Ms. Juanita Rodriguez; you may remember, the
computer salesperson from Akron.” (NEVER: “The offer is from Ms.
Juanita Rodriguez; remember, the Latino woman.”)
b. “What color are they?”
A black couple – one a computer programmer, the other a commodities

trader – have made an offer on the house.
Suggested answers:
i. “Before I try to answer your question, I need to know why you

are asking it. As you know, our listing agreement provides that
this property is offered without regard to color. If you intend to
violate that agreement, I need to know ‘up front’ so that we can
save ourselves and each other a great deal of litigation and
liability. I must protect myself and my company, and it is to be
hoped, protect you.”
ii. “Under the terms of our listing agreement and under the law, I
am really reluctant to have you ask that question or to try to
answer it. The color of the prospective buyer is really irrelevant,
isn’t it, to your desire to sell your property at the price and on the
terms you consider fair? If you want one of those terms to be a
buyer of a certain race, then frankly, we can’t represent you and
no other real estate broker in town can legally do so and keep her
license.”

Page 36
iii. “Ms. Seller, I don’t want to answer that question because

whatever answer I give you will make the marketing of your
property a great deal more complicated and costly for both of us.
You and I are both obligated by law to offer your property
without regard to color. If I answer your question, how are we
ever going to be able to prove that we have fulfilled our legal
obligation? No matter whether the buyer is black or white or
some shade in between, we will have a lot of trouble proving that
race was not a factor in your final decision to sell. And, really, it
shouldn’t be a factor if we can get you the price and terms you
are looking for.”
c. “Can I wait for Mr. and Mrs. O’Brien to make an offer? The Sanchez
family just doesn’t seem to be the type I want to buy my home.”
Mr. and Mrs. Sanchez are Hispanic. They are financially qualified and
have made an offer within $1,000 of the asking price. You have shown
the house a number of times and feel that an offer from the O’Briens or
possibly another white family may be forthcoming.
Suggested answers:
i. “Ms. Seller, I don’t understand why you don’t believe Mr. and
Mrs. Sanchez are the type you want to buy your home. They
have made a good offer and are financially qualified. What type
are you looking for?”
If the response reveals that the seller is looking for a non-

minority buyer, the broker should advise the seller of her legal
and contractual obligation not to discriminate.
ii. “Mr. Seller, I certainly appreciate your desire to have the

opportunity to consider all offers, so I will try to get an offer from
the O’Briens immediately. But Ms. Sanchez’s offer is a good one,
and I would hate to see you lose out by delaying. Also, I really
don’t understand why you don’t consider the Sanchez’s to be the
type to buy your home.”
[Where the basis for deferring decision is ambiguous but “could”

be discriminatory, it is important that the broker attempt to
remove the ambiguity by forcing the seller to articulate consent.
If the concern is founded in bias, the broker is able to take action
to remove or overcome the bias or repudiate any support for it.
On the other hand, the concern may be the product of
considerations or impressions which the broker can either clear
up or explain in non-discriminatory terms.]

Page 37
d. “If I take my home off the market, how long do I have to wait before I can
sell it again?”
Ms. Jones, the prospective buyer, is black. The house has been shown
only three times in three months, and no one else seems interested.
i. “Ms. Seller, you must understand that if you withdraw this

property in order to avoid selling it to Ms. Jones (an African
American), you risk serious legal liability and you may be unable
to sell your property indefinitely. I strongly suggest you consult
with your counsel before you take this action. As for me and my
firm, I certainly cannot agree to the termination of our listing
agreement for this reason.”
ii. “Mr. Seller, I am very uncomfortable with your decision to

withdraw your property from the market. I realize this is your
decision, but I am concerned that it will appear to be merely an
excuse not to sell to Ms. Jones (an African American). Perhaps
you should re-think your decision.”
iii. “Ms. Seller, I understand the reasons you feel you need to
withdraw your property from the market. However, Ms. Jones
may feel that they are merely excuses for not accepting her offer
because she is black. I think it would be helpful to you and Ms.
Jones, and it might avoid hard feelings, misunderstanding and
possible litigation, if I brought Ms. Jones by and let you explain
your decision to her personally.”
[Face-to-face meetings between seller and minority offeree have

several values: first, the broker is relieved of the problem of
articulating and explaining the reasons for the withdrawal;
second, the minority offeree is able to see that it is the seller and
not the broker who has made the decision; third, the mere
bringing of seller and offeree together for a “final discussion”
supports the objective role of the broker; and fourth, the prospect
of confrontation may well discourage the seller whose reasons for
withdrawing the property are not substantive or honest.]
e. “Are you aware that there is a bonus for selling my home to the ‘right
people?’”
This is a new listing in a community that is a white pocket in a mixed

race county.

Page 38
Suggested answers:
i. “I appreciate the offer of a bonus, but it would be both unethical

and illegal for me to accept it when it is conditioned on the race,
national origin, religion, handicap, familial status or sex of the
buyer I am able to bring you. Such an arrangement would
subject each of us to very serious liability.”
ii. “Your offer of a bonus for bringing you offers from the “right”
people is inconsistent with our agreement that I am to market
your property without regard to race, religion, national origin,
handicap, familial status or sex of the homeseeker. I must insist
on holding to your agreement.”
f. “Why must I sell my house to people I don’t like, white or black? Why
don’t I have freedom of choice? What about my rights?”
Seller is an elderly black college professor who lives in an upper class

section of town. She is interested in seeing that the neighborhood stays
integrated.
Suggested answers:
i. “Ms. Seller, I don’t think it is appropriate for me to try to answer

these questions for you. If you believe you have the right to
discriminate on the basis of race, religion, national origin,
handicap, familial status or sex, I can only urge you to have a talk
with your attorney.”
ii. “From my standpoint, and that of my firm, we know we are

prohibited by law and by our Code of Ethics from marketing
property on a discriminatory basis. Moreover, it is difficult for
us to understand how people can dislike a whole race, religion,
nationality, sex, family status, or handicap. How can someone
hate someone without knowing him/her? What does being a Jew
have to do with being a good neighbor? What does being Italian
have to do with the price you want for your property?”
iii. “We can do a good job of selling your property to a qualified

buyer at the price and on the terms you specify. But, we cannot
do that job unless we have your consent and support to market
your property on a non-discriminatory basis.”

Page 39
2. Buyer questions
a. “What is the racial composition of this neighborhood?”
This agent covers the entire south side of a major metropolitan area. The
family is of Asian descent.
Suggested answer:
“We have a host of demographic information back at the office. You can
review it when we return. It would not be wise for me to guess. If you’d
like to research this matter, I have the telephone numbers to the city’s
planning department and the Bureau of Census. They have additional
information.”
b. “I am black. Do you service any areas that I would feel at home in?”
The agent serves a wide, rural area.
Suggested answer:
“We have access to houses for sale in many areas. If you can tell me some
of the features you are looking for in either your house or neighborhood,
I am sure I can help you out. Are there any particular villages or towns in
which you would like to start your search? Most of the villages have
houses in several price ranges, and the houses tend to vary quite a bit in
style and age. Once I know what you’re looking for, I’ll be in a better
position to let you know what is available that meets your criteria and to
help you find the house in the area that you want.”
c. “Are the schools integrated?”
The agent serves an area with homes owned by a variety of races, ages,
and religions. The agent’s own children attend a school that is
approximately 60% white, 20% black, 10% Hispanic, and a 10% mix of
American Indian and Asian.
Suggested answers:
i. “Our office does not maintain statistics regarding the racial

makeup of the student body in the schools in our market area. If
you would like such information, you should contact either the
school itself or the school district’s office. Those sources can also
tell you which schools will be available to your children, class
size, the basic curriculum and provide the best answers to your
questions. Also, you might want to check with some of your
potential new neighbors about how they feel about the schools
their children attend.”

Page 40
ii. “Mr. Buyer, the only school I’m really familiar with is the one my
own children attend. Since I don’t have personal experience with
the others, I cannot give you complete information you really
want and need. Let me refer you to the school district office
which can give you information about curriculum, class size, and
the names of the schools which service the various
neighborhoods in which you are interested.”
d. “Why don’t you just pick out some nice properties in a safe area for us?”
The prospective buyers are an elderly couple. The agent’s area covers
urban, suburban, and rural areas. There are pockets of high crime in the
urban areas. The suburbs tend not to suffer from major crimes such as
murder and armed theft, but they do have their share of purse-
snatchings, shoplifting and home break-ins. There are some adult
communities in your area that have walls and security guards.
Suggested answers:
i. “We have many homes in our market area to choose from.

Perhaps we should inspect a few to see which ones best fit your
needs.”
ii. “Our office does not compile crime statistics. Let’s go through
our multiple listing of homes and select some that fit your
requirements. While we’re out inspecting homes, we can stop at
the village police department if you would like to. Also, I can put
you in touch with several security services who would
undoubtedly be able to discuss your concerns in depth.”
e. “Would you live here?”
The agent lives in a community very much like this, but closer to the
river. The home under consideration is in a relatively new subdivision.
The agent’s neighborhood is older, with larger homes and established
trees. The agent has no children in school as this family does.
Suggested answers:
i. “Yes, I would. The area is well maintained and that particular

house is very nicely located. It’s very convenient to the
commuter trains and shopping and the elementary school is only
a few blocks away.”
ii. “No, I wouldn’t because the house is just too small for our
teenager’s activities.”

Page 41
f. “I’m from out of town; could you suggest some good areas?”
The client is a professional couple, second generation Japanese. They

have two children.
Suggested answers:
i. “We feel that all the area in which we do business have many
positive features. The communities, style and price of housing
do vary, however. What did you have in mind? Do you have any
particular needs in a house?”
ii. “We’re very positive about all the areas we service. Each
community has its own particular charm, and of course, no place
is perfect. What size and style of home are you looking for? Are
you familiar with any of the communities we have listings in?”

Page 42
VI. WORDS NOT TO USE IN ADVERTISING
A. Do Not Use These Words or Phrases in Your Advertising:
1. Words descriptive of dwelling..."White private home", "Jewish home," "Adult

building"
2. Words indicative of race, color, religion, sex, handicap, familial status, national
origin, marital status, public assistance status, or sexual orientation
a. Race—“black,” “African American,” “oriental,” “American Indian”
b. Color—“white,” “black,” “colored”
c. Religion—“Protestant,” “Christian,” “Catholic,” “Jew”
d. National origin—“Latino,” “Native American,” “Southeast Asian”
e. Sex—no mention of sex to indicate that housing is offered to one sex and
not the other. The exceptions: shared living spaces, educational
dormitories.
f. Handicap—“crippled,” “blind,” “handicapped,” “physically fit;” you may

advertise “handicapped accessible”
g. Familial status—“adults,” “children,” “singles;” you may advertise

housing for “older persons” if such housing conforms with the HUD
designation for “older persons”
h. Catchwords—avoid these words in a discriminatory context: “restricted,”

“exclusive,” “private,” “integrated,” “traditional”

Page 43
VII. WHAT WILL THE NEIGHBORS SAY?
ZERO TOLERANCE FOR DISCRIMINATION The Keys and Beard filed complaints with city police, and three
(Inman News Features) days later the Keys withdrew their purchase offer and forfeited
their deposit. A month later, the Keys bought a less desirable
Mississippi man who harassed potential homebuyers ordered house in a different neighborhood of Brandon.
to pay $146,000 in damages and penalties
HUD Administrative Law Judge (ALJ) Robert Andretta issued
HUD has ordered a Mississippi man, Chris Hope, to pay an initial decision and order that Hope pay $126,900 in
$146,000 in damages and penalties for harassing an African- damages to the Keys and $8,140 to Beard. Hope must also pay
American couple, Michael and Pamela Keys, who had an $11,000 civil penalty to the federal government.
contracted to buy the house next to his.
This is believed to be one of the few cases in which a real estate
In November 2000, HUD filed charges on behalf of the Keys, agent has been awarded damages under the Fair Housing Act.
who had filed a housing discrimination complaint saying they
were intimidated out of buying the house in Brandon. HUD “Michael and I are very pleased with the judge’s ruling,” said
also filed charges on behalf of the seller’s real estate agent, Pamela Keys. “We want to thank friends, family and HUD for
Katherine Beard, whose sales commission was reduced when their support. And we thank God for bringing us through the
the house eventually sold for less money to another buyer. trials and tribulations that came along with this case.”
“This decision sends a clear message that racial discrimination “This has been a very long and trying ordeal for all of us and I
will not be tolerated,” said HUD Deputy Assistant Secretary am glad that it has finally concluded,” said Katherine Beard.
Ken Marcus. “The Fair Housing Act was created to combat this “What the Keys’ experienced should not occur in today’s world.
type of behavior.” I look forward to the day when the only determining factor in
purchasing a home is the amount of loan an individual qualifies
Keys and Beard told HUD investigators that in April 1999, for, and not race, cultural differences or ethnic background.”
during a pre-settlement walk-through inspection of the house,
the Keys were introduced to neighbor Hope as he arrived home DAS Marcus commended Beard for coming forward, noting
in his car. Beard, the sellers, and Hope are white. that the case shows how real estate agents can help fight
discrimination and promote equal housing opportunities. He
Upon meeting his new neighbors, Hope stated a few times, encouraged more real estate professionals to complete the
“You’re kidding me,” and asked the Keys why they wanted to diversity training offered by the National Association of
live there. When the Keys replied that the neighborhood Realtors. Over the past five years, more than 5,000 agents have
seemed to be nice and quiet, Hope responded, “Yeah. It is. It’s taken the training, which was developed by NAR with help from
an all-white neighborhood.” HUD.
Witnesses testified that Hope pointed to his backyard and said, The Fair Housing Act bars housing discrimination on the basis
“That’s why my wife had to hold the dogs. They were going of race, color, religion, sex, disability, family status and national
crazy, and they don’t like blacks either.” Hope then asked why origin. The Act covers the sale, rental, financing, insuring and
the Keys did not go back to South Jackson, which is a advertising of most of the nation’s housing. Investigations are
predominantly black neighborhood, whereupon Pamela Keys conducted by HUD, state and city agencies working with HUD,
responded that they were not from South Jackson. and by private fair housing groups that receive HUD funds.
After a charge is filed, a hearing is held before an ALJ, unless a
Hope continued to ask why they would want to live there, and party elects to have the case heard in federal court.
pointed to a nearby house, stating that his neighbor, “who owns
a gun shop, feels the same way I do.” HUD, like many other federal agencies, has ALJs who make
independent decisions in administrative law matters before the
The Keys testified that when Hope started moving back toward Department, such as fair housing cases. ALJs have career,
the dogs that they feared what he might do next, so they left as nonpolitical appointments with lifetime tenure.
fast as they could.

Page 44
VIII. WHAT ABOUT YOU?
A. Know the Laws
B. Have the Courage to Defend
C. Talk About Issues at First Opportunity
D. Be Willing to Walk Away
IX. WHY ME?
A. It is Not Only the Law, but Also Attitudes and Fairness
B. Change Your Thinking, or Your Business Will be Limited to People Who

Think Like You
X. REALTOR® DECLARATION
A. I Agree to:
1. Provide equal professional service
2. Keep informed about fair housing law and practices
3. Develop advertising that indicates that everyone is welcome, and no one is

excluded
4. Inform my clients and customers about their fair housing rights and
responsibilities
5. Document my efforts to provide equal professional service
6. Refuse to tolerate non-compliance
7. Learn about those who are different from me, and celebrate those differences
8. Take a positive approach to fair housing
9. Develop and implement fair housing practices

STATE OF MINNESOTA RE-9
DEPARTMENT OF COMMERCE REAL ESTATE
TH
85 7 PLACE EAST CONTINUING EDUCATION
ST. PAUL, MN 55101 COURSE VERIFICATION
651-296-6319
The information which you furnish on this form will be used to determine compliance with the real estate license law
requirements.
INSTRUCTIONS
1. Brokers must maintain accurate education records for all agents who are affiliated with the broker. At renewal, brokers must
certify to the Commerce Department that renewing agents are in compliance with education requirements.
2. Agents must maintain accurate education records, including course completion certificates and a copy of this form, and upon
request by the Commerce Department, agents must submit satisfactory documentation of compliance with education
requirements.
Name (as it appears on your license) License Number
Address Social Security Number
City, State, Zip License Expiration Date (as it appears on your license)
LIST OF CONTINUING EDUCATION COURSES

DEPARTMENT COMPLETION COURSE TITLE AND SPONSORING ENTITY CREDIT
COURSE NUMBER DATE HOURS
2009 Agency/Fair Housing: A Legal Update /
3.75
Kaplan Professional Schools
TOTAL HOURS COMPLETED
Please check the correct box below and sign and date this form:
I have completed all required education during this license period (30 continuing education hours, including one hour of Fair
Housing law and one hour of Agency law).
I am engaged solely in the commercial real estate business and I have completed all required education during this license
period (30 continuing education hours, exempt from Fair Housing and Agency Law hours).
CERTIFICATION STATEMENT
I certify under penalty of law that I have taken and completed the courses listed above and will furnish to the Department of
Commerce and/or my Broker, upon request, evidence of having taken all of the courses listed on this report. I also certify that I have
not reported these course hours previously on any of my reports.
SIGNATURE OF LICENSED AGENT (mandatory) DATE

Continuing Education Course Evaluation
Course Date: ______________________________ Course Title: _______________________________________
Course Location: ___________________________ Instructor: ________________________________________
1. How would you describe today’s classroom experience?
2. Do you have suggestions for improvements?
3. Was the workbook well organized?
4. What other topics would be of value to you in the future?
5. Please evaluate today’s instructor(s).
5 = Excellent 4 = Very good 3 = Average 2 = Not so hot 1 = Poor
Motivated you
Demonstrated Explained material through example, Showed respect and
knowledge and ability effectively and challenge and consideration for
Instructor name to answer questions accurately enthusiasm students Overall effectiveness
6. Briefly comment on anything you particularly liked (+) or disliked (-) about the instructor.
Name (optional):
Please contact me. I would like to learn about becoming a Kaplan Professional Schools instructor.
Name: Phone number:

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ST. PAUL BLOOMINGTON PLYMOUTH

Bandana Square BLN Office Park Four Seasons Mall
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SMOKING Outside at least 20 feet away Outside around the corner on

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Fast food Cafeteria and convenience Four Seasons Mall

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towards Har Mar Mall or south Bahn Thai Cuisine
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Vending machines Road:
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RESTAURANTS
Fast food Wendy’s
494 west at Lyndale, Nicollet & Quizno’s
Portland exits Chili’s
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3 floor food courts on north & Applebee’s
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2009 Agency/Fair Housing:

SECTION 1: LEGISLATIVE AND COMMERCE DEPARTMENT UPDATE ................................................2

SECTION 2: UNDERSTANDING AGENCY .................................................................................................... 11

SECTION 3: THE CHALLENGES OF FAIR HOUSING ................................................................................. 24

©2008 DF Institute, Inc. All rights reserved. RC09AGFH.1008

Real estate agents continuously must deal with ever-increasing

Today’s topics include:

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

SECTION 1: LEGISLATIVE AND COMMERCE DEPARTMENT UPDATE1

A. The following is excerpted from the Minnesota REALTORS® 2008

In addition to budgetary negotiations, the MN Legislature debated and passed numerous

Susan Dioury Christine Berger

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

• Impose a surcharge of $10 through June 30, 2011, on each business or

B. Final Budget Balancing Bill

Chapter 363 HF 1812 (Carlson) / SF 3813 (Cohen)

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

A. The Minnesota legislature introduced, debated and passed numerous

• Before a lender is entitled to foreclose on a property consisting of one to four

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

B. Regulating Borrower’s Ability to Pay

Chapter 241: HF 3829 (Lillie) / SF 3154 (Scheid)

• The mortgage originator’s analysis of the borrower’s reasonable ability to repay

1. the borrower’s current and expected income;

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

C. Foreclosure Data Practices Requirements and Study

Chapter 238: HF 3516 (Davnie) / SF 2914 (Rest)

1. The physical address of the mortgaged premises;

• Requires the Secretary of State to convene a Statewide Foreclosure Data

• Requires the group report its recommendations to the state legislature by

• MNAR staff has been invited to participate in the work group.

D. Providing Evidence to Shorten the Redemption Period for Abandoned

Chapter 178: HF 3473 (Hilstrom) / SF 2918 (Higgins)

• The bill amends current law pertaining to foreclosure of abandoned properties.

• Specifically, this legislation clarified that a borrower’s failure to appear at the

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

E. Landlord Tenant: Providing Certain Notices Relating to Foreclosure

Chapter 177: HF 3476 (Kohls) / SF 2908 (Higgins)

Chapter 253: HF 3229 (Nelson) / SF 2775 (Foley)

• Requires a cooperative electric association or municipal utility to provide notice

• Requires utilities to provide a report including addresses of properties currently

IV. REAL ESTATE

• Exempts this deed transfer from imposition of the deed tax.

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

B. Real Estate Recording Fees

Chapter 341: HF 3420 (Hilstrom) /SF 3239 (Moua)

Minn. Stat. Chapter 515

• For any document affecting two or more units in a condominium governed by

• An amendment to the declaration governed by Chapter 515 and a related

C. Limited Broker License Modification for Timeshares

Chapter 344: HF 3783 (Atkins) / SF 3467 (Scheid)

Section 54 of the Miscellaneous Commerce Provisions bill

Effective: May 19, 2008.

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y

D. Minnesota Real Property Electronic Recording Act

Chapter 238: HF 3516 (Davnie) / SF 2914 (Rest)

• If a law requires or refers to something related to tangible media such as a book,

• If a law requires a document be signed as a condition of recording, this law allows

• If a law requires a document or signature be attested, acknowledged, verified,

Provisions above effective: July 1, 2008

A. Omnibus Environment Policy Bill: Underground Storage Tanks

Chapter 357: HF 3625 (Hansen) / SF 3056 (Anderson)

y 2009 AGENCY / FAIR HOUSING: A LEGAL UPDATE y