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About Discrimination and Commercial Real Estate

Quanti: Homebuyers and sellers may face discrimination when buying, renting, or selling properties due to their race, color, national origin, religion

Quanti: Homebuyers and sellers may face discrimination when buying, renting, or selling properties due to their race, color, national origin, religion, disability or sex. While certain laws protect residential home buyers from discrimination, commercial real estate lending and buying can work differently. Discrimination laws can also vary from state to state.


It’s important for business owners to understand how they can be protected from discrimination when buying or leasing commercial properties, such as retail shops, office buildings, or warehouses.


How are residential buyers and lessees protected from discrimination?


The Fair Housing Act protects people from discrimination when buying, renting, or financing a home. It states that people can’t be discriminated against based on race, color, national origin, religion, sex (including pregnancy), age, or disability.


There is no federal law in the U.S. preventing housing discrimination on the basis of sexual orientation, but many states and cities have enacted laws expanding housing discrimination protections to include these groups. The protected class of sex discrimination has also been interpreted to include sexual orientation and gender identity in some cases, and in February 2021, the Department of Housing and Urban Development announced that it will enforce the Fair Housing Act to prohibit discrimination based on sexual orientation and gender identity.


This means that an apartment landlord, for example, can’t refuse housing to a tenant because they practice a different religion. Or a mortgage lender can’t change the conditions of a homebuyer’s loan because they have a disability.


How are commercial real estate buyers and lessees protected from discrimination?


Commercial properties used for housing purposes, such as apartment buildings and fixer-uppers are covered under the Fair Housing Act. That means a developer buying a house to flip or knock down can’t be discriminated against. Hotels and structures for temporary lodging, on the other hand, may not be covered under the Fair Housing Act.


Corporate tenants may also qualify as tenants under fair housing, meaning that they are protected from discrimination on account of any protected class. For example, commercial spaces within a housing complex may fall under fair housing.


Discrimination on the basis of race in buying or selling commercial real estate is also a violation of the Civil Rights Act of 1866. The act states that “All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold and convey real and personal property.”


States and jurisdictions may also set their own anti-discrimination laws for commercial property transactions based on different factors, such as the number of units in a commercial building. Some states have enacted legislation that makes fair housing standards apply to all commercial real estate as well as housing. For example, New York State’s Anti-Discrimination Law groups together housing, land and commercial space under the same standards for discrimination.


Of course, it is often the case that when discrimination occurs or is suspected, it may be difficult to prove. Suspected cases of discrimination in commercial real estate lending, renting or other transactions should be brought to an attorney for a fuller understanding of the rights of the commercial buyer or tenant in their state and locality.


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