What is the Disparate Impact?
Disparate impact allows people to challenge housing discrimination without having to prove “discriminatory intent” in the mind of the discriminator. In other words, it’s the outcome that matters, even if it’s impossible to demonstrate (as it usually is) what a landlord, developer or an insurance company’s intention was when they took the discriminatory action.
Take for example a landlord that institutes a new rule that any tenant that calls 911 for emergency services more than twice in 6 months can be evicted; as a result, several women and their children are evicted from their homes after calling the police or an ambulance as a result of domestic violence. This policy has had a “disparate impact” on women, since 95% of domestic violence victims are women—although anyone can be a victim of domestic violence. While the landlord’s policy doesn’t explicitly state they will evict women, the impact of the policy puts up barriers to women renting. That’s the basis of disparate impact: it’s not what you say or intend, it’s what are the results of your actions.
Why is the Disparate Impact Standard So Important?The Fair Housing Act says that no one can discriminate in the terms, conditions or privileges of sale or rental of housing to people based on their race, color, religion, sex, disability, familial status, or national origin.
Even in an era where white supremacy is crawling out from the shadows into mainstream society, it’s still pretty rare to find big banks, developers, corporate landlords and insurance companies that will put in writing something that says, “let’s design this policy to make it harder for people of color to move into our building.” But, far too often, that’s what their policies do. The Fair Housing Act and its disparate impact standard allows the public—and HUD as the agency tasked with enforcing the law—to hold those accountable whose policies drive unequal outcomes.
Disparate Impact Examples
Scenario: Full-Time Employment Required
Situation: A 50 unit apartment building has opened up and is accepting new applications. The application states that every tenant must be employed full-time.
Outcome: The landlord says he wants to be sure the applicants can afford their rent. But the full-time employment requirement means that disabled, senior, and potentially veteran applicants who may have enough income to afford the apartment but aren’t working full-time are barred from becoming tenants.
Resolution: By restricting access to seniors and disabled renters, the disparate impact standard would apply. The landlord would be required to rework the application to allow anyone who can afford the rent to get an apartment.
Scenario: One Bedroom, Two PeopleSituation: A new apartment building is planned for the neighborhood and the developer has decided that they will all be one bedroom units. The developer and manager have instituted a rule that no more than two people can live in each unit.
Outcome: This policy would discriminate against a couple with a child that could safely sleep in the single bedroom; it would have a disparate impact on families with children by denying them access to a unit they could afford and thrive in.
Resolution: Even if the policy appears to be neutral, it has a discriminatory impact—a disparate impact on families with children and would need to change.
Scenario: Refusal to InsureSituation: A homeowners insurance company refuses to insure apartment buildings if an owner plans to rent out the units to people with a Section 8 housing assistance voucher.
Outcome: In order to buy the building, the owner has to have insurance, so the insurance company’s policy forces them to not accept Section 8 voucher holders. Since people of color suffer from higher rates of poverty than white people, more people of color would be affected by this insurance company’s rule and their access to housing diminished.
Resolution: The insurance company’s policy will have a big impact on the availability of subsidized housing to people of color. That policy will have a “disparate impact,” or a more severe impact, on people of color and would not be permissible. The insurance company has to strip the source of income discrimination to not violate the law.
Scenario: Zoning LawsSituation: A high-income, all-white suburb draws up new zoning laws that state they will not allow the construction of any affordable housing in their city.
Outcome: The suburb is surrounded by a large, racially diverse city where people of color are more likely to be lower income. The zoning policy appears—on paper—to be ‘race-neutral;’ but in practice, it keeps people of color from accessing housing in the opportunity-rich suburb.
Resolution: The zoning policy appears—on paper—to be ‘race-neutral;’ but in practice, it disproportionately keeps people of color from accessing housing in the opportunity-rich suburb. The zoning law has a disparate impact on people of color and their ability to access housing and in violation of the Fair Housing Act.
Conclusion: Be very, very careful in representing landlords. A landlord may not intend to discriminate, but if the impact of the landlord’s guidelines affects a protected class more than the general population, a claim for violation of Fair Housing could result. Remember, it is the policy of RMAA that Associates should never make rental decisions on behalf of the landlord. Those decisions should fall solely on the owner and must not violate any Fair Housing Laws.
Source: Alliance for Housing Justice, allianceforhousingjustice.org,
A letter of intent, often used in commercial transactions, is simply a letter in which a buyer expresses to the seller interest in buying property and sets out the basic terms of the transaction. Since the preparation of an offer to purchase commercial property can often be time-consuming, the purpose of a letter of intent is to see if the parties are in general agreement on the basic terms of the transaction. If they are, the parties can then proceed to have a purchase and sale agreement prepared based upon the terms of the letter of intent.
A few suggestions are worth considering in drafting letters of intent. First, the parties to an LOI should include as many of the significant business points as possible in an effort to limit disputes and negotiations later. This should include a legal description of the property, the price of the property, the length of any due diligence period, the amount of earnest money, when the earnest money goes “hard” or becomes nonrefundable, the closing date, any major conditions to closing (such as a rezoning contingency), and who will pay certain costs (such as obtaining a survey, title insurance, and transfer taxes).
One risk of a letter of intent is that it will be so specific and detailed that it is misconstrued as an offer to purchase property that, if accepted, will create an enforceable purchase and sale agreement. The more the parties agree to in a letter of intent, the greater the risk that one of the parties may claim that the letter of intent was actually an offer, and that by signing it the other party entered into an enforceable contract. The best way to mitigate this risk is to state in the LOI that it is not intended to be a contract and that only a subsequently signed contract will bind the parties. In response to this and similar contracting issues, the Georgia Court of Appeals has stated that “the failure to agree to even one essential term means that there is no agreement to be enforced.”31 In other words, as long as the parties fail to include at least one essential term in a letter of intent, it is unlikely that a court would find the LOI to be an offer capable of becoming a binding contract. However, the same court stated that “a deferral of agreement on a nonessential term does not invalidate an otherwise valid contract.”32 It can be difficult to determine what terms are “essential” since this designation is highly dependent upon the facts and circumstances of the specific sale in question. For example, in the particular case cited above, the letter of intent was clear on the identification of the property involved, the purchase price, earnest money, and certain conditions of closing. However, the letter of intent clearly contemplated a deed restriction regarding use of the property, the exact terms to which the parties had not yet agreed. The court, in this case, held that the deed restriction was an essential term, that the parties had never reached a meeting of the minds on that issue, and that the letter of intent could therefore not be enforced as a binding contract. In a different case, however, the Georgia Supreme Court upheld a letter of intent as an enforceable contract.33 In that case, Beller & Gould (a partnership) executed a letter of intent to acquire the Lisenbys’ property. The letter of intent gave Beller & Gould the option to purchase the property by November 15, but when Beller & Gould tried to exercise the option and enter into a formal agreement, the Lisenbys refused. Beller & Gould then sued for specific performance to enforce the agreement of the parties. The court found that the letter of intent was sufficient to support the creation of a binding agreement because the letter (1) identified the parties and their assent to the terms of the agreement, (2) described the subject matter of the contract, and (3) set forth the terms of the consideration.34 The court went further and stated that even if the parties discussed other terms that were not included in the letter of intent, the absence of such terms did not render the letter of intent unenforceable.35 The court determined that all of the material terms of the agreement had been established in the letter of intent.36 To help avoid the risk of having a letter of intent being considered an enforceable contract, most letters of intent contain specific language stating that they are only intended as a letter of intent and not as a real estate purchase and sale agreement. An example of such a provision is included below: Letter of Intent Notwithstanding any provision to the contrary contained herein, all parties acknowledge that this Letter of Intent is not intended to be and shall not be construed to be an offer to purchase real property that, if accepted, shall create an enforceable purchase and sale agreement between the parties. This Letter of Intent is intended as nothing more than an expression of interest in the real property discussed herein and no binding agreement of sale shall be formed until and unless the parties agree to a separate written purchase and sale agreement subsequent to the Letter of Intent being accepted. Parties should not underestimate the value of a well-written letter of intent. While letters of intent are generally not legally binding,37 they establish the basis of what will eventually be included in the purchase and sale agreement between the parties. If there has been an agreement on a particular point in the letter of intent, few parties will agree to alter that term in the purchase and sale agreement. Therefore, deal points that are particularly important to a party should be included in a letter of intent to avoid disputes on those points at a later time. §2.1.2Time Limit of Offer
Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (pp. 90-93). BookBaby. Kindle Edition.
The National Association of REALTORS® Code of Ethics and Arbitration Manual states the procuring cause broker, to be entitled to a commission, is a broker whose efforts are the foundation on which the negotiations resulting in a sale are begun. Further, that procuring cause originates a series of events which, without a break in their continuity, result in the accomplishment of the prime objective of the employment of the broker who is producing a purchaser ready, willing and able to buy real estate on the owner’s terms. The Georgia courts have tended to express the definition of procuring cause in terms of whether the broker initiated the key uninterrupted series of events which resulted in the sale of the property.
Procuring cause cases are most often resolved by REALTORS® serving on arbitration panels. The cases arise in 2 different ways. First, between 2 buyer’s agents and second, between a listing agent and a buyer’s agent. The National Association of REALTORS® tries to give guidance to arbitration panels by including in its Code of Ethics and Arbitration Manual a list of factors to consider, but it does not give guidance regarding the relative weight of the factors or how to evaluate the answers. Panel members are given broad discretion in making decisions with regards to procuring cause because each decision requires a fact intensive investigation by the arbitration panel.
Examples of such questions include the following:
This discussion will focus on whether an agent brought in after a buyer identifies a property and negotiates the terms is entitled to a commission.
A property is listed in the MLS with 2.5% commission to the buyer’s agent. A sign is placed on the property. A buyer without an agent negotiates with the listing agent over a period of weeks and settles on contract terms. The listing agent writes the offer with the negotiated terms and sends it to the buyer for signatures. The buyer then decides that he wants a representative. The new buyer’s agent rewrites the offer with the same terms and presents it for the seller’s signature.
Is the Buyer’s agent owed a commission from the listing agent?
Answer: Probably not. In listing the property in MLS the listing broker has agreed to pay cooperating brokers a commission if they are a procuring cause of the sale. In this case, the buyer found the property without the assistance of the buyer’s agent and made his decision to purchase the property before the agent became involved in the transaction. However, there is an argument that the efforts of the buyer’s agent carried the contract through to closing or otherwise contributed to a successful sale. The Arbitration Panel has to weigh the facts and determine the outcome. It is suggested that the buyer’s agent will have a difficult time establishing that he is the procuring cause of the sale. If the buyer signed a buyer brokerage agreement with the agent, he may be entitled to be paid a commission from the buyer, but he will likely not be able to collect a commission from a seller.
Protect Yourself From Late Buyer’s Agent
There are 2 ways that a listing agent can protect itself from this situation. First, the Exclusive Seller Brokerage Engagement Agreement in the Commission section allows a commission not to be paid to a cooperating broker in certain circumstances. A listing agent can include in that section circumstances that would reduce or deny a commission. Second, that language should be mirrored in the private comments section in the MLS.
The terms for reducing a commission are up to the listing agent. Just be sure to include the terms in both the listing agreement and the private comments in MLS for added protection.
“Commission to the co-operating agent shall be reduced to 1% if the buyer’s agent does not accompany the buyer on the buyer’s first visit to the property.” Or
“No commission shall be paid to the buyer’s agent if the buyer’s agent does not accompany the buyer on the buyer’s first visit to the property.”
Reference: Procuring Cause Revisited, Seth Weissman
The Entire Agreement
An “entire agreement clause” (AKA a “merger clause”) establishes that the final written agreement between the parties represents the entire agreement of the parties and that the parties are only relying on what is written in the contract. Sometimes referred to as the “4 Corners Rule,” the merger clause bars a buyer from relying on alleged misrepresentations not contained in the written agreement.
Alleged false representation issues commonly arise through the Seller’s Property Disclosure (SPD). Because of the Entire Agreement clause, the SPD must be incorporated into the PSA to be effective. (Also referred to as “attached” to the contract.). The SPD offers enormous protection to the seller. If a defect is disclosed in the SPD, the buyer is on notice of it and must perform its own due diligence to investigate the defect. Reliance on a seller’s repair receipts or representations can be dangerous. If a repair issue is important to the buyer, it is much better to investigate further before closing.
The entire agreement clause would also control, if there is a conflict between the multiple listing and the contract. For example, if the MLS says the refrigerator stays, but the contract says it does not, the entire agreement clause or four corners of the contract prevail.
In the 2023 GAR Purchase and Sale Agreement (PSA), it is at 4(e). Page 6
Entire Agreement, Modification and Assignment: This Agreement constitutes the sole and entire agreement between all of the parties, supersedes all of their prior written and verbal agreements and shall be binding upon the parties and their successors, heirs and permitted assigns. No representation, promise or inducement not included in this Agreement shall be binding upon any party hereto.
Disclaimer Protection for Brokers in the GAR Purchase and Sale Agreement
The GAR Purchase and Sale Agreement protects brokers and agents by requiring the seller and buyer to acknowledge that they have not relied on any representations of brokers related to certain information concerning the property. The disclaimer explicitly states that the broker has no duty to advise the buyer or seller on any matter relating to the property that could have been revealed, among other things, through a survey, title search, report on termites in the property (Official Georgia Wood Infestation Report), inspection by a professional home inspector or construction expert, utility bill review, an appraisal, inspection by an environmental engineering inspector, consulting governmental officials, or a review of the purchase and sale agreement and transaction by an attorney, financial planner, mortgage consultant, or tax planner.
The GAR New Construction Purchase and Sale Agreement offers similar broker and agent protections. It contains a disclaimer that states that the broker is not responsible to advise the parties on any matter including, but not limited to the following: building products and construction techniques; the necessity or cost of any repairs to the property; views from the property; mold; hazardous or toxic materials or substances; termites and other wood-destroying organisms; the tax or legal consequences of the contract and transaction; the availability and cost of utilities or community amenities; the appraised or future value of the property; any conditions existing off property that may affect the property; the terms, conditions, and availability of financing; and the uses and zoning of the property, whether permitted or proposed.
Claims Against the Broker for False Statements
In Georgia, a buyer has no claim against the seller’s broker for false statements made by the seller in the seller’s disclosure statement unless the seller’s broker knows the representations to be false. Neither can the buyer sue the seller’s agent for fraud when the seller fails to disclose concealed defects in the property.
When sellers’ agents are asked questions regarding the condition of the property, it is always a good idea to answer them in reference to the Seller’s Property Disclosure Statement Exhibit. So, for example, let’s say that a buyer asks if the roof on a particular property has leaks. The Seller’s Property Disclosure Statement Exhibit provides that the roof does not leak. To avoid any claim against the seller’s broker, it is always better to say, “The seller indicates in his Seller’s Property Disclosure Statement Exhibit that the roof does not leak,” rather than, “The roof does not leak.” Although a Seller’s Property Disclosure is not a requirement, it is clearly best for the protection of all parties, that an SPD be incorporated into the contract.
Ethical Responsibility of Brokers
If a seller makes a misrepresentation on a Seller Property Disclosure and refuses to correct it, the REALTORS® ethical obligation of honesty to the public requires that the broker/agent terminate representation of the seller.
Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (pp. 762-767). BookBaby. Kindle Edition.
September 6, 2023
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