THE CLINTON administration is wrestling with an explosive issue that threatens to redefine what real estate agents can -- and cannot -- tell prospective homebuyers about the racial or ethnic characteristics of neighborhoods.
Since the passage of the Fair Housing Act in 1968, realty agents nationwide have been trained to avoid discussions of racial or other features of neighborhoods that may be covered by the law's anti-bias protections.
But a controversial pre-election opinion letter from the federal Department of Housing and Urban Development (HUD) appears to open the door to a significant change in that 30-year practice.
According to an Oct. 2 opinion from HUD's top fair-housing official, Elizabeth K. Julian, a home shopper represented by a buyer's agent could ask that agent to restrict the home search solely to neighborhoods with no minorities, and the agent would remain in compliance with federal law in doing so.
"If a white buyer said to his [or] her agent, 'I want to live in a white neighborhood,' or 'Don't show me any house where a lot of minorities live,' Julian wrote in her opinion letter, "the agent would not violate the [Fair Housing Act] if he [or] she acted upon his [or] her client's instruction."
However, according to Julian, if the agent either initiated the discussion of racial composition or made a comment supporting the client's bias -- such as, "I don't blame you for wanting to live in a white neighborhood" -- then the agent would violate the anti-discrimination law.
Julian's letter was sent to Jill D. Levine, a lawyer for the Buyer's Agent Inc., a Memphis, Tenn.-based realty firm with franchise offices in 26 states. The firm's agents exclusively represent purchasers.
That distinction is critical, according to Levine, because unlike conventional agents, exclusive buyer's agents sign a legally enforceable agreement with the buyer that "includes fiduciary duties to act in the best interests of the buyer." When a purchaser instructs an exclusive buyer's agent to "limit the search for properties" using criteria volunteered by the purchaser, the agent would violate his or her fiduciary duty to do otherwise, according to Levine.
Fair housing and civil rights groups reacted sharply to the Julian letter once details of the apparent policy change circulated.
"We thought it was very disappointing," said Shanna L. Smith, program director of the National Fair Housing Alliance. "Morally, ethically and legally, you don't do anything that helps segregation in housing in America."
For years, Smith said, "We have taught [realty] agents to say, 'We're not going to show you housing on any racial basis. If you want a three-bedroom or a four-bedroom home or a split-level, that's fine -- we'll talk about that.' "
Smith, whose organization trains hundreds of Realtors across the country annually on how to comply with the fair housing law, said the Julian letter opened a Pandora's box of potential complications. For example, what constitutes a "white" or "Jewish" or an "Asian" neighborhood? Who makes that determination when a buyer asks to only see houses in such an area, she asked? And can't this work to the disadvantage of all people covered by the statute, including whites?
For example, said Smith, "If I were a white person trying to sell my house, and because there's a black family living down the street a buyer's agent refuses to show my house, I'd be very upset."
After negative reactions like this, Julian sent a second letter to Levine Oct. 28, saying the matter had been referred the Justice Department for further study.
Julian also said that she wanted to make clear that even if an exclusive buyer's agent could legally provide information on race, ethnicity and other criteria if requested by a client, "I do not endorse that sort of accommodation as good policy, nor as keeping within the spirit of the Fair Housing Act.
"I want to emphasize that there is nothing in the Fair Housing Act that requires an agent to accommodate an expressed desire to limit housing search based on race," wrote Julian. "The fact that [the law] may, under limited circumstances, not prohibit such accommodation does not make it right, does not make it ethical..."
Pub Date: 12/01/96