A real estate broker is hosting an open house for a seller. The seller expresses a strong preference to sell to a buyer who is a veteran, stating, 'I want to give back to those who served.' Which of the following is the most appropriate action for the broker to take?
- AExplain to the seller that they can only express such a preference if they are selling a single-family home without the use of a broker.
- BInform the seller that while their sentiment is admirable, discriminating based on veteran status is illegal under federal fair housing laws.
- CProceed with the open house and discreetly try to identify veteran buyers to present to the seller.
- DAdvise the seller that veteran status is not a federally protected class, so they can legally express this preference.
Show answer & explanationAnswer & explanation
Correct answer: B. Inform the seller that while their sentiment is admirable, discriminating based on veteran status is illegal under federal fair housing laws.
While veteran status is not a federally protected class under the Fair Housing Act, a broker's participation in any discriminatory act, even if not explicitly covered by federal law, can violate ethical duties and state licensing rules (TREC Rule 531.20, Discriminatory Practices). The broker must refuse to cooperate with any discriminatory instructions.
Why the other options are wrong
- A. The 'Mrs. Murphy exemption' (selling without a broker) for certain single-family homes applies to federal FHA, but a licensed broker cannot participate in discrimination even if the seller could. Also, veteran status is not covered by the FHA exemption.
- C. This would be an unethical and potentially illegal act of discrimination by the broker.
- D. This is incorrect and misleading. While not federally protected, brokers cannot assist in discriminatory acts, and some state/local laws may include it. The broker's ethical obligation is to refuse.
Broker's Ethical Duty - Discriminatory Instructions
A real estate broker has an ethical and legal duty to refuse to carry out any discriminatory instructions from a client, even if the requested discrimination is not against a federally protected class, as such actions can violate state licensing laws and ethical standards.
- Broker cannot facilitate or participate in discrimination.
- TREC rules prohibit discriminatory practices beyond federal FHA.
- Duty to educate clients on fair housing and ethical practices.
Memory trick: Discrimination's call, broker must stall, and stand tall.