The Mrs. Murphy exemption is a limited federal fair housing exemption for certain owner-occupied dwellings with living quarters for no more than four families in total. The owner must actually live in one of those quarters. It does not authorize racial discrimination, remove the federal ban on discriminatory housing statements and advertising, or override stronger state and local protections.
You may wonder, “Why does the Mrs. Murphy Exemption rule even exist?” With our years of experience in real estate, we’re here to guide you through the details of this exemption and how it works in the housing industry.
In this post, we’ll define the Mrs. Murphy Exemption, give a background of its history, and discuss how it affects the real estate world. By the end of this article, you’ll be ready to nail this section on your exam!
What Is the Fair Housing Act (FHA)?
Before we explain the Mrs. Murphy Exemption, we must be familiar with the Fair Housing Act. The Fair Housing Act, or Title VIII, prohibits discrimination against protected classes in real estate. This act states that landlords and other housing providers cannot treat individuals with protected characteristics differently.
Who Are the Protected Classes In Real Estate?
The federal Fair Housing Act names these protected categories:
- Race
- Color
- National origin
- Religion
- Sex
- Familial status
- Disability
How these protections apply also depends on relevant court decisions and any additional state or local protections.
While the Fair Housing Act protects these groups, exceptions exist, such as the Mrs. Murphy Exemption.
What Is the Mrs. Murphy Exemption?
Under 42 U.S.C. §3603(b)(2), the exemption applies to rooms or units in a dwelling occupied, or intended to be occupied, by no more than four families living independently. The owner must maintain and occupy one of those living quarters as a residence.
Think of an owner who lives in one unit of a four-unit building and rents the other three. The owner’s unit counts toward the total. The exemption limits certain provisions of section 3604; it is not an exemption from every fair housing obligation.
Source: 42 U.S.C. §3603.
Mrs. Murphy Exemption History
The name “Mrs. Murphy” is an informal label for the small owner-occupied housing exemption. The provision relevant to this article is part of Title VIII of the Civil Rights Act of 1968, not Title VIII of the Civil Rights Act of 1964.
How Does the Mrs. Murphy Exemption Work Now?
The federal exemption must be read alongside other laws. Section 1982, derived from the Civil Rights Act of 1866 and interpreted in Jones v. Alfred H. Mayer Co., prohibits racial discrimination in property sales and rentals even when an FHA exemption may apply. State and local laws may protect applicants more broadly.
Do not treat this exemption as a checklist of people an owner may reject. First check the property’s eligibility and every applicable federal, state, and local protection.
Why Is the Mrs. Murphy Exemption Controversial?
If you think this exemption sounds problematic, you’re not alone; many fair housing groups have called for its repeal. These organizations argue that the Mrs. Murphy Exemption encourages housing discrimination by denying equal opportunities to protected classes.
State and local fair housing protections may still apply when a property qualifies for the federal exemption.
How Do State and Local Laws Affect the Exemption?
Federal and state protections are separate. A dwelling may qualify for the federal owner-occupied exemption and still be covered by a state or city fair housing law. Check the current law and guidance from the agency responsible for fair housing where the property is located. A simple state-by-state “yes” or “no” chart can miss different property-size limits, protected classes, and local rules.
When Does the Exemption Not Protect an Owner?
The federal prohibition on discriminatory housing notices, statements, and advertisements remains relevant. This goes beyond a published listing: an unlawful discriminatory statement to an applicant can also create liability. It does not mean an owner must never explain a lawful screening decision.
Also keep the exemptions separate. The statutory restriction on using a broker appears in the single-family-home exemption under section 3603(b)(1). It is not written into the owner-occupied exemption in section 3603(b)(2). That distinction does not excuse an agent from other applicable legal or professional duties; REALTORS® also have NAR Code obligations.
Should Landlords Use the Mrs. Murphy Exemption?
Many people frown upon the use of the Mrs. Murphy Exemption, claiming that it contributes to landlord discrimination against certain groups.
Examples of Landlord Discrimination
Landlords contribute to housing discrimination by
- Denying housing to tenants for their religious beliefs
- Refusing to house tenants because of their gender
- Charging higher rent for non-English speakers
- Encouraging minorities to live in other neighborhoods
When exemptions do not apply, landlord discrimination violates fair housing laws and results in serious penalties.
Who Enforces the Fair Housing Act?
HUD’s Office of Fair Housing and Equal Opportunity (FHEO) investigates housing discrimination complaints and may refer matters to state or local agencies. A complaint can lead to a voluntary resolution, a charge, and an administrative or court proceeding; an allegation does not automatically produce a penalty.
Penalties for Violating the Fair Housing Act
Consequences can include compensation for injured people, orders to stop unlawful practices, and civil penalties. The amount depends on the proceeding and facts, and federal civil penalty limits are adjusted for inflation. Check current official guidance rather than relying on an old list of fixed fines.
Are There Other Exemptions to the Fair Housing Act?
Other FHA exemptions have their own conditions. The single-family-home exemption includes limits on ownership, use of brokerage services, and other requirements; it does not cover every home sold without an agent. Certain noncommercial religious-organization housing and private-club lodgings have limited exemptions as well.
Qualifying housing for older persons is exempt from familial-status provisions, not from all fair housing protections. Whether lodging is a covered dwelling depends on its use as a residence, so do not assume every property called a hotel or motel is outside the law.
Can Landlords Screen Tenants?
Landlords may use lawful screening criteria, but a neutral label does not automatically make a policy lawful. Apply criteria consistently and check federal, state, and local requirements before using credit, income, eviction, or criminal-history information.
Disability-related reasonable accommodation requirements can also affect a policy. For example, a housing provider may need to make an exception to a pet restriction for an assistance animal. Review the applicable rules before denying an application.
Does Housing Discrimination Still Occur?
Housing discrimination remains an enforcement issue. The case below illustrates why an exemption discussion should never be treated as permission to disregard other civil rights protections.
United States v. Price
In United States v. Price, the Justice Department alleged that a Virginia rental manager sexually harassed female tenants and discriminated based on race, including through racial slurs and restrictions on guests.
The court entered a consent order in October 2020 requiring compensation, a civil penalty, and restrictions on Price’s role in property management. This is a concrete example of federal fair housing enforcement; it is not a ruling about the Mrs. Murphy exemption.
Source: Justice Department case record for United States v. Price.
How We Can End Housing Discrimination
Real estate professionals can help by supporting fair housing organizations that fight discrimination in real estate. We can also combat housing discrimination by:
- Knowing state and federal housing laws
- Avoiding businesses that violate fair housing laws
- Using nondiscriminatory language in property listings
- Being ready to get tested on housing laws at any time
- Treating all clients equally
What to Know Before the Real Estate Exam
For the exam, remember four points: no more than four independent families in total, the owner actually lives there, discriminatory housing statements and advertising remain restricted, and racial discrimination is not excused. State and local protections can also apply.
Now that you’re fully acquainted with Mrs. Murphy, you’re closer to killing it on the day of your test. But what other key terms should you know?
Quiz yourself using our Real Estate Flashcards to prepare for the big day!
