Real Estate Terms

Mrs. Murphy Exemption Explained

The Mrs. Murphy Exemption provides that owner-occupied homes with four or fewer rental units are exempt from certain aspects of the Fair Housing Act. This exemption allows property owners to discriminate against certain groups when looking for tenants.

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 seven protected classes in real estate are 

  1. Race
  2. Color
  3. National origin
  4. Religion
  5. Sex (including sexual orientation and gender identity)
  6. Familial status
  7. Disabilities 

While the Fair Housing Act protects these groups, exceptions exist, such as the Mrs. Murphy Exemption. 

What Is the Mrs. Murphy Exemption?

The Mrs. Murphy Exemption states that if an owner-occupied dwelling has four or fewer rental units, it is exempt from the Fair Housing Act. This means that if a property owner lives in a home with three other rented rooms, they can technically discriminate against certain protected classes.

Mrs. Murphy Exemption History

Let us introduce you to Mrs. Murphy, a hypothetical elderly widow and property owner.

Senator Aiken created the imaginary Mrs. Murphy in 1964 to exemplify why the Fair Housing Act should have exemptions. The hypothetical Mrs. Murphy, set in her ways of bigotry, runs a small bed and breakfast to help pay the bills. She worries that her white guests may not like sharing a space with racial minorities, so she only chooses tenants who are white. 

The senator argued that because Mrs. Murphy lives in a property with only four rental units, she should be able to choose to whom she rents out rooms. As a result of this argument, the Mrs. Murphy Exemption was put into law under Title VIII of the Civil Rights Act of 1964.

How Does the Mrs. Murphy Exemption Work Now?

The Mrs. Murphy Exemption works differently now than it did in 1964. For example, the Mrs. Murphys of the world can no longer discriminate based on race; the Civil Rights act of 1866 strictly forbids it.

However, property owners who fall under the exemption can still discriminate based on:

  • Sex
  • Religion
  • Familial status
  • Disabilities

If Mrs. Murphy prefers renting to female tenants or fellow widows to support her limited income, this exemption gives her the right to turn down other applicants. 

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.

Some states even have systems that limit or completely override this discriminatory loophole.

Which States Recognize the Mrs. Murphy Exemption?

Check out this table with data compiled from Fox Rothschild Attorneys at Law to find out which states recognize this exemption:

StateDoes It Recognize the Murphy Exemption?
ArkansasYes, but with limitations
CaliforniaYes, but with limitations
ColoradoYes, but with limitations
ConnecticutYes, but with limitations
Florida Yes
IdahoYes, but with limitations
Iowa Yes
KentuckyYes, but with limitations
MaineYes, but with limitations
MassachusettsYes, but with limitations
MichiganYes, but with limitations
MinnesotaYes, but with limitations
Missouri Yes
MontanaYes, but with limitations
New HampshireYes, but with limitations
New JerseyYes, but with limitations
New MexicoYes
New YorkYes, but with limitations
North CarolinaYes
North DakotaYes
OregonYes, but with limitations
PennsylvaniaYes, but with limitations
Rhode IslandYes, but with limitations 
South CarolinaYes
South DakotaYes, but with limitations
TennesseeYes, but with limitations
VermontYes, but with limitations
West VirginiaYes

When Does the Mrs. Murphy Exemption Not Apply?

States that do not recognize this exemption include:

  • Alaska
  • Nevada
  • Ohio
  • Wisconsin

It’s also important to note that this exemption does not apply to advertising. For example, Mrs. Murphy cannot run a rental advertisement stating that certain religious groups need not apply. She also cannot tell prospective renters why they are being denied; she must deny their tenancy without explaining her reasoning. 

This exemption also does not apply in cases where a real estate agent represents Mrs. Murphy. Real estate professionals must comply with the federal Fair Housing Act, so they cannot partake in discriminatory behavior. If Mrs. Murphy decides to take the real estate exam and get a license herself, she can no longer discriminate against tenants in her home based on sex, religion, etc.

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?

The United States Department of Housing and Urban Development (HUD) enforces the Fair Housing Act. This agency penalizes landlords who use discriminatory practices that don’t fall under any exemptions. 

If a renter feels a landlord has discriminated against them, the HUD’s Office of Fair Housing and Equal Opportunity (HFEO) will investigate the matter. 

Penalties for Violating the Fair Housing Act

If a landlord is not protected by the Mrs. Murphy Exemption, they will be penalized for discriminating against protected classes. Penalties for violating the Fair Housing Act include 

  • $16,000 for one first-time violation
  • $37,500 if a violation has occurred in the previous 5 years
  • $65,000 if two previous violations have occurred in the previous 7 years

In cases where a landlord uses the threat of force to violate the FHA, they may even spend time in prison.

Are There Other Exemptions to the Fair Housing Act?

The Mrs. Murphy Exemption isn’t the only exception to the FHA. For example, the Fair Housing Act also does not cover the following housing types:

  • Single-family housing sold without a real estate agent
  • Privately owned clubs 
  • Housing for religious organizations 
  • Most housing communities for elderly tenants
  • Hotels 
  • Motels

Can Landlords Screen Tenants?

Landlords can still screen tenants without being accused of discrimination. Most states allow property owners to consider the following factors when looking for renters:

  • Credit score minimums
  • Income vs. rent
  • Pet requirements
  • Smoking preferences
  • Violent criminal record
  • Past evictions
  • Previous bankruptcies 

Mrs. Murphy’s Exemption will not be required for landlords who deny tenants based on these factors, as they are not considered discrimination under the Fair Housing Act

Does Housing Discrimination Still Occur?

Because of these exemptions and other factors, housing discrimination is still a problem in the United States. 

For example, studies show that rental agents provide qualified minority renters with fewer housing options than white renters. This subtle discrimination often flies under the radar, letting landlords violate the Fair Housing Act with no repercussions.

Another study from the National Low Income Housing Coalition (NLIHC) found that African American and Hispanic renters receive fewer responses from housing providers than white renters. This proves that there are still Mrs. Murphys out there getting away with discriminatory practices.

Let’s look at a recent real-world example of prejudice in the housing market.

United States v. Price

In 2020, a rental property manager named Gary Price was sued for racially discriminating against his tenants. Price harassed his renters by using racial slurs and disallowing them from inviting over nonwhite guests.  

While Price was ultimately penalized for violating the Fair Housing Act, this lawsuit proves that housing discrimination based on race is still a massive issue. 

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

The Mrs. Murphy Exemption overrides aspects of the FHA in owner-occupied homes with four or fewer rental units. This legal loophole is a weak spot in the Fair Housing Act that will appear on the real estate exam. 

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!

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