Real Estate Terms

Single-Family Home Exemption Explained

The Single-Family Home Exemption states that homeowners selling single-family homes without a licensed real estate agent are exempt from the Fair Housing Act. 

To ensure a passing grade on the real estate exam, you’ll need to be well-versed in the fair housing exemptions like the Single-Family Home Exemption. What better way to learn than from experienced real estate professionals like ourselves?

In this post, we’ll define the Single-Family Home Exemption, give examples of how it works, and discuss other FHA exemptions. 

What Is the Fair Housing Act (FHA)?

Before we dive into the Single-Family Home Exemption, we need to know about the Fair Housing Act of 1968. The Fair Housing Act, or Title VIII, defends protected classes against housing discrimination.

The Fair Housing Act applies to the following seven protected characteristics:

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

This act prohibits discrimination against these groups in the sale or rental of property. While the FHA covers most housing types, some exceptions exist. 

What Is the Single-Family Home Exemption?

The Single-Family Home Exemption states that any single-family dwelling sold without an agent is exempt from the FHA. This means single-family homeowners can be more discriminatory when selling their homes themselves.

What Is a Single-Family Home?

A single-family home is a residential property not attached to any other units. These homes are for only one family to live in at a time.

Examples of non-single family homes include:

  • Apartments
  • Townhouses
  • Condos
  • Duplexes
  • Mobile homes

The single-family exemption does not cover multi-family homes and other property types. Homeowners selling multi-family properties must follow all fair housing laws.

When Does the Single-Family Home Exemption Apply?

As mentioned, there are a few conditions to the Single-Family Home Exemption Act. For example, this exemption only applies when:

  1. The homeowner is not using a licensed real estate agent or broker
  2. The homeowner owns fewer than three other single-family homes
  3. The homeowner is not living on the property during the sale 
  4. No discriminatory advertising is used for the sale
  5. The exemption has not been used in the previous 24 months

The sale or rental of the home must meet all of these conditions for it to be exempt from fair housing laws.

When Does the Single-Family Home Exemption Not Apply?

This exemption still does not allow homeowners to discriminate based on race. They can only discriminate against characteristics such as sex, religion, or familial status.

In fact, there is no exemption to the federal Fair Housing Act that allows housing providers to discriminate racially. This is all thanks to the Civil Rights Act of 1866. This act asserts that citizens must be treated equally regardless of race.

Are There Other Exemptions to the Fair Housing Act?

The Single-Family Home Exemption isn’t the only exception to fair housing laws. Others exceptions include the Mrs. Murphy Exemption and affinity housing organizations.

The Mrs. Murphy Exemption

The Mrs. Murphy Exemption states that an owner-occupied dwelling with four or fewer units is exempt from the FHA. This exemption uses a hypothetical older widow named Mrs. Murphy to justify its creation. This exemption initially allowed property owners like Mrs. Murphy to discriminate against tenants.

While the Mrs. Murphy Exempetion still exists, housing providers can no longer use it to discriminate based on race. However, landlords in Mrs. Murphy’s position can still deny housing to renters based on

  • Sex
  • Religion
  • Familial status
  • Disabilities

Affinity Housing

Affinity housing is another exemption to the Fair Housing Act. This type of housing allows protected classes to live in exclusive communities. The purpose of these communities is to create a safe space where tenants with shared cultures can live together.

Examples of affinity housing include

  • Black affinity communities on college campuses
  • Same-sex dormitories on college campuses
  • Senior housing communities 
  • Housing for religious organizations 
  • Private clubs offering housing as amenities

Affinity housing is not housing discrimination because it is purely optional. Protected classes do not have to live in affinity communities. If they did, that would be housing segregation. Affinity communities only exist to give marginalized groups the option to live among like-minded tenants.

What to Know Before the Real Estate Exam

The Single-Family Home Exemption is one of the exceptions to the Fair Housing Act that all real estate professionals should know. This rule states that an owner of a single-family home is exempt from the FHA, provided that they meet every requirement.

This key real estate term and many others will be essential to passing your licensure exam. Make sure you’re prepared for the big day with our Real Estate Flashcards

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