Explain Important Laws & Regulations
The real estate industry is massive and has laws and regulations ensure safety, transparency, and fair housing for all. Real estate laws and regulations address a wide range of topics, from tenant and landlord rights to taxes and investments. Understanding the basics of this crucial industry can help to protect real estate agents, brokers, landlords, tenants, and investors in all transactions.
Fair Housing Act
The Fair Housing Act (FHA) is a federal law that prohibits discrimination in housing. This law, which was passed in 1968, prevents individuals or entities in the real estate industry from discriminating against any potential tenants or buyers on the basis of race, color, religion, sex, national origin, disability, or familial status. This includes denying access to housing, refusing to rent or sell, or setting unfair terms or conditions for tenancy or purchase. Real estate agents, brokers, lenders, or any other parties involved in the sale or lease of property must follow the federal laws outlined in the FHA.
American Disabilities Act
The American Disability Act (ADA) is a civil rights law that prohibits discrimination against people with disabilities in all aspects of life, including real estate. The ADA requires both public and private real estate entities to provide equal access to all persons, regardless of disability. Private real estate entities must make reasonable accommodations such as adding railings and providing accessible bathrooms, bedrooms, and public spaces. Public real estate entities must ensure that all public spaces, such as malls or parks, are easily accessible to those with disabilities.
Truth in Lending Act
The Truth in Lending Act (TILA) is a federal consumer protection law that requires lenders to disclose exact loan terms and conditions to borrowers before any contract is signed. TILA protects buyers by making sure that no surprises are hidden in the fine print of a loan agreement. The lender must provide an estimated interest rate, estimated closing costs, and total amount of the loan before the loan is finalized. Additionally, the borrower must receive two copies of this disclosure, and they must be given a certain amount of time to review and agree to the terms.
HOME Investment Partnership Program
The Home Investment Partnership Program (HIP) is a federal program which provides grants to state and local governments to help create affordable housing. This grant money is used to provide financial assistance to low- and moderate-income families, who may not be able to obtain a traditional home loan. HIP also provides loans and loan insurance to local governments to help finance home purchases and rental projects.
Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act (RESPA) is a federal law that requires mortgage lenders to provide accurate, detailed disclosures of all fees and costs associated with the purchase of a home or other real estate. RESPA also prohibits lenders from requiring that the borrower purchase specific products, such as homeowner’s insurance, from the lender in order to gain approval for a loan. Finally, RESPA prohibits lenders from paying or receiving “kickbacks” or other fees for referring clients to specific providers.
The Interstate Land Sales Full Disclosure Act
The Interstate Land Sales Full Disclosure Act (ILSFDA) is a federal law that requires real estate brokers who operate in multiple states to provide meaningful and precise disclosures to buyers of large-scale parcels of land, such as large acreage or subdivision lots. Specifically, the ILSFDA requires disclosure of zoning, general information about the parcel and the nearby area, and any restrictions that are in place. These disclosures must be included in any contracts or agreements before the transaction is finalized.
Real Estate Records and Disclosures
The law requires real estate agents to provide accurate and detailed disclosure of any ”material fact or defect”, or any information that could have an impact on the price or value of a property. This disclosure is usually made in the form of an inspection or title report. The purpose of these reports is to ensure that all buyers and sellers have full knowledge of any defects or issues that could affect the value of the property.
States’ Traif Laws
Most states have laws that regulate the leasing or rental of residential or commercial real estate units. These laws, which are known as “traif” laws, protect the tenants by enshrining the rights and responsibilities of landlords and tenants in the form of written contracts. These laws vary by state and can be complicated; it is important for landlords, tenants, and real estate agents to be aware of their specific states’ traif laws.
Other Local Laws and Regulations
In addition to federal and state laws and regulations, there may be additional local laws and regulations applicable to real estate transactions. It is important for real estate agents, brokers, landlords, tenants, and investors to familiarize themselves with local laws and regulations, such as zoning ordinances and building codes. Understanding these laws and regulations ensures that real estate transactions are in compliance with all applicable laws.
Real estate is a complex industry with numerous laws and regulations that must be followed. It is essential for any real estate agent, broker, landlord, tenant, or investor to understand the laws that govern the real estate industry to ensure that all parties have a safe, transparent, and fair transaction.
