The Portland, Ore. MLS Settlement: What You Need To Know

We asked attorney P. Steven Russell III of Portland, Ore., some questions concerning the recent settlement of the fair housing complaint brought against the Portland MLS by the Fair Housing Council of Oregon and the implications for other MLSs. Russell represented the MLS in the case. Here are his comments.

June 1, 1996

Q: Many think that the federal Fair Housing Act applies only to real estate advertising. How can words written in the "Remarks" section of an MLS listing be considered in violation of fair housing?

RUSSELL: According to federal regulations: "It shall be unlawful to make, print or publish . . . any notice, statement or advertisement . . . containing discriminatory material. . . . The prohibition in this section shall apply to all written or oral notices or statements by a person engaged in the sale or rental of a dwelling." Thus, any statement containing the prohibited discriminatory material is a violation of the act, regardless of where the statement appears or whether it is written or oral.

Q:Will the MLS be exempted from punishment for fair housing violations that appear in the "Remarks" section of a listing if the MLS can show a good faith effort to educate members about proper wording of listing information?

RUSSELL:Neither the Fair Housing Act nor federal regulations contain any exemption from liability based on the MLS's educational program or policies that prohibit discrimination. In fact, the Fair Housing Act is a so-called strict liability law, meaning that a negligent or even an unintentional violation is still a violation, and the accidental or negligent character of the discriminatory statement is not a defense against the violation. Intentional or egregious violations, of course, may result in more severe penalties or damages.

Q:Does my MLS need to screen the "Remarks" section of the listings for possible fair housing violations?

RUSSELL:Each MLS should consult its own counsel regarding Fair Housing Act compliance procedures, including whether and how listing information should be screened before publication. Some MLSs have considered eliminating the "Remarks" section of listings altogether on the theory that these free-form listing fields are fertile ground for misrepresentation claims and potential Fair Housing Act violations. The Portland MLS now conducts specific routine searches of all free-form fields immediately before MLS books are published.

Q: What is the potential liability of an MLS if a fair housing violation shows up in the "Remarks" section of a listing?

RUSSELL: Because an MLS "prints, publishes or causes to be printed or published" the offensive listing, the MLS is liable for the violation. It doesn't matter that the MLS is broker loaded---with information being fed directly into the system by the broker---or has a policy requiring its members to comply with the Fair Housing Act and other applicable laws. As a result of the contract between the MLS and the broker, an MLS may be able to force the broker submitting the listing to respond to the MLS for any damages the MLS suffers as a result of the violation, but the MLS may still be held directly liable under the act.

Q: Who else besides the MLS is liable if a fair housing violation shows up on a listing?

RUSSELL: Although the ultimate liability of the parties will depend on the facts of each case, it's possible that every party mak-ing the prohibited statement may be held liable: the MLS, the broker who owns the listing, the salesperson who wrote the offensive statement in the "Remarks" section, and the owner of the listed property, either because the owner asked for the statement to be included or because owners are generally held responsible for the act of their salespeople.

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