A California mortgage company uses an automated underwriting algorithm that applies identical financial criteria to all applicants, but statistical analysis shows it denies applications from borrowers in predominantly Hispanic neighborhoods at a significantly higher rate without a demonstrable business justification. Under California Government Code §12955.8, is this practice actionable under fair housing law?
Correct Answer
D) Yes, because California FEHA recognizes disparate impact liability, and a facially neutral practice that produces an unjustified discriminatory effect on a protected class can violate fair housing law
California Government Code §12955.8 expressly codifies disparate impact liability under FEHA. A practice need not be intentionally discriminatory to be unlawful — if it produces a disproportionate adverse effect on a protected class and the defendant cannot demonstrate that the practice is necessary to achieve a legitimate, nondiscriminatory objective that cannot be served by a less discriminatory alternative, it violates fair housing law. The algorithm's facially neutral criteria do not shield the company from liability where no sufficient business justification exists.
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- → A California salesperson's personal real estate blog states, 'I closed 50 transactions last year!' The actual number was 32. A competing agent reports this to the DRE. What is the most likely regulatory outcome?
- → A seller is selling a condominium in a California common interest development (CID). In addition to the TDS, which disclosure package is the seller required to provide under California Civil Code §4525?
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- → A property in a California Mello-Roos district has a base Proposition 13 property tax of 1% on its assessed value of $600,000, plus a Mello-Roos special tax of $3,200 per year. What is the total annual property tax bill for this property?
- → A California buyer's agent conducts a visual inspection of a property and observes extensive, recently applied caulking around all window frames and along the base of the exterior walls. What is the buyer's agent's most appropriate next step?
- → A California buyer's agent conducts a visual inspection and notices that the property's water heater is not strapped to the wall as required by California law for seismic safety. Under California Health and Safety Code §19211, water heaters must be braced. What should the buyer's agent do?
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