ABA Family Legal Guide

Buying and Selling a Home

Meeting the Players

The Fair Housing Act

Can a homeowner legally refuse to sell a home to a potential buyer?

The Fair Housing Act, Title VIII of the Civil Rights Act of 1968, addresses housing discrimination. This law prohibits housing discrimination by real estate firms and homeowners. This means that homeowners may not refuse to lease or sell property based on race, religion, gender, color, or national origin. In some localities, special housing discrimination ordinances or laws also cover sexual orientation. This does not mean, however, that sellers must sell their home to anyone who makes an offer. Of course, sellers may accept a higher bid, or prefer a buyer who already has a mortgage loan commitment. Sellers also might legitimately prefer one buyer over another for noneconomic reasons, as when one buyer promises to preserve the character of the house. But a buyer could take legal action if the seller refuses to sell and the buyer believes that the true motivation was discrimination.

A homeowner can face serious financial penalties if found in violation of this law. The potential buyer could sue for actual monetary losses as well as lawyer's fees, court costs, and even punitive damages.

A homeowner may lawfully discriminate on economic grounds. Without too much fear of legal action, a seller could refuse the offer of a buyer with a poor credit rating or inability to obtain a loan. The homeowner's argument could be that he or she cannot be forced to remove the home from the market while waiting for a loan commitment that had little chance of materializing. Perhaps the safest thing for the seller to do if the economic viability of an offer is in question is to tell the buyer that his or her offer might be accepted once the loan commitment is obtained if no other offers were received in the interim.