NY State Reaches Settlements with Three LI Brokerages Over Discriminatory Practices, Fair Housing Violations
John Jordan | August 31, 2022
ALBANY—New York State Gov. Kathy Hochul and Attorney General Letitia James announced on Aug. 30 the state had reached settlements with three Long Island real estate brokerage firms found to have engaged in discriminatory practices and Fair Housing Law violations first uncovered in an investigation by Newsday in late 2019.
Following the Newsday report, the Office of the Attorney General and the Department of State opened parallel investigations into Keller Williams Greater Nassau, Keller Williams Realty Elite and Laffey Real Estate. The probe by the OAG concluded that LRE, KWRE, and KWGN engaged in discriminatory practices that violated state and federal fair housing laws. The parallel investigations found that agents associated at these firms steered prospective homebuyers of color away from white neighborhoods and subjected them to different requirements than white homebuyers, and otherwise engaged in biased behavior.
In some documented cases, agents were recorded showing preferential treatment to white homebuyers, disparaging neighborhoods of color, and directing homebuyers of color to homes in neighborhoods where residents predominantly belonged to communities of color.
State officials announced that as part of agreements with the three brokerage firms, the brokerage firms are required to spend more than $115,000 to remedy their discriminatory practices and undergo regular fair housing trainings. Specifically, LRE is required to pay $30,000 to the state and $35,000 to Suffolk County to conduct unannounced fair housing testing of any LRE agent at any LRE branch. In addition, LRE must create an online complaint form for potential buyers and sellers to report any potential instances of discrimination, and LRE is required to provide quarterly fair housing trainings to all its agents.
KWGN and KWRE, under a global settlement with OAG and DOS, are required to pay $25,000 to Suffolk County to promote enforcement of and compliance with fair housing laws. KWGN and KWRE must also spend up to $25,000 on fair housing courses and trainings for its agents.
“Efforts to discriminate against any New Yorker’s fair access to housing cannot, and will not, be tolerated,” said Attorney General James. “These investigations have uncovered a pervasive culture of allowing unlawful discrimination and violations of every New Yorker’s right to fair housing. These settlements should send a clear message: if you discriminate and deny New Yorkers their basic right to housing, we will take action.”
“With these actions, we’re delivering a forceful message: New York State has zero tolerance for discrimination,” said Gov. Hochul. “Here in New York, we firmly believe that housing is a human right and I thank Attorney General James and Secretary of State Rodriguez for their work to enforce our laws and protect that right for all New Yorkers.”
“Real estate professionals in New York State have an obligation to provide fair and equitable services to all,” said Secretary of State Robert J. Rodriguez. “Housing discrimination is illegal, and the Department will not tolerate New Yorker’s rights being violated. This comprehensive fair housing settlement demonstrates that New York’s leadership is making sure every New Yorker has equal access to housing. The penalties and agreements with these real estate companies educate their agents about housing laws to ensure New Yorkers are protected.”
The Attorney General’s investigation involved review of two paired tests conducted on LRE agents—one in the firm’s Huntington office and another in Great Neck. In Huntington, LRE was found to have required a potential Black homebuyer to obtain a pre-approval letter from a mortgage lender before he was shown a home, while the same standard was not applied to a white homebuyer. In Great Neck, an LRE agent lectured a Hispanic potential homebuyer about his finances, suggesting that he limit his search to an area he could afford without any insight into his financial situation. The same agent did not give the affordability lecture to a white homebuyer looking for homes in the same neighborhood and instead steered him towards neighborhoods that were less diverse, stating, “Do you want your kids to be in school with kids that they relate to?” Based on a thorough review of evidence collected throughout the investigation, OAG determined that LRE’s agents unlawfully discriminated against homebuyers based on race, color, and national origin, in violation of the Fair Housing Act.
KWRE and KWGN also engaged in illegal and discriminatory housing practices, according to the Attorney General’s office. For example, one agent warned a white potential homebuyer against a particular neighborhood, citing recent gang violence, but then proceeded to tell a Black potential homebuyer that the same area has “the nicest people.” The Black potential homebuyer was also directed toward predominantly non-white areas more than the white potential homebuyer, in a practice known as racial steering. A KWGN agent required a Black potential homebuyer sign an exclusivity agreement before touring homes, but showed properties to a white potential homebuyer immediately, without any mention of such an agreement. In another instance, the agent told a white potential homebuyer to avoid school districts where a majority of the students were of color, saying they were not good schools, and even admitting to the potential homebuyer, “legally, I get in big trouble if I [tell you this].”
The paired tests conducted controlled for race as the only variable: the prospective homebuyers otherwise submitted similar financial profiles and identical terms for their future homes.
The OAG concluded that LRE, KWRE, and KWGN violated the Fair Housing Act and the New York State Human Rights Law.
The Attorney General’s office noted that an investigation into another unnamed real estate brokerage is ongoing. The DOS has taken action against individual licensed agents, which included the revocation of a license belonging to a former KWGN agent and imposed a fine against an individual former KWRE agent. Several DOS investigations into LRE and its agents also remain pending.