'No Children, No Section 8' - Advertising, Steering, and the Affiliated Title Company

Three distinct problems, all reached by the federal Fair Housing Act and the Kentucky Civil Rights Act, which protect familial status and disability along with race, color, religion, sex, national origin, and ancestry.

• The seller's instructions. 'No families with young children' is a flat refusal to sell to a protected class. 'No Section 8' is a source-of-income preference: Kentucky does not protect source of income statewide, but some local ordinances do, and in practice it functions as a proxy for race or disability. Either way, Tasha should refuse it.
• The ad. 'Ideal for young professionals' indicates a preference based on familial status and is discriminatory advertising. 'Must be employed' screens on a characteristic that operates as a proxy for protected status. A lawful ad describes the property and carries the Equal Housing Opportunity logo; it does not describe the preferred buyer.
• The steering. Telling a wheelchair user the house 'isn't really suitable' and redirecting her to another area is textbook steering - different treatment because of disability, and a limitation of her housing choices. The correct response is to show the property and describe objective features such as the staircase; the buyer decides what suits her.

Each of these is independently actionable, and together they suggest a pattern rather than an isolated slip.

Her duty of obedience runs only to lawful instructions. She owes the seller loyalty and confidentiality, but she has no duty to carry out a discriminatory instruction, and her independent obligations under fair housing law override the seller's preference. An agent cannot launder a seller's bias through an advertisement.

What she should have done: explain plainly that she cannot advertise or screen on those bases, put the explanation in writing, and offer a compliant alternative ad - for example, describing the bedrooms, the hardwood floors, and the location without characterizing the ideal occupant.

If the seller insists on discriminatory terms, the broker should terminate the listing in writing rather than continue. Staying on means the firm's name is on the ad and the firm is a respondent in the complaint.

What the broker should do now: stop the ad, correct it, document the timeline showing the firm refused and advised the seller, and re-train on advertising review. If a complaint is filed, that contemporaneous record is the difference between a firm that corrected a client and one that joined in.

This is a RESPA Section 8 problem, not merely a disclosure oversight.

• The general rule. Paying or receiving anything of value for the referral of settlement service business is prohibited. A title agency paying a real estate firm $300 for each closing sent its way is a textbook referral fee.
• The affiliated business arrangement exception. It applies only if: (1) a written AfBA disclosure is given to the consumer at or before the referral, stating the ownership relationship and that use of the title company is not required; (2) the only thing of value that may flow is a return on ownership - a dividend or profit distribution reasonably related to the ownership interest; and (3) the title company actually performs the core services.
• Why this fails. A flat per-closing payment is compensation for the referral itself, not a return on ownership, and no disclosure was given to the buyer's side at all. Ownership of the title agency does not cure a per-deal fee; the fee is the violation.

Kentucky license law separately requires the broker to disclose an ownership interest in a settlement service provider, but that disclosure does not satisfy RESPA.

Fix: stop the per-closing payment, adopt a compliant AfBA disclosure delivered at or before referral, and make clear to every buyer that they may choose any title company. Undisclosed referral fees are among the most commonly audited violations in settlement, and the liability runs to both companies.