STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6722

June 8, 1992

MICHIGAN HANDICAPPERS' CIVIL RIGHTS ACT:

Disclosure of the presence of a group home to a potential buyer

The Michigan Handicappers' Civil Rights Act does not prohibit sellers of real property and their agents, including licensed real estate brokers or salespersons, from disclosing to a potential buyer of real estate the presence of a group home for the handicapped in close proximity to the subject property, provided that such disclosure is truthful, is not made for the purpose of inducing additional real estate transactions from which the agent or seller may benefit, and is not accompanied by any representation that the presence of the group home has resulted or will result in a reduction of property values or other negative effects specified in section 506 of the Act.

Truthful commercial speech is protected both by the First Amendment to the United States Constitution and Michigan's own Const 1963, art 1, s 5, under the controlling decisions of the United States Supreme Court and the Michigan courts.

Honorable Paul Wartner

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion on a question which may be stated as follows:

The term "group home" in your question refers to an "adult foster care facility" established under the provisions of the Adult Foster Care Facility Licensing Act, MCL 400.701 et seq; MSA 16.610(51) et seq. Section 3(4) of the Act, MCL 400.703; MSA 16.610(53), defines an "adult foster care facility" as a facility or home providing care, supervision, and room and board to adults who are aged, emotionally disturbed, developmentally disabled, or physically handicapped.

As stated in its title, the Michigan Handicappers' Civil Rights Act (MHCRA), MCL 37.1101 et seq; MSA 3.550(101) et seq, was enacted in order to "define the civil rights of individuals who have handicaps" and to "prohibit discriminatory practices, policies, and customs in the exercise of those rights." The housing discrimination provisions of the MHCRA closely parallel those of the Elliott-Larsen Civil Rights Act, MCL 37.2101 et seq; MSA 3.548(101) et seq, except that the latter prohibits discrimination based on religion, race, color, national origin, age, sex, height, weight or marital status rather than handicap. Section 506 of the MHCRA, MCL 37.1506; MSA 3.550(506), the only section directly pertinent to your question, ⁽¹⁾ provides:

MCL 37.1506; MSA 3.550(506).

The first clause of section 506 prohibits a person from representing that a change has occurred (or will or may occur) in the neighborhood with respect to handicappers, but only if the representation is made "for the purpose of inducing a real estate transaction" from which the speaker may benefit. This clause prohibits a practice, commonly known as "blockbusting," in which unscrupulous profiteers encourage owners of property to sell by preying upon irrational fears of neighborhood change.

Blockbusting ordinarily involves the exploitation of prejudice on the part of neighboring property owners who are potential sellers, in an effort to promote panic selling. The real estate broker or agent makes statements to the neighboring property owners which are intended to play upon the the neighbors' fears and prejudices so as to induce those neighbors to list and sell their property. This benefits the real estate firm by provoking additional real estate transactions--and, thus, additional fees and commissions--in the affected neighborhood.

Your question, however, involves the truthful disclosure to a potential purchaser rather than to a neighboring homeowner or other potential seller. Given this fact, any prejudice engendered by the disclosure would tend to discourage the buyer, thus tending to work against the interest of the seller and the real estate agent. It follows that a simple, truthful disclosure to a potential purchaser that a group home exists in the neighborhood would not be made for the purpose of inducing a real estate transaction by a seller and would not, therefore, violate the first clause of section 506 of the MHCRA.

The second clause of section 506 prohibits a more aggressive form of "blockbusting" in which real estate brokers or agents not only disclose the presence of handicappers in the neighborhood, but also represent that this change in the neighborhood will or may cause certain negative consequences such as the lowering of property values. The language used in this second section of section 506, however, does not prohibit a person from making a truthful statement which merely acknowledges the existence of a group home in the neighborhood; rather, the prohibition applies only where the speaker also asserts that the existence of such a home has led or will lead to the reduction of property values or other similar negative consequences. The disclosure contemplated by your question concerns only the former type of assertion, i.e., a truthful statement that a group home exists in the neighborhood. Because such a statement contains absolutely no allegation that any negative consequences have resulted or will result from the existence of that home, it is not prohibited by the second clause of section 506. ⁽²⁾

In summary, then, section 506 of the MHCRA, by its express terms, does not prohibit a real estate seller or agent from making a truthful disclosure of the existence of a group home in the neighborhood, provided that the disclosure is not made for the purpose of inducing additional real estate transactions from which the agent or seller may benefit and is not accompanied by any representation that the presence of the group home will negatively affect the neighborhood.

This conclusion is further supported and, indeed, compelled by the established rule of statutory construction that the Legislature shall be presumed to have intended that construction of a statute which renders it constitutional. People v Dubina, 304 Mich 363, 369; 8 NW2d 99 (1943).

Commercial speech, such as that described in your question, at least to the extent that it is truthful and non-deceptive, is protected both by the free speech provisions of the First Amendment to the Constitution of the United States and by the corresponding provisions of Michigan's own Const 1963, art 1, s 5. Virginia Pharmacy Bd v Virginia Citizens Consumer Council, 425 US 748, 771-773; 96 SCt 1817; 48 LEd2d 346 (1976); Michigan Beer & Wine Wholesalers Ass'n v Attorney General, 142 MichApp 294, 312; 370 NW2d 328 (1985), cert den 479 US 939; 107 SCt 420; 93 LEd2d 371 (1986). While the courts have upheld statutes prohibiting blockbusting against First Amendment challenges, see, e.g., United States v Bob Lawrence Realty, 474 F2d 115, 122, (CA 5, 1973), cert den 414 US 826; 94 SCt 131; 38 LEd2d 59 (1973), the courts have also made it clear that such laws do not prohibit purely factual statements which are not made for the purpose of inducing panic selling or for other similarly improper purposes. See, e.g., Abel v Lomenzo, 25 AD2d 104, 106; 267 NYS2d 265, aff'd 18 NY2d 619, 272 NYS2d 771, 219 NE2d 287 (1966); United States v Mintzes, 304 FSupp 1305, 1312 (DMd, 1969); United States v Saroff, 377 FSupp 352, 361 (EDTenn, 1974), aff'd 516 F2d 902 (CA 6, 1975). But cf. Zuch v Hussey, 394 FSupp 1028, 1051 n 11 (EDMich, 1975). Similarly, in Linmark Associates v Willingboro, 431 US 85, 97; 97 SCt 1614; 52 LEd2d 155 (1977), the Supreme Court struck down a township ordinance prohibiting "for sale" signs. The ordinance had been enacted to help prevent panic selling by whites who feared that their neighborhoods were becoming predominantly black. The Court held that the denial of truthful information to citizens on the ground that it would cause them to behave irrationally was inconsistent with First Amendment guarantees.

It is my opinion, therefore, that the Michigan Handicappers' Civil Rights Act does not prohibit sellers of real property and their agents, including licensed real estate brokers or salespersons, from disclosing to a potential buyer of real estate the presence of a group home for the handicapped in close proximity to the subject property, provided that such disclosure is truthful, is not made for the purpose of inducing additional real estate transactions from which the agent or seller may benefit, and is not accompanied by any representation that the presence of the group home has resulted or will result in a reduction of property values or other negative effects specified in section 506 of the Act.

Frank J. Kelley

Attorney General