On September 30, 2024, I published a video message explaining the requirements of the federal Corporate Transparency Act. (“CTA,” you can see the video above). This law requires most U.S. based corporations or limited liability companies to file a “Beneficial Ownership Information” Report (“BOI Report”) with the Treasury Department’s Financial Crime Enforcement Network identifying all “beneficial owners.” A beneficial owner is any individual who directly or indirectly owns 25% or more equity interest in a reporting company, or who has substantial control over the reporting company. The law set the deadline for compliance as January 1, 2025, for companies existing prior to January 1, 2024. New entities formed in 2024 would have 90 days to comply, and after January 1, 2025, any new corporation or LLC would have 30 days. But all this came to a screeching halt in the federal courts that make up the 5th Circuit. First, on December 3, 2024, the federal district court for the Northern District of Texas issued a nationwide injunction against the enforcement of the CTA., suspending the requirement to file BOI reports until the constitutionality of the Corporate Transparency Act could be determined. The government quickly appealed, and on December 23, 2024, the 5th Circuit Court of Appeals overturned the injunction, reinstated the reporting requirement, and extended the deadline to file reports until January 13, 2024. Then, three days later, a different panel of the 5th Circuit vacated the stay (in effect overturning the overturning) and put the preliminary injunction back in place. BOI filing requirements were again suspended. The government again quickly responded and appealed to the U.S. Supreme Court. Meanwhile, on January 7, 2025, in a different federal district court in Texas (this time the Eastern District), the court issued an identical nationwide injunctions.

Is It Really Necessary to Have an Attorney in A Real Estate Transaction? Indiana Clients should click here for a Special Note Many non-legal professionals, such as realtors, bankers, or mortgage brokers might still insist that real estate contracts and closings can be accomplished without the assistance of an attorney. They argue that the expense is too great, especially when customers are paying so much in other expenses related to selling or buying their home or obtaining financing. Yet, it ís still true — the purchase of a home is the most expensive purchase you will ever make. Why wouldn’t you want to protect that investment with all the resources available to you? Here are just some of the reasons why you should engage an attorney when you buy or sell a home: 1. A Real Estate Attorney Will Keep Things Above Board and Ultimately Save You Money. Real estate contracts are fairly complicated. Your realtor will help prepare the contract, but even the savviest real estate agent is still filling out a form. These form contracts contain attorney review provisions, which will allow the attorney to make sure there are no hidden “pitfalls,” that the contract meets the client’s expectations and that the clients truly understand what they are getting into. An attorney’s experience helps assure the deal is fair to you. The goal is to protect your interests. Unforeseen problems might come up before or after the closing. If contractual contingencies are not met, the deal might fall through. The attorney review process that happens when the contract is signed could save you a lot more than the attorney’s fee. 2. Real Estate Attorneys Can Help You Get Your Loan Approved. The process of getting approved for a loan, and dealing with the ins and outs of home finance is changing all the time. The recent scandals involving loan fraud, improper documentation, and lenders or title companies charging unfair fees reveal how tricky these concepts are. A lawyer’s advice and experience can help avoid these problems from the time you enter into the contract through the closing and even afterwards. But even more so, now that federal and state regulators are trying to “fix” these problems, and the regulatory pendulum is swinging towards making it more difficult to obtain financing and for getting buyers to the closing stage, the new rules are confusing for buyers, sellers, lenders, and realtors — an attorney can help make sense of the financing landscape. 3. Real Estate Attorneys Help Make Sure the Deal Closes. A lot of things need to happen before a real estate transaction can close. There are key points along the way where conflicts often arise. If these conflicts can’t be overcome, the deal inevitably dies. Time frames involving inspections, financing, notices, and other contingencies need to be followed, and if they are not, the attorney can protect your rights. What if the inspection turns up an unforeseen defect? Or the survey reveals an encroachment? What if there are issues with the chain of title, unpaid taxes, judgments against the parties, or other liens? Your attorney will work to resolve these problems before you close. 4. Real Estate Attorneys Help Cut Red Tape. Many municipalities have enacted strict requirements that must be satisfied before the real estate transfer can be completed. These can include home inspections and repairs, zoning certificates, water certifications and payment, and transfer taxes and other requirements before a property can be transferred. In some cases, such requirements are the Seller’s responsibilities, in others it’s the Buyer’s. Your attorney will help you keep this all straight. 5. Real Estate Attorneys Make Sense of Title Issues. In Illinois, a real estate attorney acts as the Seller’s title agent. The attorney works with the title company to make sure the Seller can convey clear title to the buyer. The buyer’s attorney will review the title commitment and survey to ensure the buyer is receiving exactly what the contract requires. The attorney will explain the intricacies of title exceptions and liens. Your attorney is invaluable in offering explanation and assistance in this area. 6. Real Estate Attorneys Help Avoid Post-Closing Problems. Even after the closing, disputes can arise. There might be a lack of clarity or even a mistake in the contract. An issue with the title arises. The buyer moves in and discovers some horrible problem after the fact. Your attorney will help make sure any contractual issues are covered, the title is clear prior to closing, inspection issues have been resolved, and all required disclosures were made. If the Seller and Buyer each have an attorney, things go a lot smoother. (As a side note, even if something does go horribly wrong, the deal falls apart, and the result is rancorous and expensive litigation over who is at fault, the only professional sitting at the closing table with professional liability insurance to cover such a problem is your attorney). 7. Real Estate Attorneys Help Make Sense of It All. Whether buying or selling a home, the documents you’ll be signing at closing will seem both voluminous and confusing. You need your questions answered. Representatives of the lender or title company either cannot answer or have a conflict of interest. A knowledgeable realtor is out of their depth when trying to give what is essentially legal advice. An attorney will explain it all to you, as your advocate. 8. Real Estate Attorneys Advise You on More than Real Estate. Your attorney will look deeper than just the transaction. Purchasing a home often involves more than just qualifying for a mortgage and closing. The client who now owns real estate will need to understand matters relating to debt-servicing based on the value of the home. Home ownership raises questions of estate planning, financial planning, accounting, and taxation. For example, there are different ways a person can hold title to real estate — a buyer needs to make an informed decision on how title should be held. Estate planning concerns might dictate holding title in a trust, or the owner of a business or a professional (e.g. a doctor) might want to try and avoid exposure to legal liability. An attorney will help his client understand these issues and refer the client to other professionals to help properly sort out these concepts when necessary. 9. Real Estate Attorneys Are Not that Expensive. The going rate for hiring an attorney to help you with your real estate transaction is still generally a bargain when you consider what the other closing charges and fees will be and the services an attorney provides. Most attorneys will provide real estate closing services on a flat fee basis, encompassing all matters related to the transaction. The amount of the fee usually amounts to about one half of one percent of the contract price or less. And the cost of a litigation attorney to clean up the mess of a failed transaction is a lot higher.

For a half century, federal law has prohibited employers from discriminating against their workers based on religion. Title VII of the Civil Rights Act made it clear that employers must “reasonably accommodate. . . an employee’s or prospective employee’s religious observance or practice” unless the employer is “unable” to do so “without undue hardship on the conduct of the employer’s business.” 42 U.S.C §2000e(j). The question for an employer has been “Where is the line drawn?” If an employee’s religious practices require the employer to change its policies or make some special exception, at what point does it become an “undue burden?” In 1977, the U.S. Supreme Court decided Trans World Airlines v. Hardison, 432 U.S. 63 (1977). The case involved a Seventh-Day Adventist employee, whose religious beliefs required that he not work on their Sabbath Day – which was Saturday. The employee asked to have every Saturday off. Because the employer operated seven days a week, and scheduled its workers according to seniority, more recent hires like this employee were assigned to work on Saturday. Attempts were made to accommodate the employee, but if the employee didn’t work his assigned Saturday shift, the employer was forced to fill the shift with a supervisor, shift another employee over (which left that department undermanned), or pay premium wages for overtime. The employee was fired for refusing to work his assigned shift and brought an action against the employer via Title VII for failing to make a “reasonable accommodation.” Id. at 67-69. While the Court ruled in the employer’s favor, it was not the decision itself that made the most impact, but what the court said about “undue hardship.” “To require [the employer] to bear more than a de minimus cost” to provide the accommodation “is an undue hardship.” Id. at 84. Courts that have interpreted Title VII since then have understood that an employer has no duty to accommodate an employee’s sincerely held religious beliefs if the employer could demonstrate that the proposed accommodation would result in more than a minimal cost or expense for the business. Even when the Equal Employment Opportunity Commission investigated claims of religious discrimination, it adopted this position. However, in an opinion released June 29, 2023, the U.S. Supreme Court announced that this was all wrong. In Groff v. DeJoy, the Court ruled that a “small or trifling” burden is not the kind of “undue hardship” that justifies an employer refusing to accommodate an employee’s religious beliefs. Id. at 17. Instead, employers must accommodate employee religious beliefs unless they can show that “granting an accommodation would result in substantial increased costs in relation to the conduct of” employer’s business. Id. at 18. The facts of Groff are similar to Hardison. The employee was an evangelical Christian who believed that Sundays must be reserved for rest and worship. He began working for the employer (the U.S. Postal Service) in 2012, He was disciplined for refusing to come to work when scheduled to work on Sundays and resigned in 2019. Id. at 2-3. The Court, in a unanimous opinion, spent a great deal of space explaining the Hardison decision. Justice Alito’s opinion explained that courts interpreting Hardison have construed “undue hardship” to mean “any effort or cost that was more” than minimal, but that this interpretation is “a mistake.” Id. at 19. Hardison’s focus had been on whether federal employment discrimination laws required an employer and labor union to accommodate employee religious practices at the expense of bargained-for seniority rights of the established employees. Hardison barely discussed the question of what constituted an “undue hardship.” Id., 16-18. Indeed, Hardison relied on an express finding of the District Court that the employee’s proposed accommodations “would have created an undue burden on the conduct of [employer’s] business (Hardison, 42 U.S., at 84, n.15) and that “accommodation is not required when it entails “substantial” “costs” or “expenditures.” Groff at 3. The Court noted that the phrase “undue hardship” required a higher standard. “Hardship” itself is a term that means “something hard to bear,” and “more than a mere burden.” Id. at 16. With the additional modifier, “undue,” the concept must be “excessive” or “unjustifiable.” Id. The Groff employee argued that employers must accommodate religious practices unless the employer would experience “significant difficulty or expense.” The Government argued that an “undue hardship” meant an employer would suffer” substantial expenditures” or “substantial additional costs.” The Court concluded that “it is enough to say that an employer must show that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business.” Id. at 18. So, if “undue hardship” does not mean “de minimus” anymore, but rather means “substantial increased costs,” how are employers to interpret that? The Court, while refusing to establish any kind of clearly established “bright line” test, noted that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business.” Id. at 18 (emphasis added). This is not a one-size-fits-all standard. A small business operating at one location with 15 employees might face substantial increased costs accommodating an employee like the one in Groff, while a Fortune 500 company could allow this same employee the leeway necessary to accomplish the basic functions of his job while not violating his conscience. The Court also noted that the employee/plaintiff wanted the Court to apply the same standards used to determine when a suggested accommodation becomes an undue hardship from the standards under the Americans with Disabilities Act (“ADA”). Id. at 18. Under the ADA’s Enforcement Guidance, “undue hardship” also means “significant difficulty or expense.” The guidance encourages an analysis “which focuses on the resources and circumstances of the particular employer in relationship to the cost or difficulty of providing a specific accommodation. Undue hardship refers not only to financial difficulty, but to reasonable accommodations that are unduly extensive, substantial, or disruptive, or those that would fundamentally alter the nature or operation of the business.” EEOC Enforcement Guidance on Reasonable Accommodation and Undue Hardship under the Americans with Disabilities Act. [Washington, D.C.] EEOC, Notice No. 915.002 (October 17, 2002). The Groff decision seems to suggest the Title VII standard for establishing undue hardship is lower than the ADA standard, noting that the suggestion that decades’ worth of ADA caselaw should serve to guide the courts “goes too far.” Groff, at 19. I think it’s a closer call than Justice Alito suggests. I guess we will wait for the lower courts to figure this out. But the Groff Court has made it clear that employers must do more than simply determine if a particular possible religious accommodation suggested by an employee is reasonable. For example, in the Groff example, giving the Sabbatarian employee every Sunday off will force other employees to work overtime, meaning an increased payroll, which the employer concludes is an “undue hardship.” Id. at 20. The employer will need to consider other options, such as voluntary shift swapping, incentive pay, or shifting employees from one worksite to another. Id. at 20-21. “Title VII requires that an employer reasonably accommodate an employee’s practice of religion, not merely that it assesses the reasonableness of a particular possible accommodation or accommodations.” Id. at 20. Other factors that might be relevant when an employer considers the impact of a religious accommodation is how it will affect the productivity or morale of the other employees. However, “a hardship that is attributable to employee animosity to a particular religion, to religion in gen­eral, or to the very notion of accommodating religious practice, cannot be considered “undue.” Bias or hostility to a religious practice or accommodation cannot supply a defense.” Id. at 5. The Court remanded the case back to trial, specifically instructing the District Court to consider all possible accommodations, some of which may have been overlooked because of the “de minimus” threshold. Id. at 21. The Groff employee’s high court victory may prove hollow. The evidence that there were multiple efforts by the employer to accommodate the employee’s request to have Sunday off that were not considered at trial, and that the trial court found there to a be genuine issue of material fact regarding whether the employee’s resignation was an “adverse employment action” for purposes of Title VII indicate a strong possibility that the employer will still prevail. Id. at 3, n.2. But the Groff Court’s clarified standard for what constitutes an “undue burden” for religious accommodation under Title VI will offer employees who seek religious accommodations more negotiating power, and force employers to take such requests more seriously.

Carl Hansberry was a real “renaissance man.” He had been a deputy U.S. Marshall. He was an inventor with several patents. But he ultimately excelled at being a business entrepreneur – as a banker and as a real estate broker. He founded and was President of Lake Street Bank in Chicago and was one of the most successful real estate agents of his time. His general level of prosperity seemed to demand that he relocate his family consisting of a wife and four young children to a more prominent neighborhood in the City. But Carl Hansberry had limited options. The year was 1937, and he was African American. In addition, he lived in the public eye. Besides being the founder of one of Chicago’s first black-owned financial institutions and an objectively wealthy man, Carl Hansberry was an activist. He designed the businesses he built for the betterment of the black community. He helped organize and fund philanthropic organizations that advanced African American interests. He took political risks as well, at a time when speaking out was dangerous; he created the “Hansberry Foundation,” and wrote, published, and distributed pamphlets advocating for black civil rights. The Chicago Defender, a newspaper that catered to African American and urban issues, had dubbed Hansberry a “race man,” a title reserved for blacks who selflessly and tirelessly worked to contribute to the betterment of the community, and bravely stood against the ideas, people, and institutions in society that threatened and sought to limit the well-being and prosperity of his people. The prominent neighborhood where Hansberry chose to purchase a home in 1937 was Chicago’s Woodlawn neighborhood. Today, Woodlawn has mostly African American residents. But back then, it was a white neighborhood on Chicago’s south side. Despite a huge influx of black residents into Chicago at the time, African Americans were shut out of neighborhoods like Woodlawn because of racially restrictive covenants. A “restrictive covenant” is an agreement in a deed to real estate or in a plat of development that limits the future use of the property by any subsequent owner. An example might be “no fence may be constructed exceeding six feet in height,” or “no structure may be erected less than 5 feet from the lot lines,” or “basketball and tennis courts are prohibited.” Any new owner who violates these covenants can be fined, penalized, or legally enjoined and forced to comply. In 1928, a group of white businessmen organized a homeowner’s association in Woodlawn, establishing restrictive covenants to cover the entire neighborhood. Every owner of the 500 homes that joined the Woodlawn Property Owners Association purportedly agreed to a restrictive covenant that “no part of the land should be sold, leased to, or permitted to be occupied by any person of the colored race.” This was enforceable in court just like any other contractual commitment. If an African American sought to move into one of the homes in Woodlawn in violation of the covenant, the other homeowners could file a lawsuit to seek to prevent the sale or enjoin the new occupants from taking possession. These kinds of covenants effectively boxed African Americans into certain areas of Chicago. As more white neighborhoods adopted racially restrictive covenants, segregation was all the starker, and blacks were forced into ever shrinking spaces in poorer neighborhoods. The black population had tripled since 1900, yet by 1934, only 3% of blacks lived where 95% of the whites did. By 1937, there were 50,000 more black people than available housing units, resulting in African Americans paying up to 50% more than whites for comparable housing. At the same time, the Depression had reduced the demand for white housing. The white population in Woodlawn had decreased by 14% from 1930 to 1934. The economic atmosphere of the 1930s made it so many white families couldn’t afford houses in Woodlawn. Because of this dip in the white market share, many homes in Woodlawn that were for sale or rent sat vacant. In a strange twist of fate, the only market for these vacant homes were wealthy African Americans– people like Carl Hansberry. White property owners ended up covertly leasing their properties to blacks for exorbitant rents, risking the penalties for violating the covenants rather than suffer financial loss. It was into this environment that Carl Hansberry stepped, but he did not blaze the trail alone. Like so many other ground-breaking cases that eventually make it to the United State Supreme Court, there is a sense that everything here was “set up” to achieve the desired outcome. The authors of this set-up consisted of two African American attorneys and one of the white Woodlawn property owners. Both attorneys had been involved in promoting life insurance in the black community, substantially expanding economic opportunities for African Americans. Now they were trying to open the door for blacks to own their own homes. The first, Earl Dickerson, was also instrumental in helping African Americans qualify for the mortgage loans they needed to purchase real estate. In 1937, Carl Hansberry sought out a loan from Dickerson to buy a home in Woodlawn. Dickerson knew that if Hansberry tried to purchase this house, the Association would attempt to thwart the transaction. Dickerson was able to convince the lender (a black owned business that Dickerson had helped start) that any risk was consistent with its social goals, and that the chance of an ultimate victory in court were good. The second attorney, Harry Pace, was specifically on the lookout for an opportunity to test the validity of the Woodlawn racial covenants in court. He just needed a connection. But Pace’s connection was not with an African American buyer, but with a white seller. Pace found James Burke, a white Chicago policeman, and the owner of a 3-flat located at 6140 South Rhodes Avenue in Woodlawn. Burke had been one of the men who had helped found the Woodlawn Property Owners Association and may have had a hand in drafting the racially restrictive covenant. He had served on the Association’s board of directors, and his wife had been one of the plaintiffs in a lawsuit that had successfully enforced the covenants. In that 1934 case, Burke v. Klieman, which was brought as a class action by the Association, the Illinois Appellate Court had determined that an owner could not lease his property to an African American, and that the covenants were valid not just for current owners, but for the future. But, by 1937, Burke had experienced a falling out with the Association. The history of it is not clear – Burke and his wife had since divorced, and perhaps he bore her ill will, or maybe it was an issue with the entire association — but Pace and Burke became unlikely allies. When Burke had resigned his position with the Association, he had declared that he wanted to “put negroes in every block” of Woodlawn. Whether Burke was a noble man or not, Dickerson, Pace and Hansberry had their opening. Pace guided Burke to sell the property to Hansberry through a third party. Even before Hansberry and his family could move in, the Association filed suit to enforce the covenant. The complaint alleged that through fraudulent concealment, Burke, Price, and the lender (represented by Dickerson) had tried to hide the fact that Hansberry was black. The great irony was that Burke was now a defendant in Hansberry’s case, which sought to overturn the ruling in the prior lawsuit brought by his wife. At trial, the Woodlawn Association alleged that the restrictive covenant was valid and enforceable because 95 percent (or 475) of the 500 members of the Association had signed it. Hansberry v. Lee. 311 U.S. 32, 38 (1940). This was supported by the decree in the Burke decision from four years before, where the court had accepted a stipulation by the parties regarding the 95 percent acceptance rate. Hansberry responded that he had not been a party to the Burke case, so he was not bound by it, and to use it to deny his right to litigate the issue violated due process. Id. After hearing all the evidence, the trial court found that only 54 percent of the owners had signed the covenant, making the stipulation relied on in the Burke case fraudulent. Id. Yet, the trial court ruled that the validity of the covenant was res judicata (the principle that once a matter has been decided by a court it cannot be relitigated by the same parties), and therefore could not be challenged, regardless of any other evidence. The court ruled in favor of the Association. Id. On appeal, the Illinois Supreme Court adopted the trial court’s reasoning, finding that the 1934 Burke v. Klieman case was a “class or representative case,” and that “other members of the class are bound by the results in the case.” Lee v. Hansberry, 372 Ill. 369, 373 (1939). Agreeing that the Burke case’s ruling was res judicata, the question of the covenant’s validity had already been litigated and decided, and the trial court’s ruling was affirmed. Hansberry, 311 U.S. at 39-40. Hansberry’s legal team, now bolstered by an all-star lineup of attorneys from the NAACP, appealed to the U.S. Supreme Court. The centerpiece of Hansberry’s argument was that the res judicata issue should not apply to him because he was not a party to the Burke suit and was thus not bound by its ruling. In addition, the revelation at trial that the racially restrictive covenant had not been properly adopted meant that upholding its validity based on a fraudulent stipulation denied Hansberry’s due process rights under the 14th Amendment. Id. at 38. The U.S. Supreme Court, however, sidestepped the Constitution completely. Instead, the court hyper-focused on technicalities related to class actions, overlooking the obvious racism and the blatant unfairness of the entire process. The Court determined that the class action plaintiffs did not “adequately represent” absent members of the class. Id. at 40-43. In Hansberry’s case, the U.S. Supreme Court determined that the Burke judgment did NOT adequately represent his interests. The court explained that the restrictive covenant did not create a joint obligation, and that an inherent conflict existed between homeowners who sought to enforce the covenant and those who sought to challenge its validity. The interests of all the owners could not possibly be the same. Also, the defendants in the Burke case were not treated as if THEY were representing a class, and that the judgment, though binding on them, could not effectively bind the rights of anyone in the future. Id. at 44-46. Because of this, the Court reversed the judgment of the lower courts. Hansberry was the winner after all! In its conclusion, the court made a veiled reference at what might have been the reason for its decision. In explaining how the defendants’ interests in the Burke case did not necessarily line up with the defendants in Hansberry’s case, the Court noted that the Burke defendants were “nominal defendants,” and that “it does not appear that their interest in defeating the [covenant] outweighed their interest in establishing its validity.” Id. at 46. While not saying so directly, the Court seemed to imply that the Burke defendants, who were ostensibly all white homeowners, really didn’t have a vested interest in whether they won or lost the case. The defendants in the current case, however, included African Americans, whose interests in invalidating the covenant were clear. But there was also a white defendant in Hansberry’s case who had a unique position. James Burke would have been considered one of the class action plaintiffs in Burke. Indeed, his wife was the named plaintiff of the class. There would have been no doubt at the time Burke was litigated in 1934 that James Burke was one of many plaintiffs seeking to enforce the racially restrictive covenant. The evidence showed he had signed the covenant, leading to the implied conclusion he intended to be bound by it. But here he was, six years later, a defendant in a similar legal action seeking to invalidate the same covenant. Was Justice Harlan Stone, the opinion’s author, specifically thinking of James Burke when he defined the defendants as “nominal?” Regardless, the judgment against Carl Hansberry had been reversed, and his purchase of James Burke’s property went forward. The U.S. Supreme Court’s ruling was trumpeted in the black community as a tremendous victory. The Chicago Defender proclaimed to its largely black readership that “The iron band of restrictive covenants which has checked the eastward movement of the Race on Chicago’s South side was pierced at one point by a decision handed down by the United States Supreme Court.” In the same edition, an interview with Hansberry indicated he had purchased the property for the “purpose of trying to have the theory of restrictive covenants once and for all abolished, or declared as against the public policy of the state and nation.” But the ultimate legality of racially restrictive covenants had not been directly addressed, and Hansberry’s new neighbors were not pleased with the result. After his family moved in, they were subject to mob violence. A brick thrown through a window nearly killed his youngest daughter. His wife always carried a pistol with her and kept close watch over the children. Those children were subjected to open humiliation, and were spat upon, cursed at, and beaten as they walked to and from school every day. These daily struggles and the anxiety they caused took a terrible toll on Carl Hansberry. His health appeared to be in decline. He tried to continue his activism, and ran for Congress later that year, but lost. Depression began to set in. He became extremely disillusioned. He began to feel that the great victory he had won in court had all been in vain. Chicago’s neighborhoods were still as segregated as ever. He decided to relocate his family to Mexico, to escape the country whose noble ideals he now felt had betrayed him. While visiting Mexico, he suffered a cerebral hemorrhage, and died there on March 17, 1946. Sadly, had Carl Hansberry lived another two years, he would have seen the fruit of the seeds he had planted when he bought the 3-flat in Woodlawn. On May 3, 1948, the U.S. Supreme Court issued its decision in Shelly v. Kramer, 334 U.S. 1 (1948), which held racially restrictive housing covenants cannot be legally enforced and were unconstitutional because of the 14th Amendment’s Equal Protection Clause. Justice Harlan Stone had also died in 1946, and none of the same attorneys were involved. Chief Justice Fred Vinson wrote the opinion, which was a unanimous 6-0 decision. But doesn’t the U.S. Supreme Court have nine members? Yes, but three of the justices had to recuse themselves because they owned homes which had racially restrictive covenants. There was one other product that grew out of Carl Hansberry’s home purchase and social experiment. His youngest daughter – the one who had dodged the brick – grew up to be a playwright. In 1959, Lorraine Hansberry’s play, A Raisin in the Sun, premiered on Broadway. The play told a fictionalized version of her family’s story, about a black family who decides to purchase a home in an all-white neighborhood in Chicago. It was the first time an African American female author had a play performed on Broadway. The title of the play comes from a Langston Hughes poem, “Montage of a Dream Deferred,” “What happens to a dream deferred? Does it dry up like a raisin in the sun? Or does it explode?” Had Carl Hansberry lived to see his daughter’s work, he would have seen his “renaissance man” concept come full circle. His daughter portrayed his activism and idealism in the face of the racial injustice and oppression he fought so hard against in the character of “Mama,” the matriarch of the family in the play. Mama is determined to get her family out of a ghetto tenement. She rejects the community group’s cash offer to stop her family from moving into its all-white neighborhood, saying to her son, eager to take the money: “I come from five generations of people who was slaves and sharecroppers — but ain’t nobody in my family never let nobody pay ‘em no money that was a way of telling us we wasn’t fit to walk the earth. We ain’t never been that — dead inside.” Carl Hansberry never felt it himself, but he was vindicated. Vindicated in his court victory. Vindicated after death by the Shelly case. Vindicated by his daughter’s portrayal of his ideals on stage, and her life dedicated to civil rights activism. Carl Hansberry’s story is Chicago-centric, but with universal appeal. It’s a shame that when the concept of the 14th Amendment and equal protection is presented in American law schools, the name “Shelly” is remembered, and not “Hansberry.” SOURCES: Shelly v. Kramer, 334 U.S. 1 (1948). Hansberry v. Lee. 311 U.S. 32, 38 (1940). Lee v. Hansberry, 372 Ill. 369, 373 (1939). Burke v. Kleiman, 277 Ill. App. 519 (1934). Anna Price, Hansberry v. Lee: The Supreme Court Case that Influenced the Play “A Raisin in the Sun,” IN CUSTODIA LEGIS, Library of Congress, January 24, 2023, https://blogs.loc.gov/law/2023/01/hansberry-v-lee-the-supreme-court-case-that-influenced-the-play-a-raisin-in-the-sun/ Radiolab: The Vanishing of Harry Pace: Episode 2, WNYC STUDIOS (June 18, 2021), https://radiolab.org/episodes/vanishing-harry-pace-episode-2 Ron Grossman, Flashback: A Chicago Family Defied a Racist Real Estate Covenant. The Backlash and Legal Fight Inspired ‘A Raisin in the Sun,’ Chicago Tribune, July 10, 2020, https://www.chicagotribune.com/history/ct-opinion-flashback-hansberry-house-restrictive-convenant-20200710-dslzaju35ngmpghgwazpcodosq-story.html Becky Beaupre Gillespie, A Dream Deferred, Advanced, and Remembered, The University of Chicago Law School, April 29, 2020, https://www.law.uchicago.edu/news/dream-deferred-advanced-and-remembered Alan R. Kamp*, The History Behind Hansberry v. Lee, 20 U.C. Davis L. Rev., 481 (1987). (*Allen Kamp was a Professor at John Marshall Law School when the author was a student there).

Carter G. Woodson (a Virginia native and the son of former slaves who relocated to Illinois) graduated from the University of Chicago in 1908 with a Master’s degree in History and completed his PhD in History at Harvard University in 1912. In 1915, he traveled to Washington, D.C., to celebrate and serve as an exhibitor for the 50th anniversary of emancipation. Illinois helped sponsor the national celebration showcasing Black history and accomplishments. Inspired, Woodson returned to Chicago resolved to promote the study of Black life and history. Later that year, Woodson was among the founders of the Association for the Study of Negro Life and History – now known as the Association for the Study of African American Life and History (https://asalh.org/about-us/origins-of-black-history-month/) and The Journal of Negro History was published in 1916. A member of Omega Psi Phi Fraternity Incorporated, Woodson leveraged his fraternity brothers’ networks, but Woodson and the ASALH wanted greater exposure and impact. The organization established Negro History Week in February 1926. The choice of February was savvy, because the birthdays of Abraham Lincoln and Frederick Douglass had been traditionally celebrated in the Black community. Rather than try to create a new tradition, Woodson sought to promote the study of Black history by encompassing Negro History Week in already established celebrations. Woodson also had a larger goal in mind; he would transform a celebration of singularly great figures into the celebration of the wider contributions and accomplishments of the Black community. Although the celebration of Black History in the United States was officially expanded to a month-long concept in 1976, during the nation’s bicentennial, the path to expanding Black History Month is multifaceted and goes as far back as the 1940s. Black civic leaders in West Virginia, cultural activists in Chicago and young Blacks on college campuses were instrumental in the eventual expansion. Before his death in 1950, Woodson believed that Black history celebrations would eventually come to an end, envisioning an environment where Black accomplishments, history and studies would be an established facet of annual learning. (This material, slightly edited, is taken from the website of the Illinois Realtor’s Association. (https://www.illinoisrealtors.org/). Illinois REALTORS® advocate for private property rights at the state Capitol in Springfield and in communities statewide. They stand for excellence in advocacy, education, and ethics for real estate practitioners. As an attorney who regularly represents people who buy and sell real estate, I believe and recommend that well trained, savvy, and professional realtors are part of the transaction to assist my clients).

On January 31, 1865, the U.S. House of Representatives approved the 13th Amendment to the Constitution, which would prohibit slavery anywhere in the United States or its territories. President Abraham Lincoln had made the approval of the 13th Amendment his primary focus at that time, and used his ample political influence to help push the bill through. Because the Senate had already approved the measure in April, 1864, the amendment was sent to the State legislatures for ratification. On the next day, February 1, 1865, Illinois became the first state to ratify the amendment, putting Illinois at the forefront of the newborn civil rights movement. Illinois became a state in 1818. The first Illinois State Constitution prohibited slavery and involuntary servitude but permitted a system of indentured servants. This system of “indenture” went back to 1803, when the Indiana Territory’s governing council developed a system of long-term indenture which was the practical equivalent of slavery. (Illinois was part of the Indiana Territory at the time). Therefore, despite technically not allowing for slavery prior to Illinois becoming a State, the territorial government allowed what was tantamount to “private slavery” – though the government did not condone slavery officially, individuals could be held as indentured servants under long term private contracts or judicial orders. (Being an “indentured servant” involved a person obligated by contract to work without payment for a specific number of years. The contract was called an “indenture,” and it was often used when someone apprenticed for a trade, to pay off a debt, to avoid prison, or as a judicial punishment. Like other contracts or loans, an indenture could be sold or assigned). In 1814, the Illinois territorial legislature authorized the use of slaves in salt mining in the State. While the use of slaves was purportedly limited to this work, this provided the legal context to allow for general slavery in Illinois. Thus, even though Illinois was official a “free state,” and slavery was officially outlawed, as late as 1840, the Illinois census counted 331 African American slaves. In 1848, Illinois voters overwhelmingly approved a new state constitution which expressly prohibited “free persons of color” from immigrating to Illinois and preventing slave owners from bringing slaves into the state for the purpose of setting them free. In fact, in 1853, the Illinois legislature made it a crime to bring a “free negro” into the state. That same year, Illinois enacted its controversial “Black Codes,” or “Black Laws,” which established legal discrimination against African Americans in the state. In 1857, Dred Scott, a Missouri slave, brought a lawsuit for his freedom in state and federal court. He contended that his residence of twenty years earlier at Fort Armstrong in Rock Island, Illinois, gave him the right to be free. The state and federal courts, and eventually the U.S. Supreme Court, reject Scott’s argument. The Dred Scott decision by the United States Supreme Court declared that no African American, free or slave, was a “full citizen” and therefore could not bring a suit in court; further, the decision stated that Congress could not prohibit slavery in the states and territories. Chief Justice Roger Taney authored opinion, stating that black Americans have “no rights which any white man is bound to respect.” Despite this extremely shameful period in Illinois, some Illinoisans worked tirelessly to push the tide the other way. In September 1862, President Lincoln issued his preliminary Emancipation Proclamation, declaring that the Confederate States rebelling against the United States in the Civil War must abandon their hostilities or lose their slaves by January 1, 1863. On New Years’ Day, 1863, Lincoln signed the Emancipation Proclamation, enacting an executive order declaring all slaves free in all states and territories that were in rebellion against the Union (which excluded the Northern states). Meanwhile, that same year, the 29th United States Colored Infantry was formed, becoming the first Civil War regiment composed almost entirely of Illinois African Americans. The exact number is probably higher, but approximately 1,811 Illinois African Americans served in U. S. infantry, artillery, and cavalry units during the Civil War. Then, in 1864, John Jones, an abolitionist and Underground Railroad station manager, publishes The Black Laws of Illinois … and Why They Should Be Repealed. His lobbying efforts are influential in the repeal of these laws by the legislature. (Jones, a wealthy Chicago tailor, later serves as Cook County commissioner (1871-1875)). Also in 1864, U. S. Senator Lyman Trumbull of Illinois co-authored and sponsored the 13th Amendment, which ended slavery. The Senate passed the proposed amendment on April 8, 1864, but it languished in the U. S. House. In his Annual Message to Congress on December 6, 1864, President Abraham Lincoln urged the House to pass the amendment and send it to the states for ratification. The House took up the proposal the following month and on January 31, 1865, it passed the proposed amendment, sending it to the states by a vote of 119 to 56. The next day, February 1, 1865, both the Illinois House and Senate approved a joint resolution to ratify the amendment. Governor Oglesby immediately signed the resolution and Illinois became the first state to ratify the 13th Amendment. That night, in remarks from the White House balcony, President Lincoln proudly announced that Illinois had already ratified the amendment and urged the other states to follow suit. At the very same time, the Illinois legislature repealed the controversial “Black Laws.” The citizens of Illinois can be proud our state stood with Abraham Lincoln and was at the forefront of the beginning of the civil rights movement. But we need to recognize that our state’s history regarding the treatment of African Americans prior to the Civil War is disgraceful and embarrassing. Thankfully, that tide has turned and will continue to turn more and more in the direction of understanding, acceptance, and advocacy for civil rights. It hasn’t been perfect, but there has been progress. We are known, of course, as the “Land of Lincoln.”

Last month, I talked about how high housing prices, unpredictable and rising mortgage rates, combined with runaway inflation were making it tough for consumers to buy homes. In making suggestions for ways that might help consumers make buying a home more affordable, one of the ideas was to investigate the recent changes in “conforming loan” limitations. The two most important federal entities that regulate mortgages — the Federal Housing Finance Agency (FHFA) and the Federal Housing Administration (FHA) — raised the confirming loan limits and FHA loan limits for 2023. What is a “conforming loan?” This means a loan that is structured according to guidelines set by government-sponsored entities such as Freddie Mac and Fannie Mae, as well as the FHFA. Contrast this with a “conventional” loan., which is any loan issued by a private, non-government entity, such as a bank. Not every conventional loan is a conforming loan. Conventional loans tend to require a larger down payment and charge higher interest rates than conforming loans. A conforming loan is easier to qualify for. Conforming loans are also designed to be purchased by Fannie Mae or Freddie Mac on the secondary mortgage market, making them more appealable for lenders to offer them. And don’t think these loan programs are just for first-time home buyers – if the house you are looking to purchase is in a “designated low-cost area” (and Southern Cook County certainly is!), you can qualify for a lower interest rate. Conforming loan limits are based on the average home price of an area and change each year to reflect current home values. Homebuyers shopping for a single-family homewill be able to qualify for a confirming loan of up to $726,200 in 2023, a $79,000 jump over the 2022 conforming loan limit. For the consumer who is trying to figure out how to buy that bigger, fancier house, this increase is a boon. When the conforming limit price is passed, the only loan a purchaser can get is a “jumbo” loan, with a much higher down payment and interest rate. The new limits allow for an additional $79K before that line is crossed. In desirable areas, this could be the difference for the family that needs more bedrooms. The FHA loan limits have also increased. FHA loans are traditionally meant for homes on the less-expensive side of the spectrum for lower income buyers. The FHA loan limit is set at 65% of the conforming loan limit. The 2023 FHA loan limit is now $472, 200.00, which is $51K higher than 2022. So what’s the difference here? FHA loans are issued by private mortgage lenders but are guaranteed by the government. This government backing classifies FHA loans as non-conventional, but it also makes the loans less risky for banks. As a result, it’s usually easier for borrowers to qualify for an FHA loan than for a conventional or conforming loan. If you have issues with your credit, it’s easier to get an FHA loan. Conventional loans fall into two categories: Conforming and non-conforming loans. Loans that don’t meet the FHFA’s standards are considered non-conforming conventional loans – like the “jumbo” loans mentioned above. The difference between conforming conventional loans and FHA loans, are the conforming loans are not backed by the government, but they meet the standards set by the FHFA and can be sold by your lender on the secondary market. So, while conventional conforming loans have fewer restrictions, they can still be tougher to qualify for. The practical differences between FHA loans and conventional conforming loans are that with FHA loans, the home must be owner occupied. The down payment for the FHA loan tends is usually around 3.5% of the price, while conventional conforming loans usually require 5%. (Although there can be rara occasions where the conventional loan’s interest rate could be as low as 5%). Both loans require mortgage insurance, and with the conventional loan, this is eliminated when your debt-to-equity ratio reaches 20%. (Many FHA borrowers try to refinance when they get to that 20% level as well). Of course, the required minimum credit score is lower for the FHA loan. In the end, there are multiple factors that every buyer needs to consider as they determine what kind of mortgage to pursue. Buyers need to determine how much they can ultimately spend on a house. Interest rates and the kind of loan you end up getting are just two of the factors. If people expect the interest rates to come back down to 2 percent again, they will be waiting a long time. But the costs of renting are at an all-time high as well. While the increased interest rates and rising prices force some to sit on the sidelines for now, those who want or need to buy despite the economic situation need whatever help they can get. Understanding mortgage options – like the “ins and outs” of conforming and FHA loan limits — is a great starting point.

What a difference a year makes. A year ago, the real estate market still seemed hot. 2021 had seen mortgage interest rates hit an almost unheard-of annual average low of 2.96 percent. The supply side problems of the pandemic made new construction materials hard to obtain, and therefore much more expensive. Home buyers turned to existing homes. But there was a shortage of the “inventory” of pre-built homes, driving up demand, prices, and prompting buyers to try to snap up homes as soon as they were listed for sale. Bidding wars erupted. Selling for more than the list price was the norm. As 2022 began, we started to feel the effect of an economic downturn. Inflation had returned to haunt us in a way it hadn’t since the 1970s. Consumer prices started to rise. The lingering supply side issues from the pandemic made it tough to find what we needed. Demand drove up the price; inflation brought it up even more. From gas to groceries to garages, 2022 prices seemed out of control. The core inflation rate rose nearly 9 percent from January to December – 5.1 percent in September alone. The Federal Reserve felt compelled to raise interest rates seven times over the course of 2022. What About the Housing Market? The housing “inventory shortage” became less of a problem. As the number of existing homes increased by over 26 percent, buyers had more choice, and therefore, more negotiating power. Houses were spending more time on the market. By October 2022, the average time a home spent on the market was 54 days, when just a few months before, it was 7 days. This change in supply and demand also affected prices. By mid-2022, the median listing price for a home was $450,000.00 – an all-time record high. July 2022’s home-price growth over the same time in 2021 was an amazing 15.6 percent. In just a month’s time, the median price had dropped to $435,000.00. By the end of November, it had fallen to $370,700.00. While this still reflected an increase of 5 percent over 2021, homes seemed to be losing value at a rate of 2 percent or more per month. (Although these prices were still 30 percent ahead of January 2019). Great News for Buyers, but What About the Mortgage Rates? The mortgage rates were at 3.25 percent as 2022 began. Inflation and the Federal Reserve’s decisions to raise general interest rates drove mortgage rates upward at a dizzying pace. By April, the thirty-year fixed mortgage rate was over 7 percent for the first time since 2002. While rates retreated briefly, by the end of the year, they were at 6.75 percent to 8 percent depending on the property’s location. This meant that even if home prices were coming down, soaring mortgage rates served to cramp affordability. For example, a $200,000.00 house purchased in February 2022, with a mortgage of $195,000 and an interest rate of 3.8 percent resulted in a monthly payment of principal and interest of $903.00 a month. The same home at the same price and same loan purchased in December 2022 with an interest rate of 7 percent results in a monthly payment of $1,297.00. The same investment now costs 30 percent more. This combination of elevated mortgage rates and housing prices (which, despite the recent decline, are still 30 to 50 percent higher than they have been in decades) means substantially reduced affordability. We’ve seen new construction sales decline by 18 percent. Existing home sales are down 23.8 percent. As 2023 dawns, the news about the real estate market seems to be all bad – especially for Buyers. But home prices and mortgage rates aren’t the only things to consider. The cost of renting is also at an all-time high. With overall inflation currently around 8 or 9 percent, a homeowner can take on a fixed rate mortgage to provide a hedge against inflation. With home prices starting to come down, the monthly cost of ownership will generally be lower than renting. The increase in housing inventory also helps. More houses mean less pressure for a buyer to make a particular home a “must have” – buyers have more leeway to shop around. Houses are spending more time on the market, allowing buyers to make more careful and informed decisions. Sellers are beginning to adjust their expectations. There have also been indications that inflation is slowing, and mortgage rates may be coming back down to earth. People alive today may never see mortgage interest drop below 4 percent again, but the rates certainly won’t keep going up indefinitely. Some of my buyer-clients have taken the plunge, hoping that in a year or two a decline in interest rates will allow them to save money with a refinance. Options to Help Facilitate a More Affordable Home Purchase For example, the Federal Housing Finance Agency (FHFA) recently announced it raised the “conforming loan” limits. Mortgage loans that fit into conforming loan limits don’t have as many restrictions, expenses, or fees as non-conforming loans. With a “conforming loan,” you can arrange for a lower down payment, a lower mortgage rate, and get approved with a lower credit score. Plus, if the home you are seeking to purchase is in what the FHFA defines as a “high cost area,” you can buy a more expensive home and take advantage of the “conforming loan” benefits. (I plan to go more in-depth on the FHFA’s conforming-loan/high-cost-area advantages in a future blog entry). Another option, if a buyer can afford it, is to finance over 15 years rather than 30. Let’s take that same $200,000.00 home purchase with a $5K down payment that results in a $1,297.00 monthly payment of principal and interest. 15-year rates are usually a point to a point and a half lower – for the sake of example, we’ll use 5.9 percent. The monthly payment is higher of course — $1,635.00 per month. But you’ll save 65 percent on interest for the life of the loan. But where the 15-year concept will really come in handy is for those buyers who are taking the plunge now, with 30-year rates over 7 percent. While the monthly payment on the current 30-year fixed loan is 30 percent more than it was last year, if mortgage rates continue to moderate, those buyers can refinance in a few years after paying down their existing loan to a degree. Then, they can refinance at 15 years, at a lower rate and a significant savings on interest. While home prices are seeing a sharp decline, economists are not forecasting a housing crash like 2008. In fact, in areas like Chicago’s south side and the southern suburbs, where housing price increases were more modest than the rest of the country, we may see the market stabilize a lot faster as the rate of inflation slows. People will always be selling and buying homes. It will be tougher to do so in 2023 because of inflation and other factors. It won’t take long, however, for both buyers and sellers to adjust. Interest rates will eventually stabilize at rates that are higher than we’ve had the last few years, but with less volitivity. There will be a lot less of a “wild west” feeling in the market – no more bidding wars or paying more than list price. The pendulum will swing back – and a feeling of stability and satisfaction will return. (As I review this material before publication, the current mortgage rates for January 9, 2023 are 7.09 percent for a 30-year fixed, 5.96 for a 15-year fixed). In any event, no one should consider selling or buying real estate without getting an attorney involved. Here at John R. Russell, Ltd., we stand ready to assist you with the process of selling or buying. Feel free to contact us or john@jrusslaw.com.

ABC News in Chicago reported on May 7, 2022 that “an analysis of property values reveals new insight about the real estate market on Chicago’s South Side, which is also home to some of the city’s largest new development plans.” Apparently, the real estate market on Chicago’s south side can be summed up in one three letter word – “Hot!” Local realtors are reporting that because there is a lot of vacant property, there is a lot of opportunity for new development. This includes commercial, mixed use, and residential construction. The report shows lots of new townhomes, new condos, affordable housing, and single-family homes being sold at or above list prices. But here’s the catch – the prices are more affordable than what you would pay on the North Side of the city. The ABC7 Data team began a study a year before the pandemic, compiling property values from 2019 to early 2022. “It found Near North Side properties tend to sell for more and are more often on the market. But Near South Side properties have had larger property value increases over the last three years, with the largest increase in the Oakland neighborhood. South Side properties also spend less time on the market. And real estate on the South Side may benefit from new developments. Among them is a $3.8 billion redevelopment of the former Michael Reese Hospital site, with its own Metra stop. There’s also the nearly $1 billion Obama Presidential Center, where President Obama has reportedly asked Tiger Woods to take on the Jackson Park-South Shore Golf Project. While it’s far from a done deal, Woods came back with a plan that combines the two courses into one championship course designed to bring PGA events.” The increase in values is particularly impressive. Across the entire City of Chicago, home values have increased by 34% over the last five years, with a median value of $325,000.00. Of course, when you consider Chicago on a neighborhood basis, these values can vary greatly. Lincoln Park currently has a median value of $599,000.00. While southside neighborhoods like Kenwood, South Shore, and Woodlawn have lower values, it’s still amazingly strong – the south side’s median value is around $235,000.00. There are other advantages to buying a home on the south side of Chicago. Back in 1893, the World’s Columbian Exposition (also known as the Chicago World’s Fair) was erected in the Hyde Park area. After the fair was over, this allowed the City to establish a tremendous amount of park space and transit lines for the surrounding communities. For example, the neighborhoods that surround the University of Chicago have beautiful Washington Park connected to the Midway Plaisance, which is connected with Jackson Park, leading to the Museum of Science and Industry and its campus, winding up at a well-developed lakefront area with parks and boat harbors. There isn’t an area like it anywhere else in the City. Indeed, in the wake of the development after the 1893 World’s Fair, 60% of Chicago’s landmass is on the South Side, but only 40% of the population live there. The more open nature of these South Side neighborhoods can be very appealing. The redevelopment mentioned earlier is also a direct factor. Many South Side neighborhoods are thriving again after years of decline and neglect. This offers investors and entrepreneurs an opportunity to reprice and recharacterize property that has been undervalued or underused. These kinds of market opportunities are hard to find, and they give Chicago home buyers and business developers opportunities that may not be present in other real estate markets. The increasing value of residential real estate on the South Side is also driven in part by the geography of the neighborhoods and how they’re situated around amenities such as mass transportation and access to Lake Michigan. Home buyers who work in Chicago’s Loop want a place where they can get away from the pressures of downtown, but still be close to services and the major attractions of the cities. Add the proximity to the Lake, and these South Side neighborhoods become more desirable because they offer the same kind of amenities as North Side neighborhoods, but at a much more reasonable price. These real estate market trends have also led to a significant amount of diversity in the populations of the south side. Fine Dining and entertainment are finding their place. But the neighborhood “feel” is there. A generation ago, the values in these neighborhoods were declining, but all these recent trends and developments bring tremendous opportunities for someone to find not just a house, put a neighborhood atmosphere to call “home,” while having great investment value in the property, with lots of hope for future growth. Antje Gehrken, president of the Chicago Association of Realtors, said the real estate market in Chicago will likely get some breathing room in the near future, meaning interested home buyers won’t have to decide so quickly and the bidding wars should slow down a bit. But this is all encouraging news for all of us who live and work in the Southland, and for those who want to live and invest in these communities.