Fair Housing Lawsuits

 

Think fast: is it illegal to advertise your vacant rental property in your church or synagogue’s circular?

The answer is yes, if it’s the only place you advertise.

Fair Housing laws are far more complicated than most landlords think, and Fair Housing lawsuits have been on the rise over the last few years.  Most people assume the laws are intuitive; after all, you’re a good person, you’re open-minded, you’re tolerant of others… of course you won’t violate Fair Housing laws, right?

Wrong.

The laws are complex, and landlords and property managers are held to a much higher standard than tenants when there’s a dispute.  In its simplest summary, the law prohibits anything that could possibly be considered discriminatory against the seven “protected classes”: race, color, national heritage, religion, gender, disability, and familial status.  Many states also include sexual orientation and gender identity among protected classes.

So who’s protected by the law, and who’s not?  The protected classes are considered the disadvantaged party; for example, married couples without children are not in the protected class covered by “familial status”.  Landlords can discriminate all they want against them (well, don’t get carried away, but you get the idea).  But if you discriminate against, say, a single mother with three young children, you’ve violated the law.

Short of geeking out on legalese, here are six tips that will help you avoid accidentally violating the complex Fair Housing laws.

 

1. Never Describe the Ideal Tenant

Believe me, we know: sometimes a home really is only appropriate for one type of person.  A family of four isn’t going to fit into that itsy bitsy studio that even starving grad students eye dubiously.  But you can’t say in your rental listing “Perfect for a single grad student” even if it’s right next to campus and only fits a twin bed.

That would be discrimination against people with children, which is a no-no.

Describe physical amenities, and exciting places and services near the rental unit, but never share your opinion about who the property is perfect for.

 

2. Advertise the Unit Online, Even If You Advertise Offline Too

When you only advertise in one place, you’re setting yourself up for trouble, both for business reasons and legal ones.  It doesn’t matter how devout you are, you can’t only advertise your rental unit to members of your faith.  You can’t advertise only in the men’s gym you guiltily visit once/month.  You can’t advertise only on a few bulletin boards seen by one type of person.

You even need to watch out for “geographic discrimination”, where you post the rental listing only in a small geographical area frequented by one type of person.

Use a rental listing syndicator to publish your rental ad on dozens of websites, so no one points the finger saying you were only targeting one group of people.

3. Always Pull Credit Reports, Criminal Background Checks and Eviction Reports

There’s nothing wrong with listening to your gut when it comes to reviewing rental applications and selecting tenants.  But if you’re ever sued by a rejected rental applicant, you should also be able to produce tangible evidence that the application had red flags.

By pulling tenant credit reports, criminal background checks and eviction history reports, you have a paper trail showing that you did your due diligence.

And let’s be honest, you should be doing this regardless of Fair Housing laws, in order to find the best tenant and weed out the rotten apples.

 

Discrimination Against Criminals4. …But You Can’t Have a Policy Against Ex-Cons

In May of 2016, HUD ruled that landlords may not have a blanket policy rejecting all applicants with a criminal history.  This is considered discriminatory based on the “disparate impact” rule, that it’s discriminatory against minorities because such a policy would have a disproportionate impact on minorities.  It’s controversial to some, but is the law of the land and must be obeyed.

This doesn’t mean landlords have to sign a lease with every ax murderer that applies.  It does mean that landlords need to take into account the nature of the crimes committed, and how long ago they happened.

Landlords can’t simply say they won’t accept any applicant with a crime on their record.

 

5. Never Offer Selective Discounts

Is it discriminatory to offer a discount on the rental application fees, for married couples?

You should all be reciting “Yes” by now.

That’s actually now illegal in 21 states plus the District of Columbia.  These laws were enacted in part to protect people based on sexual orientation, but they also protect unmarried couples “living in sin”, single parents, etc.

Okay, here’s another one: Is it discriminatory to offer a student discount?

This is where Fair Housing can get tricky.  A bulldog of an attorney might make a case that you’re discriminating against people with children, if you’re intentionally trying to attract only young, single students.

Don’t offer discounts on anything, and use a system (like Spark Rental!) that charges tenant screening fees directly to the applicants.

 

6. Never Make Housing Rules Involving Children

A few years back, many property managers had policies such as “one bedroom for every child”.  If a single parent and a child shared a bedroom, for example, the property management would require them to lease a two-bedroom unit instead of a one-bedroom.

This has since been ruled as discriminatory. However, do not confuse this with local occupancy regulations. As an example, some towns allow landlords to limit a two-bedroom apartment to four occupants.

Likewise, property managers can’t put families on one side of the apartment complex and people without children on the other side.  Pets?  Sure.  Children?  No.

HUD has been aggressively pursuing discrimination cases for the last five years.  In 2013, they even launched a mobile app to help people report Fair Housing violations.  They want to make an example of landlords and property managers, they want publicity for these cases, and they want to win money in court.

Be very, very careful when advertising your rental unit, and screening your rental applications.  If there is even a suspicion that you may have rejected an application based on something other than their financial or credit history, expect a lawsuit.  If you show any inclination toward one group of applicants over another, expect a lawsuit.  Do not pass Go, do not collect $200.

Have you ever had a run-in over Fair Housing issues? What tactics do you use to avoid running afoul of complex Fair Housing laws?

 

 

More Scary Stories to Tell in the Dark:

Share This
Ready to Build Passive Income?

Ready to Build Passive Income?

 

We'll email you the course videos over the next week, so enter your best email!

You're in! Check your email to confirm.

Free Mini-Course: Passive Income

Free Mini-Course: Passive Income

 

Not sure how to start earning passive income from rentals?

Over the next week, we'll email you a free series of videos, so enter your best email and let's get started!

You're in! Check your email to confirm.

Ready to Build Passive Income?

 

We'll email you the "recipe," plus a free mini-course on passive income over the next week, so enter your best email!

P.S. We never share your email, ever.

It's on! Check your email to confirm.