Fair Housing Pitfalls: 6 Ways to Avoid Being the Next Lawsuit

The Big Picture On How To Avoid A Fair Housing Lawsuit:

• • The Fair Housing Act is a federal law that provides protection against discrimination from several groups. Some states also have laws that are similar to the FHA and extend the protection to other classes or demographics. 
  • Landlords can take several steps to protect themselves or avoid Fair Housing lawsuits. These include not describing their preferred tenants, advertising in all available channels, not offering selective discounts, avoiding policies that pertain to children, and others. 
  • Landlords can also avoid lawsuits from Fair Housing complaints by enacting policies across the board, documenting all interactions, and keeping up to date with laws and regulations. 

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

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, and you’re tolerant of others… of course, you won’t violate Fair Housing laws, right?

Wrong.

Let me tell you why. 

What Is The Fair Housing Act?

The Fair Housing Act is a civil rights and federal law that “prohibits discrimination by direct providers of housing, such as landlords and real estate companies, as well as other entities, such as municipalities, banks or other lending institutions and homeowners insurance companies.”

The law clearly outlines protection for the following:

The protected classes are considered the disadvantaged parties; 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.

On top of FHA, several places have state laws that expand upon the federal law’s coverage. One example is New York, where protection is extended to:

• age
• sexual orientation
• uniformed service
• marital status
• partnership status
• alienage or citizenship
• people with lawful sources of income

Late in 2023, the National Fair Housing Alliance published a report stating that there were 33,007 fair housing complaints in 2022. This represents a 5.74% uptick year-on-year and was also the highest recorded number of lawsuits in a year. These growing numbers should incentivize landlords to avoid a Fair Housing lawsuit. 

Tips To Avoid An Accidental Fair Housing Lawsuit

While state and federal laws vary, there are some things a landlord can do to avoid getting hit with an FHA lawsuit. 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 that sometimes a home 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 advertise only in one place, you’re setting yourself up for trouble, both for business and legal reasons. It doesn’t matter how devout you are; you can’t advertise your rental unit only to members of your faith. You can’t advertise only in the men’s gym you guiltily visit once a month. You can’t advertise only on a few bulletin boards seen by one type of person.

Furthermore, 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 only targeted one group of people and can help you avoid a Fair Housing lawsuit.

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

There’s nothing wrong with listening to your gut when reviewing rental applications and selecting tenants. But if a rejected rental applicant ever sues you, 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 do this regardless of Fair Housing laws to find the best tenant and weed out the rotten apples.

4. Can You Have a Policy Against Renting to Ex-Cons?

Now, here’s a grey area.

Regarding the Fair Housing Act, there are no hard and fast rules regarding renting to ex-cons.

However, the Department of Housing And Urban Development does. 

HUD asks landlords to review each applicant with a criminal background case-by-case basis. Common sense dictates that anyone with violent offenses should be an easy no-go, yet the HUD only has two specified classes that have earned a safe and lawsuit-free denial: 

• • Individuals convicted of manufacturing/producing methamphetamine on the premises of federally assisted housing
  • Sex offenders that are subject to a lifetime registration requirement under a state sex offender registration program

Furthermore, in some states and localities, landlords can’t say or express that they will not rent to any applicant with a criminal record. For instance, in 2021, New Jersey signed into law the FCHA (Fair Chance Housing Act), which will eliminate questions on rental applications regarding a criminal background. Florida is another state that has similar regulations in place.

So, always check with your state and local laws and be informed to avoid a budding Fair Housing lawsuit!

5. Never Offer Selective Discounts

Is offering a discount on the rental application fees for married couples discriminatory?

You should all be reciting “Yes” by now.

That’s 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 if you want to avoid a Fair Housing lawsuit, and use a system (like Spark Rental!) that charges tenant screening fees directly to the applicants.

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6. Never Make Housing Rules Involving Children

Several years ago, 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. Unfortunately, you can’t do this anymore, as it has since been ruled as discriminatory.

However, do not confuse this with local occupancy regulations. For 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.  Pets?  Sure.  Children?  No.

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

Other Things You Can Do To Avoid A Hefty Fair Housing Lawsuit

Six situational tips won’t cut it. As a landlord, it’s your job to cover your behind as well as you can, and there are other things you can do to avoid a Fair Housing lawsuit, like:

Educate Yourself (And Your People)

If you’re a solo landlord, you must stay on top of fair housing law developments to avoid ugly surprises like lawsuits and complaints.  (Sidenote: You might also want to make life easier by using Spark Rental’s landlord app.)

If you have people on payroll, it’s also important to keep them in the loop. Remember, one mistake from one person can land your whole operation in hot water. 

Have Your Policies Lined Up

The first order of business in renting out is to get your policies in order and accordance with state and federal laws. The second order of business is applying them consistently across all tenants and applicants—no exemptions. 

This way, even if you are sued for Fair Housing discrimination, you can easily state that your policies are uniformly applied to everyone you deal with. However…

Always Consider Reasonable Accommodations

…there are instances where the law would call for reasonable accommodations. According to HUD, “a reasonable accommodation is a change, exception, or adjustment to a rule, policy, practice, or service that may be necessary for a person with disabilities to have an equal opportunity to use and enjoy a dwelling, including public and common use spaces, or to fulfill their program obligations.”

Reasonable accommodations include the following:

• • Installing ramps for wheelchair access
  • Modifying existing facilities for easier access by disabled persons
  • Allowing service or emotional support animals despite a “no pets” policy
  • Providing a reserved parking space close to the entrance for tenants with mobility impairments
  • Installing grab bars in bathrooms
  • Modifying kitchen cabinets for a tenant in a wheelchair
  • Allowing a tenant with PTSD to break their lease early without penalty if they need to move for treatment

However, as the word “reasonable” implies, there are limits. Again, as per HUD, you can deny any modifications that will cause you extensive financial or administrative burden. You can also deny a request if it’s not made by or on behalf of a disabled person. 

Document EVERYTHING

Though paperwork seems like a necessary evil, it’s a good friend when avoiding Fair Housing Lawsuits.

Always keep a detailed record of all interactions with tenants and applicants. Have them sign an official document if any decisions or concessions are made. Don’t leave things to chance here; always have a paper trail. 

Final Thoughts

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.

So, apply these tips to avoid a Fair Housing lawsuit and save yourself from expenses and headaches.