Fair Housing Laws and Tenant Screening

Management of rental properties requires knowledge and understanding of many federal, state, and local laws. Failure to adhere to applicable statutes can result in increased liabilities and being subject to fines and penalties. Fair Housing laws are of particular importance and a large percentage of fair housing claims are related to the tenant screening process.

Fair Housing laws promote equal opportunity to seek, obtain, and hold housing without discrimination. Such laws prohibit discriminatory practices that can unfairly limit the housing choices of individuals. Understanding fair housing laws and setting your rental policies for fair housing compliance is the best protection against claims of rental housing discrimination. In short, you must know what you can do and what you cannot do in rental practices.

Regardless of whether your title is owner/landlord, property manager, real estate agent/broker, or company employee, you are responsible for fair housing practices under the law.

Federal Fair Housing

Title VIII of the Civil Rights Act of 1968 (Fair Housing Act), as amended, prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on the protected classes of race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability). Since every individual could potentially be a member of some protected class, it is advisable to base rental selection criteria on sound business policies rather than exclusion of certain group characteristics.

Covered Housing

The federal Fair Housing Act covers most housing. In some circumstances, the Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations and private clubs that limit occupancy to members.

Landlords should also verify their state’s statutes for definition of covered dwellings and application of state fair housing laws and exemptions.

Screening and Rental Procedures

As stated above, under federal law it is illegal to screen housing applicants on the basis of race, color, religion, sex, national origin, disability, or familial status. There are certain other characteristics that, although not specified by federal law, may be considered protected classes covered under various state and local laws.

For instance, federal law does not prohibit discrimination based solely on an individual’s citizenship status. Accordingly, but with at least two notable exceptions, landlords may require rental applicants to provide documented proof of their citizenship or immigration status during the screening process. Such a request would not violate the Fair Housing Act if that requirement was uniformly applied to all applicants.

HUD regulations for federally assisted housing programs have for many years defined what documents are acceptable proofs of citizenship or eligible immigration status. General information on U. S. citizenship and immigration documents can be researched using various sources including government agency websites.

As of this writing there are two notable exceptions to landlords requiring proof of citizenship or immigration status. The California Civil Code prohibits landlords from inquiring as to tenants’ and rental applicants’ immigration and citizenship status. The New York City administrative code also prohibits landlords from inquiring about tenants’ citizenship status.

Age is another characteristic that while not specifically protected under federal law can be a protected class in many states. Landlords cannot reject an applicant solely on account of age although, again, some exceptions apply. There are regulatory guidelines for renting seniors-only multi-family housing. Landlords can refuse to rent to minors who are not emancipated or otherwise of legal age to authorize a contract.

Some states have protected classes for characteristics such as source of income, sexual orientation, or marital status. Some state courts have also interpreted fair housing laws to mean that protected class categories serve as examples of illegal discrimination or harassment practices and that any arbitrary discrimination based on an individual’s characteristics or traits is also a violation of fair housing laws.

Rules and Privileges of Tenancy

Fair housing laws also have implications during tenancy. The rules of tenancy must be enforced in a nondiscriminatory manner. A landlord’s response to a violation of the rules must not differ based on the person’s race, religion, or national origin. While landlords must be responsive to complaints from tenants, they should be careful to take action against residents only on the basis of legitimate property management concerns. Landlords should consider whether a complaint could be motivated by race, religion, or national origin.

Landlords must also give all tenants the same privileges. A landlord cannot limit the use of building amenities such as community rooms, gyms, etc. based on a person’s race, religion, or national origin.

Responding to Problem Tenants

The Fair Housing Act does not protect tenants who are unruly, who create a nuisance, or who pose a danger to other residents. Landlords are allowed to take action against tenants whose behavior is disruptive to the neighborhood, including evicting such persons from the property. The same eviction procedures must be applied to all tenants. Any disciplinary action taken must be on the basis of a person’s behavior or other violations of property management rules, and not on race, national origin, religion, sex, color, disability, or familial status.

Landlords also do not have to rent to persons who do not financially qualify for the housing and may evict tenants who are delinquent in their payments. As long as the landlord uses the same standards to determine if an applicant is financially suitable and takes the same action against all persons who are delinquent in rents, the landlord’s actions would not violate the Fair Housing Act.

State & Local Fair Housing Laws

State and local fair housing laws can be more restrictive than federal laws. For example, the New York City Human Rights Law prohibits housing discrimination based on a person’s real or perceived race, color, national origin, gender (including gender identity and sexual harassment), creed, disability, sexual orientation, marital status, partnership status, alienage or citizenship status, age, lawful occupation or because children may be or will be residing with the tenant.

As another example, California protects against housing discrimination through the Fair Employment and Housing Act (FEHA) and the Unruh Civil Rights Act. The Unruh Civil Rights Act, prohibits discrimination in “all business establishments of every kind whatsoever “and has been interpreted to include businesses and persons engaged in the sale or rental of housing accommodations. Not only does the California Civil Code prohibit landlords from inquiring as to tenants’ and rental applicants’ immigration and citizenship status, as previously mentioned, the Code also forbids any municipality from passing laws that direct landlords to make such inquiries. The FEHA and the Unruh Civil Rights Act can be enforced against any owner, lessor, sublessor, assignor, managing agent, real estate broker, salesperson, or any person having any legal or equitable right of ownership or possession or the right to rent a housing accommodation.

What’s a Landlord to Do?

Know and understand applicable landlord-tenant laws – federal, state, and local.

Develop written rental policies detailing the rental criteria, application process, screening and selection practices, “house rules,” and communication and customer service practices.

Enforce rental policies consistently and equally among applicants and tenants

Keep thorough, complete, accurate documentation of all interactions (including oral conversations) with rental prospects, applicants, and tenants, even if a prospect does not visit the property. Failure to keep adequate documentation can weaken a landlord’s defense against claims of housing discrimination.

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