In the last few articles we’ve talked about how to figure out rents and where to advertise. An extremely important aspect of your advertising to find suitable renters for your vacant unit is making sure that you do not run into trouble with the Fair Housing Act.

Now, I know you’re thinking this might be just some boring post on government laws and regulations, but what I’m about to tell you could just save you a load of money. Because the way that you advertise and respond to tenants, just might mean the difference between keeping your nose clean and getting sued for something unintentional.

Here’s a headline that I just pulled from the “HUD -Office of Fair Housing and Equal Opportunity” site:

HUD Settles Housing Discrimination Case to the Tune of $15,000

A HUD Administrative Law Judge signed a consent decree in a case brought against a property owner, claiming he discriminated against the potential renter on the basis of familial status. According to the decree, the property owner will pay $15,000 to the Complainant and $2,000, as a civil penalty, to HUD. He must also do fair housing training from a qualified fair housing agency.

What is the Fair Housing Act and how does it apply specifically to landlords?

The Act prohibits discrimination by direct providers of housing, such as
landlords… whose discriminatory practices make housing unavailable to persons
because of:

• • race or color

• • religion

• • sex

• • national origin

• • familial status or
  • disability

Under the Act, the Department of Justice could bring a lawsuit against a person or entity involved in discrimination related to housing. In the case of force, or threat of force, criminal proceedings can be instituted. Individuals can also file a lawsuit if they believe they have been victims of housing discrimination or they can file a complaint directly with the Department of Housing and Urban Development (HUD).

What kinds of things would be considered discriminatory or otherwise a violation of the Fair Housing Act?

There are lots of caveats here, but some examples might be:

• • A landlord who tries to disguise discriminating against a potential tenant in one of the protected groups above by telling then tenant that he doesn’t have a unit available (when he really does) or giving the tenant other information that is false in order to steer that tenant towards another area or another property.
  • A landlord who takes advantage of a female tenant, knowing she is poor and/or has few housing options, creating a sexually hostile environment for a her.
  • Discriminating based on national origin, such as not renting to Hispanic applicants or other immigrants. HUD has reported that an increasing number of complaints are from the “new” immigrants– those coming from Southeastern Asia, Hmong, the former Soviet Union, etc.
  • “No children” advertisements – Not renting to families with children under 18 or prohibiting families with children, in general.
  • It is also unlawful to discriminate against a disabled person– defined as an individual with a mental or physical impairment(s) that substantially limits one or more major life activities. This includes disabilities such as blindness, hearing impairment, mobility impairment, HIV infection, mental retardation, alcoholism, drug addition, chronic fatigue, learning disability, head injury, and mental illness. It also protects persons who have a record of such and impairment.
  • “Looking for a nice Christian family” — i.e. discrimination based on religion.

What kinds of potential renters doesn’t the Fair Housing Act protect?

It does NOT protect current users of illegal controlled substances (or those convicted of the illegal manufacture or distribution of such), sex offenders, and juvenile offenders. It also doesn’t provide protection for anyone who presents a direct threat to the persons or property of others (which would be determined on an individual basis, not on general assumptions or speculation about the nature of the applicant’s disability, for example).

Testers

And in case you didn’t think that the government is serious about this issue– the next time you post a vacancy, you might just unknowingly be talking to a “tester!” Now anything that has the word “test” associated with it tends to scare me… but in this case the term “tester” should scare you too, especially if you haven’t been seriously reading this post…

One of the ways the government monitors compliance with the Fair Housing Act is through the complaints it gets from tenants. Another way is through the use of “testers.” These are people calling on behalf of the government, who pose as renters. Their job is to follow up on a complaint that a landlord may be violating the Fair Housing Act. As part of the government’s “linguistic profiling”, a “tester” will call the landlord posing as a potential tenant of African American decent, Hispanic decent, etc. They will gauge the landlord’s responses to see if they are potentially discriminatory and may then call back posing as a “white” tenant, for example to see if the landlord’s treatment of the potential renter is any different.

Yes, the government IS controlling who you can rent to (in some ways)…  However, landlords can still set STANDARDS.

The Fair Housing Act is designed to make sure that people are not discriminated in the rental, sale or financing of housing, based on race, disability, national origin, sex, skin color, religion or whether a person has children. Landlords, however, can set standards based on objective criteria. Standards such as job status, creditworthiness and criminal record are all examples of the kind of objective criteria that can be applied. However, landlords must be careful in that they need to actually ACTIVELY use the standards that they set and apply them EQUALLY to ALL prospective tenants.

This is the overall thrust of the Fair Housing Act. However, there are several caveats with regard to different aspects of advertising and discrimination. There are also circumstances where this Act doesn’t apply. This blog does NOT provide legal advice… that’s why there are attorneys. So, if you have specific questions about the intricacies of the Fair Housing Act and how it applies to your Landlord Business, I’d suggest you consult a good real estate attorney.

I also have provided several resources for further reading, education and research at www.ManageRentalProperty.com under the Landlord-Tenant section. There I have links to the Fair Housing Act itself, as well as a MEMO from HUD discussing what may or may not constitute discriminatory advertising. In addition, there is a link to State Fair Housing Laws.

One final suggestion that I have is simply good business practice. Get in the habit of keeping good documentation and records. Document when a prospective tenant contacts you and note the date, time, contact name, phone number, property they called about and include a description of the conversation or correspondence you had with them. Document why you rejected an applicant. Document the standards you have created for screening and choosing tenants. Document any follow up you have with them. If an applicant decides not to rent from you, document that, too. If I haven’t made it clear yet… DOCUMENT, DOCUMENT, DOCUMENT. Remember, Landlording is a business. You have your current and future cash flow, your assets and much more at stake… so take time to build your business carefully, the right way, and then you’ll have the best chance of it being around to take care of YOU!

Steven Boorstein
Author & Landlord
https://www.managerentalproperty.com/ and http://www.howtobuyrentalproperty.com/