Understanding Fair Housing

Whether you are a landlord, own one investment property or manage 150 units, it’s important for you and your team to understand and abide by applicable federal, state and local fair housing and anti-discrimination laws to promote fair housing and run a compliant rental business.

The Fair Housing Act (FHAct) is the federal law that grants fair housing protections and rights to renters and buyers, and it’s enforced by the U.S. Department of Housing and Urban Development (HUD).[1]

According to HUD, fair housing is the right to buy or rent a place to live, regardless of:

Race
Color
Religion
National origin
Sex
Familial status
Disability
These are protected classes, and as a landlord or property manager, you cannot discriminate against them when renting property.

Beyond the federal fair housing laws, many state and local governments give additional rights to renters and impose obligations to landlords, so it’s critical to work with local legal professionals to understand how those rules can impact your business.

In this guide, we break down some important components contained in the FHAct and guidance provided by HUD, as well as state and local laws. We also suggest some key components to include in your processes so you can better understand how to operate a fair and compliant business.

Note: This guide is provided for your information only. RocSite, Inc. does not guarantee that the information in this guide is adequate or that it is compliant with current, applicable laws. This guide is not a substitute for the advice or services of an attorney. You should not rely on it for any purpose without consulting a licensed attorney in your jurisdiction.
Protected classes and discrimination
The FHAct was originally adopted as part of the Civil Rights Act of 1968, and it was subsequently broadened in 1988. The laws were created to ensure “that every neighborhood is a place of opportunity” and to attack discrimination and segregation based on someone’s inclusion in one or more protected classes.

State and local laws may provide further protection to renters based on additional protected classes, some of which are summarized below.

PROTECTED CLASSES UNDER FEDERAL LAW STATE AND LOCAL PROTECTIONS CAN INCLUDE
Race
Color
Religion
Sex
National origin
Familial status
Physical or mental disability
Citizenship
Age
Veteran or military status
Genetic information
Sexual orientation
Gender identity or expression
Source of Income
Criminal history
Others

There is significant variation among states and localities concerning fair housing laws, so you should consult with a lawyer to determine if state or local law provides additional anti-discrimination provisions in your community.

In fair housing terms, discrimination means treating someone differently based on their being part of a protected class. As part of a strategy to minimize the possibility of inadvertent discrimination, consider using a documented and consistent method to screen and accept applicants.

Give everyone an equal opportunity to apply — no matter what they look or sound like — and accept or deny renters based on criteria that are consistently applied and not related to a prospective renter’s status as part of a protected class.

Avoid questions or suggestions that may be perceived as discriminatory. Even a well-intended statement such as, “This unit would be great for a young couple,” or asking a friendly question like, “Are you two married?” can be interpreted as evidence of discrimination. If you ask questions to screen tenants on subjects like credit history or tenant history, ask the same questions of all tenants, and score prospective tenants in a similar manner, without regard to their status as a member of a protected class. Consider how you would feel if asked the same questions.

When in doubt, keep the conversation focused on the property for rent and the amenities. Let the potential renter ask you questions so you can answer factually.

More on disabilities
In 2016, over half (55 percent) of housing complaints investigated were in relation to a disability. As a landlord, there are extra protections you need to be aware of for accommodating a renter with a disability.

First, keep in mind that a disability can include a mental or physical condition, which can include (but is not limited to):

Visual, hearing and mobility impairments
Mental illness
Intellectual or developmental disabilities
HIV/AIDS
A history of disability
Alcoholism
Drug addiction (other than addiction caused by current illegal use of a controlled substance)
Remember, you can only ask questions that could be asked of every applicant or tenant — even if it’s well-meaning. As a rule of thumb, avoid any questions about a renter’s health, disability or illness.

There are two additional provisions for renters who are disabled that are relevant to landlords: reasonable accommodation and reasonable modification.

REASONABLE ACCOMMODATIONS
This is a request from the resident to the landlord to make an exception to the rules and policies of the rental, such as allowing a live-in caregiver or assistance animal (assistance animals are not considered pets) or setting up reserved parking. It may also involve changes to other policy choices, such as the use of certain cleaning products or pesticides that may trigger allergies or other chemical sensitivities. Where the nature of the claimed disability is not obvious, a housing provider may ask a person for information to verify the basis for the accommodation request.

In most cases, you are responsible for the cost of reasonable accommodations. You may not charge an additional deposit or fee to cover these costs. There are limited situations when a housing provider can deny a reasonable accommodation request, including if the accommodation would impose an undue financial and administrative burden or if it would fundamentally alter the nature of the housing provider’s operations.

REASONABLE MODIFICATIONS
These are physical changes to the property that give the resident equal opportunity to access the property and its amenities. This could include the addition of a ramp leading to the entryway, grab bars in the shower or lower countertops.

The cost is paid for by either the tenant or the landlord, depending on your specific situation. We recommend discussing the issue with a local legal professional.

Owners and managers should establish procedures for how applicants and residents make reasonable accommodation/modification requests and how you respond to them. Even a verbal request may trigger reasonable accommodation/reasonable modification duties, and a delayed response may be equivalent to a denial.

Because reasonable accommodation/modification requests compose a significant number of discrimination claims each year, housing providers should consult with an attorney if they have questions about reasonable accommodation/modification issues, including verifying the disability-related basis for the request and factors to consider before denying a request.

Intentional and unintentional discrimination
Courts recognize that discrimination may result from both intentional and unintentional conduct. Intentional discrimination (referred to as “disparate treatment” discrimination) occurs when someone treats a renter adversely because of their status in a protected class.

The classic example is posting a sign that says “No [insert protected class] need apply.” Such overt discrimination is relatively rare today, but other practices — such as imposing restrictions on families with children — still occur.

Other action or policies may trigger discrimination claims, even if the owner had no intention to discriminate, if they have a harsher effect on people in protected classes than on the general population. According to HUD, this “disparate impact” discrimination may occur where an owner applies a “one-strike” crime screening rule. HUD explains that to the extent that people of color are disproportionately convicted of crimes, crime screening may result in disqualifying disproportionate numbers of non-white people.

The U.S. Supreme Court has recently confirmed that the FHAct recognizes disparate treatment liability. As a result, owners and property managers should be aware that they may be liable for policies and practices that, even unintentionally, have a harsher impact on people in protected classes.

More on families
Familial status — that is, the status of a legally recognized relation between an adult and a minor child in the household — is another protected class with important details to be aware of. Unless your property qualifies as “housing for older persons,” you cannot refuse to rent to a family solely because they have children.[2]

You also cannot direct families with children to specific units that you deem more “kid-friendly” or recommend a unit because of its proximity to a school or park. All properties (other than housing for older persons) are supposed to accommodate children, and if you recommend specific apartments, you’re steering families with children to or away from particular units, which is a form of discrimination. In addition, you cannot charge extra fees based on familial status.

Recent protected class updates
HUD provided additional guidelines in spring 2016 to address some of the gray areas and potential loopholes in housing laws. Notable updates include:

Limited English proficiency (LEP) as a subset of the national origin protected class
Warnings about the potential discrimination impacts of screening tenants on the basis of criminal history
While LEP is not a protected class, it is nearly always linked to national origin. For example, refusing to rent to someone because they are not proficient in English may constitute national origin discrimination.

Avoiding discriminatory practices while searching for tenants
Beware of subtle practices while marketing and showing your rental that could be perceived as discriminatory.

Advertising
You’re most likely advertising your property on some level. In your search for a qualified tenant, make sure your advertising is compliant with fair housing laws by focusing on the property and the amenities in your rental listing description — not on who you think an ideal renter would be.

Advertising can be discriminatory if it appears to favor or exclude a particular group of renters. For example, don’t say that your property is great for a young couple or senior citizens — this could be perceived as discrimination against families with children. Similarly, if you plan to use human models in your advertising, consider using models who are diverse in terms of protected classes.

You are also not permitted to falsely state that the property is no longer available to dissuade specific applicants.

Steering renters
Unlawful steering occurs when a landlord tries to attract or deter a potential tenant to or from a particular neighborhood or property based on their inclusion in one of the protected classes. It’s not an outright refusal to rent to a person within a class — rather it consists of efforts to deprive a person of housing opportunities in certain locations.

An example: A landlord operates two properties, one primarily occupied by minority renters and the other occupied by non-minority renters. An owner who encourages a minority applicant to rent at the predominantly minority-occupied property on the basis of their status in a protected class may be accused of unlawful steering.

All renters need to have equal access to your listings. Show the vacancies you have, and allow renters to indicate what units they want to see. When describing the property and community, focus on facts, not assumptions about the residents or neighborhood.

Renter applications and screening
As part of your process, establish and document the criteria applicants must meet to be considered for tenancy. Use the same criteria when reviewing all applicants, and score them in the same way.

Properly qualify renters using a rental application, and use other credit and background checks and income verification to supplement the application materials.

Using a standardized rental application helps ensure that your chosen tenants are qualified. Those who do not meet your tenant screening criteria can be identified based on appropriate, uniformly applied standards. Score people in a consistent and uniform manner, without regard to their status in a particular protected class.

If you decide to reject a renter, you need to inform them that they weren’t approved and provide a reason.

Setting nondiscriminatory apartment policies and rules
As a landlord, you have every right to create policies and rules for your properties to create a safe and comfortable living environment, so long as they do not have an unintended disparate impact on protected classes. However, these rules need to be standard across all groups of people and cannot single out any one group or type of resident. For example, building-wide quiet hours must apply to all residents, not just students.

Never make rules just for families with children, such as forbidding children from swimming in the pool or riding bikes on the premises. You can, however, make rules that have the same effect but do not single out families with children specifically. For example, rather than posting a sign at a swimming pool that says, “Children under age 12 must be accompanied by a parent or guardian,” you can say “Inexperienced swimmers must be supervised.”

Maximum occupancy
Although the FHAct does not expressly prohibit occupancy standards limiting the maximum number of occupants, some occupancy standards can have a discriminatory effect. As a result, you should be careful if you set a maximum occupancy for your rental.

Keep the occupancy language to “persons,” and never specifically limit the number of children. Infants under the age of 1 should not be counted as an occupant.

Familiarize yourself with applicable laws about maximum occupancy, which may vary depending on the square footage, bedroom size and configuration of your unit. Some landlords use the Keating Memorandum, a national guideline for occupancy issued by HUD (63 Fed. Reg. 70,255), while others use square footage guidance from the Building Officials and Code Administrators (BOCA) code.

Keating Memorandum: Two persons per bedroom, subject to some exceptions and limitations
BOCA Code:
150 square feet for the first occupant
100 square feet for each additional resident
Every room occupied for sleeping purposes by one occupant must contain at least 70 square feet of floor space or at least 50 square feet per person if occupied by more than one person
Either way, be sure to standardize and document the policy, and familiarize yourself with state and local regulations.

Maintaining fair housing practices for your properties
The best way to ensure you and your team are maintaining fair housing practices? Build them into your processes and procedures. That way you can document that everyone is treated the same, every time, and you’ll be prepared should you receive a complaint. Below are a few areas to focus on.

Documentation
The importance of maintaining uniform policies and procedures for reviewing applications and renting your property cannot be overstated.

Document every interaction with renters and applicants — customer relationship management (CRM) software is helpful for this — so if you’re on the receiving end of a fair housing complaint, you’ll have a paper trail to support your case and demonstrate that your actions were consistent with your policy.

Also, if you’re presented with a complaint, promptly contact a legal professional, don’t retaliate, and remember that the FHAct and many state and local fair housing laws encourage negotiated resolutions of housing discrimination complaints.

Training
You and your team should receive regular training on fair housing laws from qualified local legal professionals to ensure that everyone understands the laws and practices — and the potential consequences of violating them — so your business remains compliant.

The bottom line: Abide by the law. Allow everyone a fair and unbiased opportunity to apply for your unit. Focus on the property and the amenities. Don’t make any assumptions about renters, applicants or the neighborhood, and evaluate everyone using the same criteria.

Resources
National Fair Housing Alliance
National Fair Housing Alliance 2017 Fair Housing Trends Report
U.S. Department of Housing and Urban Development

[1] Properties that receive certain forms of federal financial assistance may be subject to other federal anti-discrimination laws. Properties including places of public accommodation — such as rental offices or retail space — may be subject to the Americans with Disabilities Act. You should consult with a lawyer to determine the full range of anti-discrimination laws that apply to your property.

[2] Under the FHAct, multifamily properties that constitute “housing for older persons” are allowed to refuse to rent to families with minor children. These include housing where (i) all units are occupied by persons age 62 or older and (ii) at least 80 percent of all units are occupied by at least one person age 55 or older and certain other requirements are satisfied. Consult with an attorney to understand the requirements for “housing for older persons” and related state and local laws.