When managing a rental property, one of the most essential laws to be aware of is the Fair Housing Act. This law is easily overlooked, and as a result, it's often unintentionally violated. That said, if you violate this law, you will be penalized and you'll business will receive a negative reputation.
Before marketing your rental and screening tenants, be sure to learn about the Fair Housing Act. This will ensure you and your reputation remain protected.
In this article, we explain what the Fair Housing Act is all about, the designated protected classes and the penalties incurred for violation.
Let's get into it!
Key Things to Remember About the Fair Housing Act:
The Fair Housing Act was created in 1968 to promote fair housing practices across the US. It was later amended in 1988. The law seeks to prevent discrimination when it comes to selling or renting a property.
- Protected classes are outlined in the Fair Housing Act - Regardless of race, color, disability, familial status, sex, national origin and religion, everyone must be treated fairly when purchasing or renting a property.
The following additional classes have also been included: citizenship, age, genetic information, sexual orientation, source of income, gender identity or expression, veteran or military status and criminal history (arrest without conviction). This means that these classes, as well, shouldn't be used as a basis to discriminate a person from being a property buyer or renter.
- Here are some examples of committing a violation against the Fair Housing Act under religion, disability and race:
Refusing a renter who practices a different religion than you. For example, a renter may be a devout Muslim and you're a Christian. You inform the prospect that there's no rental unit available, even if you have a vacant room.
As a property seller, you ask someone who is a Catholic to submit more documents than generally required. Your main objective is to make it hard for the buyer to purchase the home simply because you don't tolerate the religion the prospect is practicing.
Selecting only able-bodied people as tenants is illegal. Some landlords do this because they don't want to build disable-friendly amenities in their rental unit. So, they prefer to choose only those that won't necessitate any changes/ upgrades in their rental homes, but this is illegal.
A seller may also refuse to entertain a buyer with disability for a number of reasons. One, it may take too much time to discuss the features of the property. Two, processing of documents may take longer especially if the disability is physical; and three, communicating with a person of disability may require other interpreters to be present such as a sign language expert. This is a clear violation of the Fair Housing Act.
- When it comes to a loan appraisal, a borrower whose roots are not from the US may be discouraged to buy a property. A different set of requirements may be given to make it more challenging to purchase a certain property. This can be due to a bias of the seller who wants only a certain race to occupy the properties in the neighborhood.
- If you accept tenants, but limit the available accommodations, you're still guilty of violating the Fair Housing Act. This can manifest by providing only units in utter need of repair to certain tenants. Offering smaller units is another way to discriminate against someone. This shows preferential treatment over the other tenants renting in your property.
During tenant screening, a landlord is not permitted to ask sensitive questions that may point to biases. Questions about age and civil status can be misconstrued as factors for being rejected for the application. As a landlord, you must have a set of objective and non-discriminatory criteria.
A landlord may have certain prejudices such as wanting to rent to females only, but this is not permitted and cannot be included in any marketing campaigns. Advertising purely for a preferred gender (or other protected classes) and including it in your property listing is a violation. If a male prospect applies to be a renter, a landlord can't turn him down solely because he's male.
Even if your property does not allow pet ownership, a landlord cannot refuse an applicant with a disability who owns a service animal. Under the Fair Housing Act, a service animal is not labeled as a pet. So, even if you prefer a pet-free rental home, you can't turn away a prospect that meets all requirements due to having a service animal.
- The penalties for violating the Fair Housing Act are as follows:
- For a first-time violation, there's a maximum civil penalty of $19,787.
- For a second-time violation, there's a maximum civil penalty of $49,467.
- For a third-time violation, there's a maximum civil penalty of $98,935.
The Fair Housing Act was established for equal protection of all - regardless of our differences.
When renting or selling your rental properties, you must be aware of the Fair Housing Act and its protected classes. Violation of the Act can result is serious financial penalties. The 7 protected classes include: race, color, disability, familial status, sex, national origin and religion.
For more information, contact Anchor Down Property Management.