Chicagoland Leasing and Management Blog

How To Avoid Fair Housing Penalties and Fines

Nora Bohanon - Wednesday, June 7, 2017
Property Management Blog

Serious property owners know that they need to screen any and all prospective tenants before signing a rental agreement. Getting a quality renter will ensure a great business relationship that benefits both parties: they get a new space and you get a reliable source of income. There are good ways and bad ways to ensure that you find a quality tenant, but more importantly, there are legal and illegal ways too.

There is a wealth of information you can gather on any prospective tenant, but not all of it is advisable to use in your decision-making process. You’ll want to gather all the pertinent information possible, getting a clear picture of your prospective tenant, without overstepping any legal boundaries. To navigate this process, you’ll want to focus on some important details.

The single most important guide will be the Fair Housing Act, the federal guidelines for what can and cannot be used to determine who you’ll rent to. This is codified into law as Title VIII of the Civil Rights Act of 1968, and is enforced by the United States Department of Housing and Urban Development. It protects citizens from unfair discrimination practices in buying or renting property by defining protected classes of people. The goal is to ensure that only a person’s relevant stats are considered, rather than than their background, creating a level playing field.

The protected classes include race, religion, ethnicity, gender, parenthood, and disabilities. In addition to these factors, many states prohibit discrimination based on marital status, sexual orientation, and age. You’ll want to look up any local laws governing the specifics, but the broad picture remains the same across the US: you can only legally determine who you’ll rent to based on relevant factors, such as financial situation.

We’ll share a great recent example of a property owner violating the fair housing rules, to better paint a picture of how this all works.

Recently, the owners and manager of some rental communities in Washington got into hot water over claims that they were refusing to rent apartments to families with children. A complaint was filed, and the Justice Department alleged that in March 1014, the manager of one of the buildings told a prospective tenant and her husband and child that the buildings were “adult only” and thus not available to her and her family. Additionally, the complaint notes that at various times from 2014 to 2015, advertisements for these units were listed as adults only. The aforementioned family filed a complaint with Housing and Urban Development, which investigated and issued the discrimination charge.

The case is still pending, but going by the outcome of similar incidents over the years, the property owners are likely to pay a penalty. When the law is as plain as it is written in this situation, it really pays to stick within legal limits. Not only is it legal and more ethical, but it will also lead to better tenants and better business relationships. When everything is clear, open, and on the table, both sides can better understand the agreements being made. Equal access to housing is an essential American right, and in a competitive market, landlords must follow the law.

Beyond the financial pains, there’s a social cost to violating fair housing laws. Breaking the law sends a poor message to future prospective renters and the public at large; it’s something no property owner wants to have on their record. This is why it’s always important to know the laws and stick to them. The outcome will be better for you and your prospective tenants going forward into the future.