Chapter 7: Fair Housing Act

Protect yourself and your business

Landlords and real estate agents need to be aware of the Fair Housing Act in order to avoid violating it during the tenant screening and rental application process. Many real estate professionals have unintentionally violated the Fair Housing Act and paid the price with their money and reputation.

Whether you handle rentals only once in a while or are a leasing expert, you can't afford a slip-up that violates the Fair Housing Act.

This guide gives you a basic understanding of what the Fair Housing Act is, who it affects, and how you can protect your business and the housing rights of your tenants.

Here are the main points we will cover in our chapter on the Fair Housing Act:

  1. What is the Fair Housing Act?
  2. Who is protected by the Fair Housing Act?
  3. Examples of Fair Housing Act Violations
  4. Exemptions
  5. Enforcement
  6. How to avoid violating the Fair Housing Act

real estate agent

What is the Fair Housing Act?

In 1968, the Fair Housing Act was put in place to ensure fair housing practices throughout the United States and was amended later in 1988. This law guards protected classes from discrimination in the sale or rental of housing and makes housing available to everyone regardless of race, color, sex, religion, disability, familial status, or national origin.

The Fair Housing Act along with the Civil Rights Act of 1968, the Americans with Disabilities Act, the 14th Amendment, the Equal Credit Opportunity Act, state, and local laws all offer protection to prospective tenants and homebuyers.

Who is protected by the Fair Housing Act?

Rental applicants and home buyers are protected under the Fair Housing Act regardless of their race, color, sex, religion, disability, familial status, and national origin.

Additional Protected Classes

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

  1. Citizenship
  2. Age
  3. Veteran or military status
  4. Genetic information
  5. Sexual orientation
  6. Gender identity or expression
  7. Source of Income
  8. Criminal history (arrest without conviction)

Check your local and state fair housing laws to make sure you are following them in addition to the federal law.

rental applicants

Source of income may not apply to Section 8 in some states. For instance, in California, Section 8 has not been considered a source of income in past cases. This may vary from state to state, so check with your region’s HUD office if you have questions about this. A list of HUD’s regional offices and contact information can be found here.

Examples of Fair Housing Act Violations

The Fair Housing Act’s main goal is to advise renters, landlords, real estate agents, property managers, and lenders about how to avoid discriminatory housing practices.

Below, is a list of examples of FHA violations.

Examples of housing discrimination

  1. Making a home unavailable for sale or lying that it is unavailable. For example, a person in a protected class answers a rental ad for an apartment but is told by the landlord that the apartment is already rented when this is not true. The landlord then rents the apartment to a different applicant who does not belong to the protected class.
  2. Denying housing to a member of a protected class. For example, A landlord refuses to rent an apartment to a blind man because he has a service dog, or a landlord refuses to rent to a woman with a mental disability.
  3. Setting forth different terms and conditions for the sale or renting of a home. For instance, a Property manager refuses to rent to a family with children, or he charges the family a higher security deposit. Another example could be a property manager who tells a family with children that they can only rent in certain buildings of the complex.

Fair Housing Act complaints are mind-bogglingly common. According to the National Fair Housing Alliance 2018 Fair Housing Trends Report, there were 28,843 complaints of housing discrimination in 2017. Some are unintentional such as evicting a hoarder and being unaware that hoarders are protected under the Fair Housing Act; however, in 2015, the Supreme Court ruled that the “FHA applies even when discrimination isn’t intentional.”

rental risks

Exemptions

There are a few situations that may be exempt from the Fair Housing Act.

    • Single-family homes rented or sold without a broker as long as the private homeowner does not own more than three of these rented-out single family homes at one time. Check out attorney Scott Badami’s article “Exemptions to the Fair Housing Act.
    • Small buildings of four or fewer units with one in which the owner lives (known as the “Mrs. Murphy” exemption). “Mrs. Murphy” is a hypothetical elderly widow renting out a room in her home to supplement her income. The exemption does not apply to rental advertising.
    • Religious organizations can lease apartments for non-commercial purposes and preference is given to the people of the organization’s religion. But the exception is limited to religion. Religious organizations cannot discriminate based on national origin, color, or race (42 U.S. Code § 3607(a)).
    • Private clubs can lease apartments on behalf of the club for non-commercial purposes and limit occupancy or give preference to club members.
    • Property that qualifies as senior housing. These properties include people who fit the requirements of 55 and older communities. Also, properties that participate in a federal, state, and local senior housing program.
      However, if your property is exempt from the Fair Housing Act, you must still comply with the FHA law’s ban on discriminatory advertising (42 U.S. Code § 3603(b)).

      Enforcement

      The Department of Housing and Urban Development (HUD) enforces the Fair Housing Act in two ways:

      1. Fair Housing Testers: These are undercover HUD employees who pose as prospective renters. Be careful of what you say in rental ads, property descriptions, by phone, and in person.
      2. Investigate Discrimination Claims: If a would-be tenant feels that their fair housing rights have been impeded or violated, they can file a discrimination claim with HUD. HUD will then investigate the claim and decide if further legal action is needed.

      Fair Housing Act Civil Penalties and Rental Application Process

      Violating the Fair Housing Act during rental application screening or thereafter can be expensive. According to a 2016 HUD announcement, the inflation-adjusted penalties for violating the FHA can be quite severe:

        • 1st Violation – Maximum civil penalty of $19,787
        • 2nd Violation – Maximum civil penalty of $49,467
        • 3rd+ Violation – Maximum civil penalty of $98,935 each

      fair housing act penalty

      Even just one violation can have a profoundly negative impact on your business.

      How to avoid violating the Fair Housing Act

      Violating the FHA is one of the last things you want to do, so below is a list of tips to help you stay in compliance with the FHA.

      What you can do…

      It is usually best to reject tenants based on other criteria not covered by the Fair Housing Act. Most people reject a tenant based on poor credit history, insufficient income, inability to pay rent in the past, and other information found in the credit history report.

      Be consistent in your rental application screening

      Consistency across all rental application screening will protect you from Fair Housing Act violations.

      Use the same qualifying standards for each tenant and go through the same process for each applicant. So, make sure you require the same documentation, referrals, and fees from each prospective tenant to avoid accusations of unfairness or favoritism. In other words, screen everyone in the same way using the same criteria.

      Carefully word your ads, property descriptions, and rental application

      Keep in mind the way you word your rental ad. Including phrases such as “No kids,” “Not deleaded” (discriminates against children 6 and younger), and “Professionals only” can lead to a Fair Housing Act complaint. Instead of focusing on who you think would be ideal renters for this property, simply focus on the property itself. If you describe the property and leave the people out of your rental ads, you can avoid complaints.

      Be clear about your rental guidelines and make sure to include a link to these in your ad.

      Post your qualification guidelines

      Do not reject a rental application for any reason other than the prospective tenant does not meet the stated rental qualification criteria. Do not be subjective at all. Be consistent in presenting the criteria to all applicants equally. It’s a good idea to post your guidelines for all potential tenants to see on a website or the rental advertisement.

      Post your qualification guidelines

      Do not reject a rental application for any reason other than the prospective tenant does not meet the stated rental qualification criteria. Do not be subjective at all. Be consistent in presenting the criteria to all applicants equally. It’s a good idea to post your guidelines for all potential tenants to see on a website or the rental application.

      Be sensitive to disabled tenants’ needs

      Avoid asking an applicant if they are disabled, what their disability is, or anything remotely related to that.

      Service animals

      A service animal is not considered a pet, but rather a necessity for the disabled tenant to equally enjoy fair housing like other residents. Since service animals are not pets, they are not subject to pet restrictions (additional deposits, size/weight rules, etc.). So, when screening for tenants, make sure to be open to service animals even if you have a “no pets” policy. Also, make sure not to ask, “Do you have a service animal?” because that could be construed as discriminatory.

      Emotional Support Animals

      Under the Fair Housing Act, support animals (like service animals) may require “reasonable accommodations”. Meaning, those who hold a “no pet” policy may still be required to allow support animals.

      Parking accommodations

      Avoid denying a request for an assigned parking space from a disabled prospective tenant. This could be in violation of the Fair Housing Act. Always consult with your lawyer should you decide to deny the tenant an assigned space even if you have existing handicap parking spots available. The disabled tenant may need a space closer to their unit.

      Avoid familial status questions

      Don’t ask an applicant anything about their children or pregnancy. Avoid questions such as “How many children do you have?” or “When are you due?” Pregnant women and families with children are protected under “familial status.” Also, do not ask a couple if they are married or engaged.

      confidential housing information

      Avoid race, color, and national origin questions

      Avoid questions such as “Where are you originally from?” or “What’s your first language?” Of course, don’t ask about a person’s race, color, or ethnicity.

      Avoid religion questions

      Don’t ask about the person’s religion or place of worship. Avoid questions such as “Do you attend the church down the street?”, “Are you Muslim?”, or “Are you Christian?”

      Avoid disability questions

      Don’t ask about a person’s disability even if it’s obvious that they are disabled. Avoid questions such as “How long have you been paralyzed?”, “Do you have a service dog?”, or “Are you able to walk upstairs?” Any of these, as innocuous as they seem, could be construed as discriminatory.

      Avoid questions about age and sex

      Don’t ask questions about a person’s age or sex, even something as casual as “When do you plan to retire?” This question could be meant to break the ice or simply make small talk. However, it can land you in legal trouble even if you asked with no malicious intent.

      Additional Protected Classes

      Take the time to learn about additional protected classes that may be covered by your state and local laws. Cities, states, and municipalities sometimes have additional protected classes that go beyond the seven protected classes of the Fair Housing Act. These could be, but are not limited to gender identification, sexual orientation, marital status, political views, student status, veteran status, and others.

      Want more information?

      For more information about the Fair Housing Act, consult the HUD.gov Fair Housing Act Overview webpage, the Fair Housing Act on the Department of Justice website, or the HUD Fair Housing booklet.

      Disclaimer:

      The information in this chapter is for informational purposes only and under no circumstances whatsoever should it be considered legal advice. Please consult an attorney if you have any specific questions about the Fair Housing Act and the rental application process.

      Check out our other chapters here:

      1. Rental Application 101
      2. How To Read A Rental Application
      3. Identifying Red Flags on a Rental Application
      4. 5 Common Problems with Lease Applications
      5. Online vs. Paper Rental Application
      6. Denying Rental Applicants
      7. Fair Housing Act