Articles of Interest
Avoiding Rental Property Discrimination Complaints
If you're in the rental housing business for long, you'll hear about six-figure or larger legal awards against rental property owners for violating fair-housing laws. Problems often arise when investment property owners are unaware that their policies or practices are discriminatory. Families, children, and folks with disabilities often are the unintended victims of this lack of knowledge. Federal and state laws prohibit discrimination, and these laws impact your advertising, tenant screening, and selection process.
The Federal Fair Housing Act prohibits discrimination on the basis of race, color, religion, national origin, sex, age, familial status, and disability. Check the state and local fair-housing laws in your area; some additional state and local protected classes include sexual preference, gender identity, occupation, source of income (government assistance, Section 8), educational status, medical status, and even physical body size.
Discrimination is a major issue for investment property owners and has serious legal consequences. If you don't know the law, you may be guilty of various forms of discrimination and not even realize it until you've been charged with discrimination. That's why knowing the law is so important.
With residential rental properties, another form of illegal discrimination is steering — guiding a rental applicant toward living where you think he should live based on race, color, religion, national origin, sex, age, familial status, disability or handicap, or any other protected class. Not showing or renting certain living units to minorities is one form of steering; however, so is the "assigning of any person to a particular section or floor of a building, because of race, color, religion, sex, handicap, familial status, or national origin." Advertising or promotion that indicates or implies a preference is also discriminatory.
All commercial and residential rental applicants should receive information on the full range of vacant space or rental units available and be able to decide which suites or units they want to see.
Residential rental property owners often have good intentions when they suggest that a rental prospect with children see only rental units on the ground floor or near the playground, but such practices are a clear violation of current federal fair housing laws as they restrict housing options and can be used by some unscrupulous landlords as an excuse or justification to cover up their intentional discriminatory actions.
Being fair to families and children
All residential rental properties must be offered to all applicants, including those with children, as federal and state legislation has virtually eliminated "adult only" residential housing except for certain HUD-certified seniors properties. However, because there's less regulation of nonresidential properties, some commercial property owners may be within their legal rights to use their business judgment to refuse or discourage an applicant with plans to use the leased space as a daycare or other business that caters to children.
Some rental property owners are concerned about renting to families with children because of hazards on the property that may be dangerous for kids. For example, the property may not have any safe areas for the children to play. Although you may truly only have children's best interests in mind, it is the parent's right to decide whether the property is safe for their children. Of course, you do need to take reasonable steps to make your property safe.
Charging rental applicants with children higher rents or higher security deposits than applicants without children is also illegal, as is offering different rental terms, such as shorter lease terms, fewer unit amenities, or different payment options. The property facilities must also be fully available for all tenants, regardless of age, unless there is a clear safety issue involved. For example, some states have laws allowing a policy that an adult must accompany children under 14 when using the swimming pool.
As a rental property owner, you should welcome renters with children. Families tend to be more stable, and they look for safe, crime-free, and drug-free environments in which to raise their kids. Along with responsible pet owners, who also have difficulty finding suitable rental properties, families with children can be excellent, long-term renters. And typically, the longer your tenants stay, the better your cash flow.
Dealing with tenants with disabilities
The federal fair housing regulations state that property owners must:
- Make reasonable accommodations at the owner's expense for tenants with disabilities, so they can enjoy the rental property on an equal basis.
- Make reasonable adjustments to their rules, procedures, or services upon request. A common example would be providing a wider and more convenient parking space, when practical.
- Allow disabled tenants the right to modify their living space at their own expense, under the following conditions:
- The modifications can only extend to what is necessary to make the space safe and comfortable.
- The modifications don't make the unit unacceptable to the next tenant, or if they do, the tenant agrees to return the rental unit to its original condition upon vacating the property.
- The tenant must obtain your prior approval and ensure that the work will be done in a professional manner, including obtaining any necessary government approvals or permits.
- The tenants must pay the funds necessary to perform the needed restoration into an interest-bearing escrow account to ensure that the work is actually completed and there will be no liens against the property.
The Americans with Disabilities Act (ADA), passed in 1992, affects most commercial and retail real estate but has limited requirements for many residential rental property owners, because it doesn't apply to private residential properties built prior to 1991. (See the more significant requirements for newer properties at the Department of Justice ADA Web site). The ADA addresses the accessibility of public areas. For example, a rental property with a pool area must be accessible to the handicapped and the removal of existing physical barriers at the rental property owner's reasonable expense is required.
Many local municipalities work closely with HUD to investigate ADA complaints and handle enforcement. Also, local jurisdictions oversee and enforce handicapped parking requirements for multiunit rental properties. Check with your local building and code enforcement office for details.
Service animals that assist tenants with daily life activities must be allowed in all rental properties, regardless of any no-pet policies. You must also allow a tenant to have a pet if requested under the "necessary and reasonable accommodation" provisions of the Americans with Disabilities Act (ADA). Some tenants do seek a companion animal based on their need for comfort or companionship, and federal law requires owners and managers to consider the tenant's claim and grant the request if it is reasonable.
