Things to Know About the Fair Housing Act

In the rental business, it's crucial that you have a degree of awareness regarding the Fair Housing Act. Landlords utilize this knowledge when conducting tenant screenings and marketing their properties. As part of your responsibilities as a landlord, following the Fair Housing Act is a must.

Without being aware, you may face a bad rep if you happen to overstep the boundaries of the FHA. Not only that, but you may also pay a fine as consequence, or worse. It benefits you as a property owner to become informed, as consequences of overstepping this law can then be avoided.

Here are the core essentials to learn about the Fair Housing Act:

What is the Fair Housing Act?

Created in 1968, the Fair Housing Act promotes equal housing opportunity for everyone looking to purchase or rent a home. Amended in 1988, it seeks to end discrimination by protecting specific classes.

Under the Fair Housing Act, there are 7 protected classes. These classes are sex, religion, race, national origin, disability, color, and familial status. This means that no tenant or homebuyer must be discriminated against based on these classes.

Different states have contributed additional protected classes. They've added age, gender expression or identity, sexual orientation, source of income, genetic information, criminal history (arrest without conviction), and military status. This is to further provide equal housing by limiting discrimination against these additional classes.

Examples of Fair Housing Act Violations

To illustrate, here are ways that you can unintentionally violate the Fair Housing Act:

Example #1

Interrogating prospective renters and refusing to accept them on the basis of being immigrants. The renters have a good rental history, excellent credit scores and make 3x the rental price.

Still, on the subject of race and national origin, you turn down the tenant application.

Example #2

You're selling your property and don't really want to sell it to an interested buyer who practices a different faith than you. You insist that you require more documentation than unnecessary from the potential buyer. This is your way of discouraging the buyer to pursue the purchase and look elsewhere. This is unfair treatment on the basis of religion.

Example #3

As a landlord, you prefer a certain gender to rent your property. You only accept males, even if the female prospects have met the standard requirements easily. This constitutes as a violation by discriminating on the basis of one's sex.

Example #4

Another method of unfair treatment is refusing prospects with disabilities to occupy your rental unit. Say you don't welcome pets in your property. However, people with disabilities are allowed to have companion animals, as these are not categorized as pets. Since you don't want any types of animals in your rental property, you choose not to entertain applications of people with disabilities, which is illegal.

Example #5

As a landlord, you may find families with children intolerable because of potential noise complaints. You attempt to dissuade them from applying for your multi-unit property by increasing the rent massively or assigning them to a smaller rental space. Thus, you leave them with little choice but to withdraw their application and find another rental property. Doing this equates to committing a violation on the grounds of familial status.

Example #6

A lender can also be guilty of violating the FHA by offering a different interest rate to a borrower. For example, the lender faces someone who is of certain racial descent seeking to buy a property and the lender proceeds to increase the interest rates.

This shows that the lender is discriminating against the borrower on the basis of race. Even if great loan terms are available, the borrower is left uninformed.

Example #7

Another way that an FHA violation is committed is when a borrower whose roots are not American is subjected to different requirements. This is to make it tougher for the borrower to sustain the interest to buy.

Fair Housing Violations During Tenant Screenings

During tenant screenings, interviews are common, but one must tread carefully. It's unfair to interrogate prospects and ask questions that directly or indirectly pertain to one's religion, race and other protective classes. As a landlord, it's important to steer clear from a discriminatory line of questioning. It's best to stick to objective questions.

Fair Housing Violations Concerning the Property Itself

Violation of the Fair Housing Act isn't only limited to tenant screening. It also occurs when only certain types of rental units are made available. For example, someone with children will be housed in the back part of the property. Another way it occurs is when only a sub-standard housing unit is offered. This forces the renters to eventually move out and relocate to a better and bigger unit, given their number of family members.

Fair Housing Violations in Property Listings

Another method that violates the FHA is advertising the rental space and highlighting that a certain race demographic need not apply. This is racial discrimination against prospects. It only makes the housing or rental opportunity available to selected races.

Indirect advertising that centers on particular races/ religions can also manifest as offers of rental discounts. A certain group is specifically welcomed to apply and, when they do, can score 10% rent price off. This instinctively draws more from that race or religion to submit their rental applications. This is highly discouraged and results in discrimination under the Fair Housing Act.

Fair Housing Violation Penalties

Discriminatory practices in selling and renting out properties are subject to penalties. The amounts to pay for Fair Housing Act violations are as follows:

  • First-time violators pay a maximum civil penalty of $19,787
  • Second-time violators pay a maximum civil penalty of $49,467
  • Third-time violators pay a maximum civil penalty of $98,935

Bottom Line

If you're a landlord, cultivate objective criteria for accepting prospective tenants. Avoid asking questions that point to their race, familial status, disability, color, sex, religion, and national origin. In addition, be careful when creating your property advertisements or property listings. Never announce your preferences of renters on the basis of protective classes, as this ensures that you'll always uphold the Fair Housing Act.

It's also helpful to read and understand the Fair Housing Act to protect yourself from any complaints. If you have a challenging time keeping up with laws applicable in rental management, hire a property manager. They have the expertise and are well versed in landlord-tenant laws, especially the Fair Housing Act.

Disclaimer: This article is in no way a substitutive for legal expert advice from a qualified attorney in North Carolina. Laws change from time to time, and this post might not be updated at the time of your visit.

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