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Property Management, Tenant Management

What Landlords Need to Know About the Fair Housing Act

The Fair Housing Act was enacted by congress to ensure that everyone who ever applies for a house would be treated equally and fairly. The act aims to advise landlords, buyers, and renters of the practices deemed as discriminatory.

Discriminatory practices, according to the Department of Housing and Urban Development (HUD),  include: adjusting prices for the sale or rental of property; delaying or failing to perform necessary repairs or maintenance for certain renters; limiting services facilities, or privileges of a home, based on a persons gender, nationality, or racial characteristics.

About the Fair Housing Act

The Fair Housing Act is a federal law enacted in 1968 that prohibits discrimination in the purchase, sale, rental, or financing of housing – private or public – based on race, skin color, sex, nationality, or religion. The statute has been amended several times, including in 1988 to add disability and family status.

The act was created on the principle that every American should have an equal opportunity to seek a place to live, without being afraid of discrimination due to factors outside their control.

Who Is Protected by the Fair Housing Act?

The Fair Housing Act prohibits discrimination in housing based on the following seven factors:

  1. Color
  2. Disability
  3. Familial status (i.e., having children under 18 in a household, including pregnant women)
  4. National origin
  5. Race
  6. Religion
  7. Sex

How does the Fair Housing Act Combats Housing Discrimination?

1. Renting and Selling

Essentially the act prevents anyone from refusing to sell, rent or negotiate for a home-based on one of the protected classes.

This includes making the house unavailable to people or lying about the availability of the house. Additionally, you can’t provide a different level of service or sell or rent the property with different terms or conditions. For example, you would not be able to nor are you allowed to exclude people from, say, a rental listing website.

If you do want to refuse or deny a person’s application it must be because of a legitimate reason. We outline the legitimate reasons to refuse to rent to sell to someone further on in this article.

2. Loan Protection

The Fair Housing Act also means mortgage providers can’t discriminate against those that apply for loans. Discrimination in this scenario would include setting different loan conditions, eg. a higher interest rate, setting different requirements for purchasing a loan, refusing to make the required information available, using discriminatory practices when property appraising.

3. Other Illegal Actions

The Fair Housing Act stops landlords and sellers from using discriminatory language in the advertising of a property or indicating a preference. This also applies to those that are otherwise exempt from the Fair Housing Act rules, such as owner-occupied units.

You also can’t threaten or interfere with anyone’s fair housing rights.

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Are There Any Exemptions?

There are several exemptions to the Fair Housing Act. However, even those that are exempt should do their best to follow the guidelines of the Fair Housing Act closely.

The exemptions include:

  • Single-family homes that are rented out or sold through a broker.
  • Owner-occupied homes with no more than four units
  • Members-only private clubs or organizations

How is the Fair Housing Act Enforced?

It is the duty of the Department of Housing and Urban Development to enforce the Fair Housing Act. There are several ways that they do this.

The first is through fair housing testers. These are sort of like secret shoppers. They hire people to pose as renters or home buyers to see if any discriminatory practices are being used. This means that they will not only be looking at written examples such as property listings but also talk to people in person, or on the phone.

The second tactic they employ is to investigate any discriminatory claims. Any individuals who feel that they have been unfairly discriminated against can file a claim with the HUD, and it is their responsibility to investigate and decide if there is any merit to the claim and if further legal action needs to be taken.

What Landlords Need to Know

To ensure you stay compliant with the Fair Housing Act you should assume that everyone you deal with is a fair housing tester working for the HUD.

As such, assume you will be called out if you do not adhere to the terms of the act.

When deciding whether or not to rent to a tenant you can decide on the following grounds:

  • Poor credit
  • Insubstantial money
  • Bad rental history, eg. previous evictions on their record.

Make sure to be consistent with your tenant screening process, treating every prospective tenant the same way. Require the same documents, referrals, and fees.

Some states have additional protected classes, such as sexual orientation, age, and even student status. So, make sure to check your local and state fair housing laws to ensure you are following them exactly.

fair housing actHUDManaging tenantsProperty ManagementReal Estate InvestingRental Propertyscreen tenantsTenanttenant screeningTenants

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Ben Luxon

Ben is an author and real estate enthusiast. His interest in all things entrepreneurial has led him to work with real estate professionals all over the world, distilling their knowledge into articles and Ebooks.

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