The Basics of Fair Housing Laws

This post was written by
 Jeff O’Brien for Simply Residential Property Management Magazine.

People who work in the areas of renting, selling, lending or insuring homes are subject to federal, state and sometimes local fair housing and other anti-discrimination laws. Recently, the U.S. Department of Housing and Urban Development (“HUD”) released guidance indicating that landlords who turn down tenants based upon their criminal records may violate the Fair Housing Act. This article focuses on residential landlords’ fair housing responsibilities and tenants’ rights under the Fair Housing Act, particularly in regards to the statute’s prohibitions against discrimination.

Discrimination Claims Under the Fair Housing Act

The Fair Housing Act (the “Act”) is codified at Title VIII of the Civil Rights Act of 1968, 42 U.S.C. §§ 3601 et seq. The HUD regulations implementing the Act are at 24 C.F.R. Parts 100 through 125. The HUD regulations “ordinarily command considerable deference…” Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 107 (1979). The Act, which applies to both government and private defendants, makes it unlawful to discriminate because of race, color, religion, sex, familial status, national origin
or handicap. 42 U.S.C. § 3604(a), (f). (The words “disability” and “handicap” are used interchangeably.) “Familial status” refers to households with a child or children under 18 or a person who is pregnant or in the process of securing legal custody of a child under 18.

hud-fair-housing FINALThe Act broadly prohibits the refusal to sell, rent, or negotiate for sale or rental, or acts that “otherwise make unavailable or deny” dwellings. It also specifically prohibits making statements indicating preferences (§ 3604(c)) or discriminating in terms, conditions, privileges, services or facilities (§ 3604(b)). It applies to “dwellings,” including vacant land offered for sale or lease for dwellings. The Act has been held to apply to mobile home parks, homeless shelters, and summer homes. See United States v. Columbus Country Club, 915 F.2d 877 (3d Cir. 1990), cert. denied, 501 U.S. 1205 (1991); accord, Hovsons, Inc. v. Township of Brick, 89 F.3d 1096 (3d Cir. 1996) (nursing home). The U.S. Supreme Court has held unanimously that the language of the Act is “broad and inclusive,” implementing a “policy that Congress considered to be of the highest priority,” requiring “a generous construction” of the statute. Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 209, 211, 212 (1972).

It is important to note that intent is not required to establish liability under the Act. Prima facie liability can be established by a showing of disparate effect. The courts of appeals have adopted different standards for determining disparate effect. The Eighth Circuit (which includes the U.S. District Court for the District of Minnesota) set forth its test to establish a prima facie FHA disparate impact claim in the case of Oti Kaga, Inc. v. South Dakota Housing Dev. Auth, 342 F.3d 871 (8th Cir. 2003). Under the Oti Kaga test, the plaintiff must demonstrate that the objected-to-action results in, or can be predicted to result in, a disparate impact upon a protected class compared to a relevant population as a whole. Oti Kaga, 342 F.3d at 883; see also Charleston Housing Auth. v. U.S. Department of Agriculture, 419 F.3d 729, 740-41 (8th Cir. 2005). Under the second step of the disparate impact burden shifting analysis, the defendant must demonstrate that the proposed action has a “manifest relationship” to the legitimate non-discriminatory policy objectives and “is justifiable on the ground it is necessary to” the attainment of these objectives. Oti Kaga, 342 F.3d at 883; Charleston Housing Auth., 419 F.3d at 741.

The courts recognize two kinds of discriminatory effect: greater adverse impact on one group than another or harm to the community by the perpetuation of segregation. (Arlington Heights II, 558 F.2d at 1290) Greater adverse impact need not mean that more minorities have been affected; if a larger percentage of minorities has been affected, the standard is satisfied.

In some situations there is direct evidence of intentional discrimination. Where there is no direct evidence, a prima facie case may be established by indirect evidence. Some ways of proving intent by indirect evidence are set out by the Supreme Court in Arlington Heights I (Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252 (1977)). Another, formulaic way to establish a prima facie case is by showing that: (1) the claimant is a member of a protected class; (2) the claimant applied for and was qualified to rent or buy the property at issue; (3) the claimant was rejected; and (4) the housing opportunity remained available.

After the prima facie case of intentional discrimination has been established, the defendant must produce a legitimate, nondiscriminatory reason for its action. If the defendant does so, the burden of production and persuasion shifts to the plaintiff to show that the proffered reason is pretextual.


42 U.S.C. § 3613 authorizes a court to award actual and punitive damages, equitable relief, and, to a prevailing party, a reasonable attorney’s fee and costs. In an administrative proceeding, HUD or the state agency may award actual damages, a civil penalty, and injunctive or other equitable relief. 42 U.S.C.§ 3612(g). HUD is authorized to award damages for emotional distress as well as other forms of loss.

The New HUD Guidance

HUD’s basis for its position that landlords may violate the Act by rejecting applicants based upon their criminal records stems from its view that because of widespread racial and ethnic disparities in the U.S. criminal justice system, criminal
history based restrictions on access to housing are likely disproportionately to burden African Americans under the “disparate impact” analysis.


HUD’s recently released guidance should give landlords pause as to their exposure to discrimination claims under the Fair Housing Act. In close cases, consultation with an attorney knowledgeable about the Act is a must.

Jeffrey C. O’Brien is an attorney with the Minneapolis-based law firm of Lommen Abdo, P.A. voice of the “Legal Minute on Minnesota Home Talk, heard Saturdays on 1500 ESPN, and a Minnesota State Bar Association Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at

In Focus: The Rental Scam

Avoiding the Rental Scam

Could you recognize a rental scam if you saw one? Rental scams have become a major problem in the rental industry, as scammers have found creative ways to use online rental postings to lure unsuspecting tenants. There are a few different versions of the rental scam, but it basically works like this:

Scammers take property descriptions and images from existing and legitimate postings for rental and sales properties. They re-purpose the information for their own online scam post. The potential tenant finds the property online and is none the wiser that they are reaching out to a scammer. The scammer typically claims to be temporarily out of the country, so the only opportunity to view the property is via a drive-by. Getting the keys to the property only requires a wire transfer deposit to for the application fee, security deposit or first month’s rent.

Before the potentell tale mag-2tial tenant realizes, the scam has been completed. The wired money is lost and the scammer is long gone. Rental scams happen every day and it’s unfortunate to hear about the loss and suffering they cause. But there are ways to combat these scams.

Simply Residential Property Managment does all it can to minimize a scammer’s opportunity to scam tenants. But we also encourage tenants to be vigilant, knowing the warning signs of a rental scam.

Finding the right rental property should be an exciting life event. If you feel you have uncovered a rental scam involving Simply Residential Property Management, please reach out to us immediately.

When Should a Homeowners Policy Become a Landlord Policy?

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Photo credit: Jinx!;

This post was written by Eric Skarnes for Simply Residential Property Management Magazine.

Whether you are currently renting out your home or considering the option, it’s important to know about the differences between a typical “Homeowner’s” policy versus a typical “landlord” insurance policy. It’s common for property owners to make the mistake of keeping their homeowner’s policy even after they have moved out and start using the property as a rental. Should you ever need to file a claim, it’s important to make sure that you have the proper coverage. Unfortunately, people often find out after it is too late, that they should have changed their coverage to a “landlord” policy.

Most homeowner policies state that your home must be “owner-occupied,” or the insurance carrier has the right to deny you any potential claim. You and your family must be living there. For example, if your home incurs fire damage and it is discovered that the fire was caused by a tenant or renter, it gives them an easy-out to deny your claim. Leaving you responsible for the entire cost of repairs!  This can also apply to the “liability” portion of your policy.  If your tenant forgets to shovel the sidewalk and someone slips… falls and gets hurt, or should their dog bite the neighbor, your insurance company will be quick to deny the claim. Once again, you will be left holding the bill. Insurance companies are not in the business of paying out money when they don’t have to.

Another difference between homeowners and landlord insurance is the need for “Loss of Rent/Income” coverage.  This coverage is included in a landlord policy and pays you rental income should your tenant have to move out while the house is under repair due to a claim. Typically during this time period, the tenant will stop payment until the property is restored and they are able to move back in.  For example, if a water pipe breaks or a kitchen fire occurs, should your tenant have to move out while the damage is repaired, you are paid the rental income by your insurance company.

And finally, just because your current insurance company had a good rate for your homeowner’s policy, it doesn’t mean that they will have a good rate for your landlord policy.  Every company has their “niche” and that niche often changes over time.  Now that your property has become a source of income and a positive cash flow is the goal we recommend reevaluating your insurance on an annual basis. So, do yourself a favor and shop several different companies to make sure you are getting the best coverage and price.

Eric Skarnes is the president of the Twin Cities-based Insurance Warehouse. They offer auto, commercial, life, home, business, and umbrella insurance. He can be reached at (612) 354-2040 or via email at

Be Proactive to Minimize Your Liability as a Landlord


Photo credit: Got Credit

This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

Last month, I discussed the pertinent legal standards under Minnesota law for when a landlord can be held liable for injuries to tenants and/or their guests.  This month, I’m going to discuss some basic steps that landlords can take to minimize their exposure to such claims.

The Difference Between Liability and Being Sued

When it comes to civil lawsuits, Minnesota – like most states in the U.S. – is known as a “notice pleading” state.  That means that a plaintiff does not have to prove his/her entire case in the complaint.  If the plaintiff has a good faith basis for a claim, their attorney is permitted under the lawyer ethics rules to commence a lawsuit, and the details of the case are then explored later on during discovery, and then come the motions and, well you get the idea.

What does this mean? It means that, even though ultimately you as a landlord may likely prevail in a lawsuit brought by a tenant, you still have to defend the lawsuit.  Hence, taking some additional steps to prevent exposure for a claim brought by a tenant for injuries is a wise course of action.  Here are a few simple steps you should undertake immediately to audit your level of exposure to a tenant claim:

Use of Liability Limiting Entities

Use of a liability limiting entity such as a limited liability company can insulate a property owner’s personal assets from liability arising from tenant claims.  For best results, it is recommended to own each property in a separate limited liability company (or LLC for short).  In this manner, in the result of a tenant lawsuit related to one property, only the assets of the LLC which owns that property are at risk; in other words, the potential claim should not affect your other properties owned within separate LLCs.

Note that I said that the potential claim should not affect your other properties; in order to make certain that other entities and properties are not affected, you must be certain to respect the corporate formalities of each LLC.  Separate bank accounts should be opened for each separate LLC and the income and expenses relative to each property should be run through those bank accounts.  Do not commingle funds between properties and do not commingle funds from your rental properties with personal funds.  Otherwise you leave yourself open to “veil piercing” claims in the event that a tenant prevails in a lawsuit but finds no assets available to satisfy their judgment from the subject LLC.

Do You Have Adequate Insurance Coverage?

In order to best minimize the risk of liability for injuries to their tenants and/or guests, landlords should make sure that they have adequate insurance coverage – including provision of and payment for legal counsel in the event of a claim – for each of their properties.  If you choose to utilize separate entities for each rental property, make sure that each entity is properly named as the insured under the policy.

Review Your Leases

A final preventive step to take would be to review your leases to make sure that they do not create any express liability occasioned by a tenant injury.

With respect to both the lease review and entity formation matters, use of a knowledgeable attorney to audit your entity documents and lease forms would be a cost effective investment given the alternative of expensive litigation.

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. voice of the “Legal Minute on Minnesota Home Talk, heard Saturdays on 1500 ESPN, and a Minnesota State Bar Association Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at

Are Landlords Liable for Tenant and Guest Injuries?


This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

Can you be held liable when a tenant or guest is injured on your property? More importantly, what steps can landlords take to minimize liability for these injuries.

Common Law Duty – General Rule; Exceptions
For a common law negligence claim, one must prove (1) the existence of a duty of care, (2) breach of that duty, (3) proximate causation, and (4) damages. White v. Many Rivers West Limited Partnership, 797 N.W.2d 739, 743 (Minn. Ct. App. 2011). When it comes to the liability of landlords for tenant injuries, however, Minnesota courts have long held that landlords generally owe no duty of care to their tenants and are not liable for damages caused by defective conditions on the leased premises. White, 797 N.W.2d at 744 (Minn. Ct. App. 2011), citing Oakland v. Stenlund, 420 N.W. 2d 248, 250 (Minn. Ct. App. 1988).

Several exceptions to the general rule exist. A duty of care may exist if the landlord: (1) has willingly undertaken to repair the premises and done so negligently; (2) retains control of certain areas of the premises; or (3) is aware of a hidden hazard on the premises by the tenant is not. White, 797 N.W.2d at 744, citing Gradjelick v. Hance, 646 N.W.2d 225, 231 (Minn. 2002).

Negligent Repair Exception
If a landlord assumes the duty to correct a defect on part of the property when not required by the lease to do so, “the landlord must bear the burden of failure to make a good job of it.” White, 797 N.W.2d at 744, quoting Canada by Landy v. McCarthy, 567 N.W.2d 496, 504 (Minn. 1997). The duty of reasonable care to make a good job of repairs, however, requires only that “the necessary repairs [be performed] in a reasonable way.” Id. The landlord’s duty is not to make improvements to the safety of the thing repaired exceeding the safety standards otherwise imposed by law.

Retention of Control Exception
A second exception to the general rule occurs if the landlord retains possession of an apartment’s common areas, like stairs, halls, elevators or yard space. White, 797 N.W.2d at 745, citing Rosmo v. Amherst Holding Co., 50 N.W.2d 698, 701 (1951). Note that a landlord performing routine maintenance on windows in a unit or addressing a tenant’s complaints related to the windows does not fall under this exception. White at 745.

Hidden Hazard Exception
If a property contains hidden dangers that the landlord knows about and the tenant does not, the landlord must warn tenants about that danger, but the landlord has no corresponding duty to warn a tenant’s guests. White, 797 N.W.2d at 745, citing Oakland, 420 N.W.2d at 251. And no warning is required even for the tenant when the tenant knows of the dangerous condition or the condition is so open and obvious that the tenant can be expected or have discovered it on her own. White, 797 N.W.2d at 745, citing Johnson v. O’Brien, 105 N.W.2d 244, 247 (1960).

Contractual Duty of Care – General Rule
A landlord may contractually create a duty to maintain the leased premises. White, 797 N.W.2d at 746, citing Dyrdal v. Golden Nuggets, Inc., 672 N.W.2d 578, 587 (Minn. Ct. App. 2004), affirmed, 689 N.W.2d 779 (Minn. 2004). When a lease contains no stipulation on the subject of maintenance, generally “there is no implied covenant on the part of the landlord…that the premises are or will prove to be suitable for the tenant’s use.” White, 797 N.W.2d at 746, quoting Krueger v. Farrant, 13 N.W. 158, 159 (1882). But if a landlord expressly agrees to maintain a part of the lessee’s premises, he then creates a duty to exercise reasonable care. White, 797 N.W.2d at 746, quoting Drager, 495 N.W.2d at 885. However, a landlord’s promise to repair parts of premises for safety purposes is not an express agreement to repair to a certain standard. White, 797 N.W.2d at 746, citing Normandin v. Freidson, 233 N.W. 14, 15 (1930).

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. and a MSBA Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at