The Basics of Fair Housing Laws

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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.

Remedies

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.

Conclusion

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 jobrien@lommen.com.

Why Hiring a Property Management Company for a Single Rental Property is a Good Idea

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For many rental property owners, a common question that they ask is if they need to hire a property management company for a single rental property. The answer from property managers and rental property owners alike is a resounding “Yes.” The fact is that a professional property management service can be a real asset and the services offered are likely much more complex than you might imagine.

Property management companies do much more than simply collecting rent checks and fixing broken appliances – their real value lies in risk mitigation, which should be your top priority when renting out a property. For example, Simply Residential signs the lease with the tenant, taking on some of that risk and allowing our owners to remain anonymous to our tenants. We also offer protection services like our Eviction Protection Plan and our Quarterly Furnace Filter Change and Lease Violation Walk-Through. These services protect our clients from the dangers of evicting a tenant, and help us identify any problems with their property before they become full blown emergencies. This also allows us to provide an efficient and regimented way to ensure that our properties are fully protected.

Choosing a property manager for a single rental property, or even for multiple rental properties, can be a challenge for first timers. The key to this choice lies in knowing what you want and need from a property management company. Some of the specific services you should look for are:

  • Finding high quality tenants.
  • Determining how to advertise your rental property.
  • Screening all tenants, including background checks and credit reports.
  • Drafting legal leases that will hold up in court.
  • Collecting evidence and documentation to reduce chances that property owners will have to pay for tenant caused damages.
  • Maintenance of the rental property.
  • Handling tenants who don’t pay.
  • Evicting tenants without violating their rights.

While property owners can complete their own research and learn how to do the things listed above, this is an extremely time consuming and legally convoluted process that can often land owners in a difficult situation, especially when evictions are a factor.

A knowledgeable property management service can also ensure that rental property owners understand legislation changes and how it will affect them, as well as their tenants. This can be extremely complicated and difficult to understand, and keeping up with the changes requires dedication and time. However, when you hire a property management service, they will know what the legislation means and ensure that you, and your property, meet all new or changed requirements.

One of the most important services offered by a property manager is the ability to respond to emergency situations in a timely manner. This will prevent property owners from having to halt their day – or night – in order to handle a tenant issue or emergency.

Hiring a property manager can eliminate the possibility of your rental property turning into one of the horror stories you have likely heard. In fact, a reputable property manager will handle all aspects of managing and maintaining your property. If you have questions, we’re happy to help. Call us today at 952-831-5300 or email me!

[Photo credit: Rental Realities on Flickr]

Ask SRPM: How Do We Find You a Quality Renter for Free?

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free renter placement service

Finding a good renter sounds like an easy enough process — you make a list of qualifications, and compare that list to the qualifications of interested potential renters, right? Not exactly. While those steps are certainly a part of the process, there’s a lot more that goes into finding the right renter for your property than what meets the eye.

At Simply Residential Property Management, we offer free renter placement services as part of our management agreement, but we also offer placement services on their own to rental property owners who choose to self manage. Every property management company goes about finding tenants in their own way. Here’s how we do it at SRPM:

1. The first step in renting out your property is marketing — spreading the word that your awesome rental property is available. We aggressively market your property on over 170 websites, and partner with a broad network of realtors and relocation companies to further expand our reach. We do showings 7 days a week, days and evenings, whenever it’s convenient for potential renters to see your property.

2. Once we show your property, tenants begin the application process. We have a strict set of renter criteria that each potential tenant must measure up to before they’re considered for your property.

3. When potential tenants pass our criteria check and fill out a full application, we do full background checks on each person named on the lease, including criminal, credit, income verification and past tenant rental history. We leave no stone unturned when it comes to ensuring we find the best renters possible for your property. We feel so strongly about this part of the process that we guarantee our renters for the first year they’re in your property — if they don’t work out, we’ll find  a new one and cover the marketing costs ourselves.

4. If an interested potential renter fits all of our criteria and passes our extensive background checks, we draft a lease agreement that protects your interests as an owner, and theirs as a renter. This lease is a binding contract that ensures that the terms of the rental agreement are honored under penalty of fines, or even eviction if the renter fails to adhere to the rules.

5. Lastly, before the renter moves in, we have a 30-step internal checklist to ensure that every aspect of our processes have been covered for your protection. In addition, we have a 72 point move-in walk-through that we adhere to with the tenant present. We thoroughly check every possible aspect of your home for existing damage prior to their move-in date, and document with photos. Once the inspection is completed, the tenant and our maintenance technician sign the document together, ensuring each party is aware of any existing damage and agrees to the assessments made in the document.

Finding a renter on your own can be tough. Working with a property management company like Simply Residential makes it easier, we take on the heavy lifting and you get the advantage of our broad network of partners, marketing resources, and full time staff working for you. If you’re looking for a renter for an existing rental property, or just have questions about the rest of our processes, contact us today!