Fair Housing Violations: Financial Penalties

Fair housing law is a nuanced but important topic to understand when you are in the business of owning or managing rental properties. Many landlords understand that a violation happens when you are discriminating against a protected class, but may not realize what exactly constitutes discrimination, or a protected class. Their definition, if they have not done ample research, likely does not match the true definition which can put landlords at risk. The truth is that fair housing complaints are not as uncommon as you might think. In 2020, there were 28,712 reported complaints of housing discrimination in the United States.

Violating fair housing law doesn’t come without consequences. Violations can result in serious financial penalties that increase for additional violations within a specific timeframe. According to the Department of Housing and Urban Development, federal fines for violations are as follows:

• For a first violation, the landlord can receive up to a $21,663 penalty
• For a second violation within the next five years, the landlord can receive up to a $53,157 penalty
• For a third violation within seven years, the landlord can receive up to a $108,315 penalty
  

State fines for violations are as follows:

• For a first violation, the landlord can receive up to a $16,000 penalty
• For a second violation within the next five years, the landlord can receive up to a $37,500 penalty
• For two or more violations within seven years, the landlord can receive up to a $65,000 penalty

These penalties can have a serious financial impact on the rental business that a self-managing landlord owns. Multiple violations could be devastating.

It’s much easier than you may think to receive a violation. While some violations may come from individuals who are knowingly violating fair housing law, many landlords do not intend to discriminate against a tenant or applicant when a violation occurs. Read the short scenario below to see if you could picture yourself making a similar mistake.

Imagine you are a landlord who is renting out their property, and you have made it clear that pets are not allowed at the unit. You spend a significant amount of time showing the property, and an applicant qualifies! You are happy to have found a qualified tenant, and immediately notify the tenant and provide a lease agreement. Everything goes smoothly and the next day the applicant happily sends back a signed lease agreement, but lets you know that she has a service animal (dog) that will be joining her in the unit.

You are surprised, because you have made it clear that you are not comfortable with the presence of any pets on the property. You review other applications and find another applicant who qualifies for the property. Although it’s inconvenient, you decide to simply let the applicant know that because you do not allow pets, you were up-front about the policy, and because of the presence of their dog, they no longer qualify. You let the applicant know you will be moving forward with another applicant, and thank them for viewing and applying for the property.

This scenario is not fiction, but took place in Las Vegas in 2022.  The applicant filed a fair housing violation against the landlord, because a service animal is not considered a pet. Not allowing an individual with the need for a service animal to rent a property discriminates due to disability. Although it’s possible that the real landlord in this scenario did not know they were in violation, they were still required to pay $6,500 to the prospective tenant, among other repercussions. Although this violation resulted in a lesser fine, other cases have resulted in $250,000 fines.

We often see violations occurring throughout the leasing process. Because we always want to protect our clients, we handle the leasing process from start-to-finish, without the possibility of the property owner unknowingly violating fair housing. Being removed from this process should provide peace of mind to property owners who are not well-versed in fair housing law. We also take our own advice, by utilizing a local, trusted law firm to provide additional information, professional advice on any specific situation that may arise, and notify us of any legal changes that would affect any area of owning or managing a rental property.

Because fair housing law can be complicated and very nuanced, it is always in a property owner’s best interest to seek professional help. Professional help can look like hiring a professional property management company or seeking legal advice from a reputable source. Although you may be confident that you understand the different types of discrimination, the individual, real-life situations that occur do not always feel so clear in the moment.

If you are interested in learning more about what hiring a property manager for your rental property would look like, you can reach out to us by visiting us here.