How To Protect Your Business From Fair Housing Violations

After showing his rental home to several potential tenants, property owner Caleb was excited at the number of applications the property had received. As he started looking through them, he noted that one couple who had toured the two-bedroom unit met all of the requirements, but listed that they had three children who would be living in the unit with them. Caleb wasn’t comfortable with a family of five living in the two-bedroom unit, and specifically with three young children. Caleb decided to deny the application, and select another applicant who did not have any children listed on the application, and who he felt more comfortable with living in the unit.

A few days later, the applicant called in to ask why their application had been rejected. Caleb told them that it was rejected due to having three children in a two-bedroom unit. The applicant wasn’t happy about it, but Caleb suggested looking for larger units, and didn’t think much about it.

This story, though fictional, and stories like this, are unfortunately not uncommon. Although Caleb is not a real self-managing landlord, the couple, who was rejected from renting a two-bedroom unit in 2020 due to the presence of their three children, is.

Owning a rental property is a business, and it is essential that property owners protect themselves, their business, and their assets taking the correct steps to avoid making costly mistakes like in the example above. Hiring a property management company will also allow property owners to protect themselves by being hands-off during this process. In reality, following fair housing guidelines means that you aren’t really “selecting” a tenant, but rather vetting them until an applicant meets the listed requirements. At Rincon Property Management, we protect our clients and their rental property business by handling this process on their behalf, with updates of any legal changes from a trusted local law firm. This eliminates the possibility of unknowingly violating these laws.

Property owners should be aware that violating fair housing laws doesn’t always seem obvious at the time the landlord is violating it. Much like the story above, the fictional property owner’s intent was not to discriminate against the family that had applied, but rather to protect his rental property and select the application he felt the most comfortable with. This is almost a surefire way to end up violating fair housing laws. Many property owners may feel confident that they will not violate fair housing or discriminate against any protected classes, without realizing that these violations can go far beyond what the typical individual would classify as discrimination.

The Fair Housing Act outlines protections for tenants based upon protected classes. This include race or color, national origin, religion, sex, familial status, and disability. Fair housing laws can vary depending on the location of the rental home or rental units. Familial status, and having children (under the age of eighteen), is considered to be part of a protected class.

Landlords are not able to reject an applicant based only on their familial status. Violating fair housing laws can result in costly fines, including:

• 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

You can see that while some instances of discrimination are very clear, there are other cases where property owners may simply not be aware that what they are doing is classified as discrimination. In the true story above of the couple being rejected due to having three children, the property owner was required to pay a $6,000 settlement, among other things. These violations can be costly, and multiple violations can be devastating to a property owner’s business.

We recommend seeking professional input, or hiring a property management company to guide you through the rental process without risking your business. When the property owner does not select the tenant, they are protected from serious fines or legal repercussions, and can have peace of mind knowing it is being managed by a professional.