If you’re just starting out as a landlord, you’ll need to educate yourself on the laws that guide you when you own a rental property. These include your state’s landlord-tenant laws and the Fair Housing Act. The more legal knowledge you have, the more successful you’ll find yourself when it comes to owning a rental property. Having this knowledge will also help you avoid facing costly legal battles and developing a bad reputation.
One of the most important laws to educate yourself on and adhere to is the Fair Housing Act. For an overview of this law and how it impacts you as a landlord, keep on reading.
What is the Fair Housing Act?
The Fair Housing Act is a law that states that certain classes of people are protected against being subjected to unfair housing discrimination. Under this act, everyone is given the chance to own or rent a property without facing prejudice or discrimination.
What are the Protected Classes?
The Fair Housing Act protects people from discrimination based on the following classes:
- Skin Color
- National Origin
- Familial Status (ex. having children under 18, pregnant women)
If a landlord accepts only certain groups of people while discriminating against others, this is illegal. As a landlord, you cannot ignore or decline applications simply because the applicant has a disability or practices a certain religion. You should avoid discriminating against prospective tenants at all costs so that you don’t end up in legal trouble.
When it comes to rejecting a prospective tenant, you must have a legal reason to do so. Examples of legal reasons include an unsatisfactory criminal record, large amounts of debt, or a poor credit score. Whatever reason it is, it must be based on criteria that do not discriminate against the tenant.
If you have rental properties in several states, you should learn about the specific clauses each state sets out regarding the Fair Housing Act. Some states protect only the basic 7 classes while others have more expanded versions of the act that protect more people. It is your duty as a landlord to have a solid understanding of this law and to follow it accordingly.
What is the Purpose of the Fair Housing Act?
The main objective of the Fair Housing Act is to ensure everyone has a fair chance to find a place to live. A landlord must follow the guidelines of the Fair Housing Act to ensure this is the case. These guidelines include:
- Not rejecting the application of a qualified applicant.
- Avoiding advertising their personal preference for a tenant. There should be no mention of a particular race, religion, national origin, etc. in the rental listing.
- Setting standard requirements for all applicants to avoid discriminating against particular individuals. For example, requiring the same amount of documents from all applicants.
- Being transparent about the availability of the rental unit. It’s unfair to overpromise just to secure new tenants by the time your unit is vacated.
- Keeping the amenities of the property available to the same standard for each tenant. Placing restrictions on certain tenants is highly discriminatory and can also lead to conflict between tenants.
How is the Fair Housing Act Implemented?
The Department of Housing and Urban Development (HUD) monitors that landlords are following all the policies of the Fair Housing Act. They are responsible for responding to tenant complaints and conducting investigations on landlords. The HUD will penalize any landlord found guilty of discrimination after investigation.
How to Avoid Violating the Fair Housing Act
No landlord wants to participate in a lawsuit. These are costly in terms of both money and time. It will also ruin a landlord’s reputation, making it difficult for him to secure tenants in the future. In order to ensure you are not violating the Fair Housing Act, follow these steps:
Step 1: Be consistent.
When it comes to screening your tenants, apply the same criteria to each applicant that you receive. This will not only make the process fair for everyone, but it will also make it more efficient for you. Each applicant should have the same opportunity to apply for your rental and should undergo the same screening process.
Before listing your property and screening any tenants, you should figure out your standard tenant screening process beforehand. Determine which documents you will want to receive from each and every applicant and the fees that they must pay. Keep these the same for all prospective tenants to ensure you aren’t discriminating against any particular individual. If you have a property management company, they will likely do all of this for you.
Step 2: Practice awareness and fairness.
Your duty as a landlord is to ensure you have an up-to-date and solid understanding of the Fair Housing Act, including all of its specific clauses and conditions. This will ensure that you are following it correctly and treating all applicants fairly.
Step 3: Review your marketing ads.
Prior to creating a rental listing or marketing advertisement, brush up on your knowledge of the Fair Housing Act and apply it when creating this listing or advertisement. To ensure you’re not discriminating in your listing, ask an unbiased third party to review it prior to posting or publishing it. Be careful not to mention any preferred types of people.
Legal Justification for Rejecting Tenant Applications
Not every tenant is going to be the right fit for your rental property and that’s okay. However, before rejecting a tenant’s application, make sure you have a legal reason for doing so. Some legal justifications for rejecting a tenant application are:
- The tenant’s credit score is lower than the standard.
- The tenant fails to meet the required financial income.
- The tenant omits important information or submits false information and documents in their application.
As a landlord, it’s important that you have a thorough knowledge and understanding of all the laws you must abide by. One of the most important laws is the Fair Housing Act. Under this act, you cannot discriminate against a tenant for reasons that fall under the protected classes. Make sure you have a thorough understanding of this act and all of its clauses so that you can avoid running into costly and timely legal trouble.
If you hire a professional property management company, they will likely screen tenants for you in accordance with the Fair Housing Act. Contact Doug Anderson Property Management if you have a rental property in California and want this service.