Managing Tenants, Part Two: Steering Clear of the Fair Housing Act

In this article

“No person shall be subjected to

discrimination

because of race,

color, religion, sex,

disability, familial

status, age, or

national origin.”

Housing discrimination isn’t a joke. It’s against the law and narrow-minded landlords who refuse to rent to those belonging to protected classes can find themselves on the wrong end of a well-deserved lawsuit.

Of course, you’d never find such low-life scum around here, but what about the small time landlord, bopping along minding his own business with no idea that entire organizations exist (and receive funding) for the expressed purpose of catching them unaware (read that: No bigots, No paycheck)?

For example:

A fellow by the name of Ned owns an 8-plex in a rough part of town. Gang activity is high and Ned knows that if he rents to just one gang member, all his tenants will grab their big screen TV’s and flee en masse. Oddly enough, the local gangs aren’t familiar with the anti-discrimination laws and only allow one particular ethnicity to partake in their social activities.

At first, Ned keeps his eyes open and watches the applications closely, vigorously checking criminal records, and for a time, all is well. Until the tenant in 6B allows her grown son to move in after making parole without telling Ned, causing several vacancies before he can get the situation under control.

A few more doting mammas and Ned’s fed up. He begins, whether consciously or unconsciously, avoiding anyone from this particular ethnic group. Ned’s not necessarily trying to discriminate-he’s trying to protect his investment. But no matter, pretty soon Ned gets a visit from the local housing authorities and he’s losing a lot more than a few months rent. Maximum fines reach $10,000 for a first offense and up to $50,000 for a third violation in seven years.

I’m Not A Lawyer, Nor Do I Play One on TV…

To protect yourself, it’s a good idea to spend some time getting cozy with the Fair Housing Act. Remember, interpretation varies from state to state and ‘protected classes’ can change at any time. For now, protected classes include:

• race
• color
• religion
• sex
• familial status
• national origin

Also, be aware that activists target members of protected classes, encouraging them to file suit and those who file have monetary incentive as they can collect not only for any actual loss, but also for ‘embarrassment and mental anguish.’ Once a complaint is filed, ‘testers’-individuals posing as members of the same protected class as the complainant-will call repeatedly, trying to catch you in some perceived discriminatory practice.

Rather than get into the intricacies of the law, let’s discuss some commonsense ways to stay on the sunny side.

Goes without saying, but:

• Treat Everyone the Same. No matter how many homes you do (or don’t) have, answer the phone and conduct all interviews in professional manner.
• Don’t ask stupid questions. Sorry, but ‘are you Polish?’ is just asking for trouble.
• Set occupancy rates for every unit and put it in writing. Its only logical to want to keep the number of people per unit low to minimize wear and tear, but consistently picking adults without children for your small apartment may get you in trouble with the ‘familial status’ rules.
• Return all phone calls in a timely manner. Don’t even think about ignoring calls from people who ‘sound’ like a protected class. (I *know* my accent’s thick, but just try to discriminate against The South and I’m liable to slap you with a suit myself.)
• Don’t tell someone your place is rented when it isn’t-doesn’t matter what the reasoning, someone’s going to scream if they figure out what you did. It’s our policy to continue showing all houses until the lease is signed.
• Number your applications as they arrive and choose the *first qualified tenant.* Let your applicants see you do the numbering, just for grins. Which leads us to…
• Have written criteria and follow them religiously (More on this next week). Sign and date a copy and mail it to yourself. If and when you make changes: Lather, Rinse, Repeat. Keep the unopened letters in your files, just in case.

Soapbox Time:

It’s a shame we live in a world where organizations like the Fair Housing Authority are necessary but they are and we do. Fear of lawsuits shouldn’t keep honest folks away from landlording, but a head-in-the-sand mentality can put you out of business.

Last Week: Managing Tenants, Part One: 5 Favorite Lease Clauses
Next Week: Written Criteria

Boxers are not a protected class…but they’re working on it.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.