Stay on top of this housing discrimination pitfall

50 Replies

Hi All:

Just came across this article and thought it might help landlords and managers keep on top of a growing trend:

How To Avoid A Fair Housing Claim Over Source Of Income Discrimination source of income discrimination as more and more cities and states pass these types of fair housing laws is the topic this week of the Grace Hill training tip.

By Ellen Clark

Many states and cities, including Seattle and the State of Washington, have laws against source of income discrimination meaning a property owner cannot choose to reject an applicant based on where his income comes from as long as it is a lawful source.

Source-of-income discrimination has been documented by researchers, and advocates say it creates barriers for people struggling to find housing.

In Baltimore, the City Council has passed legislation that would make it illegal for property managers to discriminate against prospective residents because of how they would pay their rent. The law bans discrimination on the basis of a tenant’s source of income, so long as the income is lawful. Under the law, landlords will be unable to turn away voucher holders simply for paying their rent with a voucher rather than with earned income, a rule that is already on the books in dozens of cities and several states.

This type of discrimination is known as “source of income” discrimination, and though not prohibited under federal fair housing law, it is prohibited by some state, city, and county laws. According to reports at least 12 states and numerous cities have similar legislation in place so it pays to check your local city and state laws on this issue. The states of Washington, Oregon, Utah and Colorado all have these types of laws see the list here of states and cities with these types of laws.

Source of income discrimination is often directed at people whose lawful livelihoods come from sources other than a paycheck.

Examples of lawful sources of income include:

Source of income discrimination may not be prohibited under federal fair housing law, however, it is prohibited by some state, city, and county laws.

  • Housing Choice Vouchers (Section 8)
  • Supplemental Security Income (SSI)
  • Social Security
  • Veterans benefits
  • Alimony or child support payments
  • Temporary Assistance for Needy Families (TANF)

What types of actions may be considered source of income discrimination?

Here are some examples:

  • Advertising that a person “must have a job” to rent an apartment.
  • Requiring documentation, such as pay stubs, that are typically only available to people who are working.
  • Advertisements that express limitations as to the source of income of potential residents, such as, “No Section 8” or “We do not take public assistance”
  • Refusing to rent to a person who is receiving public benefits.
  • Setting income requirements artificially high in order to exclude applicants who receive public benefits.
  • Requiring co-signers or a larger security deposit because of an applicant’s source of income.

How to avoid a fair housing claim over source of income discrimination

If discrimination based on the source of income is prohibited in your state or locality, one of the most important things you can do to make sure you do not end up on the wrong side of a fair housing claim is to keep all employees well informed.

  • Staff members should refresh their fair housing knowledge at least annually and be aware that discrimination based on “source of income” is illegal.

All staff members who come into contact with residents and prospective residents must be trained in fair housing laws.

  • All staff members should refresh their fair housing knowledge at least annually and should be very clear that discrimination based on the source of income is illegal.
  • Don’t forget about vendors and contractors! Anyone who could possibly interact with your residents should be informed of your company’s fair housing policy and asked to abide by fair housing laws.

It is important to remember that many states, cities, and municipalities have expanded fair housing protection to include additional protected classes. In addition to the source of income, these may include characteristics such as ancestry, marital status, age, military status, and student status.

Even if your area does not include some or all of these additional protections, all people should be treated fairly and equally – as a housing provider, that’s your responsibility!

Source: rentalhousingjournal.com

This post has been removed.

@Marc Winter
@Dennis M.

I just remembered as a Landlord you can always tell all prospective tenants that your property is not in

HUD's Housing Quality Standards Program for Section 8. Basicity if you have not been inspected and approved to participate in Section 8 you cannot get paid for a Section 8 tenant.

It puts the ball back in their court.

Originally posted by @Marc Winter :

Even if your area does not include some or all of these additional protections, all people should be treated fairly and equally – as a housing provider, that’s your responsibility!

Source: rentalhousingjournal.com

Any time someone tells you what your responsibilities are above and beyond the law, the person telling you is usually a loser snowflake that couldn't make it in the real world. I'm 30 years old, have 100K in student loan debt, live with my parents, and write for an online blog, but let me pontificate the meaning of life to you...

Baltimore is a horrible place to be a landlord and I doubt I will ever buy in the city again. However, I do accept section 8 but how could they tell if I rejected them for that or not? When I have rentals I go through so many I have to reject for various reasons. If they had a voucher what can stop be from saying I dont want them because of credit, past rental history, pets or dozens of other things? 

Originally posted by @Kelly DeWinter :

@Marc Winter
@Dennis M.

I just remembered as a Landlord you can always tell all prospective tenants that your property is not in

HUD's Housing Quality Standards Program for Section 8. Basicity if you have not been inspected and approved to participate in Section 8 you cannot get paid for a Section 8 tenant.

It puts the ball back in their court.

 Puts the ball back in their court to file a fair housing case against you. And though I dont know what market you are in, you would be found in violation and be fined.

Originally posted by @Russell Brazil :
Originally posted by @Kelly DeWinter:

@Marc Winter
@Dennis M.

I just remembered as a Landlord you can always tell all prospective tenants that your property is not in

HUD's Housing Quality Standards Program for Section 8. Basicity if you have not been inspected and approved to participate in Section 8 you cannot get paid for a Section 8 tenant.

It puts the ball back in their court.

 Puts the ball back in their court to file a fair housing case against you. And though I dont know what market you are in, you would be found in violation and be fined.

I believe that you are incorrect on this. You cannot say that you will not accept a S8 voucher as that is discrimination based on source of income. However, in practically every jurisdiction, you are not forced to belong to the S8 program. You are forced to accept the voucher, but you are not forced to belong to the S8 program or follow their rules. Therefore, S8 will never issue a voucher for your unit, but if by some mistake or miracle they do, you need to accept it.

The standard response to the S8 question is: I will accept your S8 voucher along with all legal forms of payment. However, I do not participate in the S8 program and my unit is not approved by S8 for inclusion in their program. 

Originally posted by @Greg M. :
Originally posted by @Russell Brazil:
Originally posted by @Kelly DeWinter:

@Marc Winter
@Dennis M.

I just remembered as a Landlord you can always tell all prospective tenants that your property is not in

HUD's Housing Quality Standards Program for Section 8. Basicity if you have not been inspected and approved to participate in Section 8 you cannot get paid for a Section 8 tenant.

It puts the ball back in their court.

 Puts the ball back in their court to file a fair housing case against you. And though I dont know what market you are in, you would be found in violation and be fined.

I believe that you are incorrect on this. You cannot say that you will not accept a S8 voucher as that is discrimination based on source of income. However, in practically every jurisdiction, you are not forced to belong to the S8 program. You are forced to accept the voucher, but you are not forced to belong to the S8 program or follow their rules. Therefore, S8 will never issue a voucher for your unit, but if by some mistake or miracle they do, you need to accept it.

The standard response to the S8 question is: I will accept your S8 voucher along with all legal forms of payment. However, I do not participate in the S8 program and my unit is not approved by S8 for inclusion in their program. 

minor discrepancy the S8 does NOT provide a voucher for the house.. the tenant has the voucher and in tough rental markets they know its the golden ticket and waive it around as such.. but what your getting at is that hud will then do an inspection and if the property does not pass they wont let the tenant use the voucher for that property until its brought up to standards.

but lets be realistic who is going to keep a property vacant just waiting for a hud inspection that you know is going to fail.. 

Times they be changing for landlords Oregon just passed state wide rent control and while it does not affect MF to much as most are at market rents and are long term.. but SFR;s it affects a lot..

I got a tape of a fund that bought 50 million worth of SFRs in city of Portland and now they want to sell them.. few of my contacts are like NO way not with rent control is would be massive undertaing to take over all those SFRs and try to figure out how to manage the rent control.. plus to evict a no cause tenant cost you 4k.. So for larger SFR landlords they can count on in this market some pretty heavy discounts for those coming in to buy those portfolios. As owner occ they are worth a ton more than rentals..

PS that fund waiting 1 to 2 years to long to unload those properties.

@Russell Brazil


Reread my post. I'll try to be more clear.
. You can say your property is NOT HUD section 8 approved if it is not.
. If your property has NOT been inspected by HUD and approved for Section 8 Housing. A Landlord CANNOT be paid for or approved for a Section 8 tenant.
. A Landlord is not legally required to have their property in the HUD program.
. If a prospective tenant askes if a Landlord accepts Section 8 vouchers, the Landlord can truthfully say their property is NOT approved for Section 8

So, no I would not loose a Fair Housing case. I have reviewed this with Alvin Munshower who represents realtors from both Maryland and DC.



I can't believe that cities actually have the bureaucratic infrastructure to enforce such statutes. 

In Los Angeles(my only experience), I have rarely had to talk to or deal with a housing authority rep., the systematic code enforcement is supposed to be every 5 years but usually takes 7-8 years, the annual elevator inspection happens every 2-3 years. 

It would not surprise me if there was a direct correlation between high property taxes and highly enforced housing bureaucracy. 

FYI, Los Angeles County is about 1.1% with a very generous(to property owners) valuation formula.

@Marc Winter @Russell Brazil @Kelly DeWinter

The problem with source of income laws is two fold.

  1. Everyone who is familiar with the issue, on both sides, knows the sole purpose of the law is to force landlords to accept section 8. The problem is politicians know if it was named or clearly written to force acceptance of section 8, they know their constituents would not put up with it. The NIMBY crowd would not want to live next to section 8
  2. That leads to the second point which is, because of the way it is written, it is basically unenforceable. Section 8 has many requirements that have nothing to do with income. For example waiting an extra month to get approved has nothing to do with the source of the income.

PS: But I don't want to be a test case for #2

People also complained and made these same arguments when you couldnt deny a tenant because the were black, or disabled, or a woman.

And you know what happened?? Lanlords still made money.

You know what will happen in these areas?? Landlords will still make money.

If it's too much for you to handle, I'm sure that there are a million landlords that will take those money making properties off of your hands.

@Greg M.

You are correct! The standard required to be approved into the HUD program is not the typical city housing standard. HUD will not issue eligibility UNLESS you meet their requirements. You DON'T have to meet their requirements. If someone on this blog has been sued as a result of not meeting HUDS requirements for renting to a Section 8 voucher holder PLEASE chime in.

Crickets....

@Marc Winter Thanks for the post. I am new to BP but have seen you on the forums before. Do you see these strict laws in NEPA markets- Wilkes Barre specifically? I would like to invest in cash flowing rental properties in WB.

@Kyle M.

No.  Not yet.  

Even if they pass those type of overreach laws, it really shouldn't matter to an experienced, ethical and diciplined investor/landlord/manager.  Why?  Because they will have a written policy posted in their office or online that states the credit/background/income guidelines for approval of an application.  

Old saying:  "We treat everyone equally:  we provide the same rotten service to all!"

The stigma with section 8 and other assistance programs needs to go away.  Who does not want guaranteed  rent?  I always hear landlords say that people on section 8 damage your house more.  Is that true?  Affordable housing is affecting everyone so the class lines are starting to blur.   Back to @Kelly DeWinter point if your house has not gone through the section 8  inspection, then the prospective tenant has to move to the next house.  You cannot be forced to have the inspection required for the program.   Both parties need to come to the table so that landlord and tenant are protected.

Does anyone have a comprehensive list of the HUDs inspection checklist.

If you shoot your mouth about this and that, then of course you can get in trouble. All you have to do is tell them you found a more qualify applicant.

@Kelly DeWinter I know first-hand that the City of Annapolis requires unit to pass rental inspection to rent any unit in Annapolis, not just Section 8, and that we were not allowed to deny Section 8 applicant if they met our other established credit/background criteria unless we met certain exemptions, like an owner renting the house out short-term while they are away for several months (Section 8 requires 12-month lease). You cannot just arbitrarily offer short-term lease to avoid Section 8. In Chesapeake, VA, however, which also now requires rental inspections in certain neighborhoods, we were allowed to just leave the Section 8 program when the lease ended and can even advise people that we do not accept Section 8, and we can offer any lease term we wish. Huge difference, so it greatly depends on state and local laws. That's why we sold the rental in Annapolis and still own the one in Chesapeake. Maryland is just not landlord friendly -- at least in Annapolis.

@Shadonna N.   In our experience, it's not that they damage it more, but they definitely don't have the same expendable income that those who qualify without vouchers seem to have, and it was reflected in overall lawn and house maintenance.  Also, while we had Section 8, our locality Section 8 froze rent raises for several years, even though we already hadn't raised rent on that tenant for several years.  And the case worker actually told me that the only thing we could do was kick that tenant out at lease end, then they'd let us re-rent to a new Section 8 tenant for the going rate, several hundred dollars higher per month by that time.  But we weren't going to do that due to their circumstances, so we were just stuck.    

@Shadonna N.

The issue I see with S8 is twofold:

1. The inspections are delusional. When I first became a LL at 21, I had the inspection done on my newly renovated duplex. Seriously, it was pretty darn nice, good neighborhood, and I was naively willing to give anyone a chance. They nit-picked the unit’s so badly....what they wanted would have cost 2K, and none of the improvements would have gotten me higher rents or added value to my property. The same day I received their “demand list”, I found a highly qualified military tenant. It became VERY clear to me that a nice property like mine will easily rent to great tenants. Why in hell would I jump through government hoops??

2. I am also a mental health therapist. We learn in school that we have an ethical obligation to “give back” to the community and do some pro bono work. I totally agree as my $150/hr rate is simply not possible for some people. BUT we were also taught to never work for free, because people don’t appreciate free things. They become entitled and accustomed to getting whatever they want for free. I lower my rate to the point where it is affordable with some sacrifice on their end. They can pay me $25/hr AND as a result, they can’t buy their giant fountain pop from the gas station on the way, or a couple less packs of cigarettes, one less trip through the drive through, or no fancy nails this month. They must sacrifice to be there, or they will no-show appointments, be late, cancel a million times, or not do their homework....because they have nothing invested. THIS is the issue with S8. Many (not all) are not sacrificing for that voucher. The small amount they are required to pay is not a hardship. They become entitled and EXPECT the government entitlement. Entitlement is a disease, and it is spreading due to the way the program is set-up and run. That situation will always end poorly for the LL.

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