Can we tell applicant that income must be 3x the rent?

Chicago · Member since 2019 · 7 posts · 3 votes

Hello,

I was looking up fair housing laws in Chicago because I am trying to rent out a unit, and I came across an article online that said we are not permitted to say that income must be three times the rent, because it is considered income discrimination. I was wondering if this is true?

This is the link I found, and it describes the issue close to the bottom of the article.
Illinois Landlord’s Guide to Source of Income Discrimination — Enterprise Esquire

Thanks!

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Crystal SmithPro Member

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Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes

Originally posted by @Danny Chan:

Hello,

This is the link I found, and it describes the issue close to the bottom of the article.
Illinois Landlord’s Guide to Source of Income Discrimination — Enterprise Esquire

Thanks!

Whomever wrote that article is wrong. You can establish a minimum income, credit, debt to income.... criteria to rent your property. What you cannot do is change that criteria for different applicants. Everyone should be treated the same. You should document in writing your minimum requirements & provide it to all applicants.

312-681-7487

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Sarita ScherpereelBusiness Member
Real Estate Agent · Chicago, IL · Member since 2018 · 659 posts · 376 votes
5y
@Danny Chan Yes, that is true.
Chicago has 14 protected classes for Fair housing-
1-Race
2-Sex
3-color
4age
5-Religion
6-disability
7-National origin
8-ancestry
9-Parent/parental status
10-Sexual orientation
11- Gender identity
12-marital status
13-military status
14-source of income
You need to be careful on the language you use for advertising a rental.
[email protected]773-456-4644
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Danny Chan
OP
Chicago · Member since 2019 · 7 posts · 3 votes
5y
Ok thank you. It just seems like a lot of people on this site keep mentioning the requirement to have income equal to three times the rent. I guess it doesn't apply for the Chicago area... Can we still ask if they are employed?
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Brendan R.
Rental Property Investor · Member since 2019 · 2 posts · 6 votes
5y

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Jonathan KlemmBusiness Member
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Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
5y
@Danny Chan - I'd bet @Bob Floss II or @Mark Ainley could provide some concrete incites on this topic. I believe you can have set criteria for credit score, income, etc. but would defer to them to confirm.
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Crystal SmithPro Member
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Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
5y
Originally posted by @Danny Chan:
Hello,
I was looking up fair housing laws in Chicago because I am trying to rent out a unit, and I came across an article online that said we are not permitted to say that income must be three times the rent, because it is considered income discrimination. I was wondering if this is true?
This is the link I found, and it describes the issue close to the bottom of the article.
Illinois Landlord’s Guide to Source of Income Discrimination — Enterprise Esquire

Thanks!

Whomever wrote that article is wrong. You can establish a minimum income, credit, debt to income.... criteria to rent your property. What you cannot do is change that criteria for different applicants. Everyone should be treated the same. You should document in writing your minimum requirements & provide it to all applicants.
312-681-7487
9 Reply
Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
5y
Originally posted by @Sarita Scherpereel:
@Danny Chan Yes, that is true.
Chicago has 14 protected classes for Fair housing-
1-Race
2-Sex
3-color
4age
5-Religion
6-disability
7-National origin
8-ancestry
9-Parent/parental status
10-Sexual orientation
11- Gender identity
12-marital status
13-military status
14-source of income
You need to be careful on the language you use for advertising a rental.

#14 Source of Income is discriminatory; i.e. saying you won't accept section 8 vouchers. But stating that your minimum income requirement is x times the rent is not discriminatory.
312-681-7487
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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
Originally posted by @Sarita Scherpereel:
@Danny Chan Yes, that is true.
Chicago has 14 protected classes for Fair housing-
1-Race
2-Sex
3-color
4age
5-Religion
6-disability
7-National origin
8-ancestry
9-Parent/parental status
10-Sexual orientation
11- Gender identity
12-marital status
13-military status
14-source of income
You need to be careful on the language you use for advertising a rental.

Source of income is different than income amount. If what you said is true, it would be illegal to deny someone making $5000 a month from renting an house that costs $5000 per month. That doesn't make sense and it would create dangerous business implications.
Source of income simply means you cannot discriminate if the income comes from government assistance or some career you don't like.
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Sarita ScherpereelBusiness Member
Real Estate Agent · Chicago, IL · Member since 2018 · 659 posts · 376 votes
5y
I would not say that and I would not write that. My concern is interpretation. If it’s even remotely possible that an applicant could interpret that as discriminatory. Then, I would not write that nor tell that to the Applicant. Even reading this thread, is an indicator to me that there is a conflict in interpretation.
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Gianni M.
Seattle, WA · Member since 2021 · 15 posts · 6 votes
5y
@Danny Chan not familiar with chicago but in nyc it’s commonplace to state that applicants must make 40x monthly rent and any guarantors must make 80x rent. not legal advice but i don’t think it’s a non-starter
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Caroline Gerardo
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
5y
Though @Sarita Scherpereel is incorrect about "source" of income; but in her second response she advises not to say or write your standard. It is LEGAL in all of the US to have standards. Government lenders use: total debts should not exceed 43% the total income (all types of income that continue 36 months). Say your rents are $2000 and they have $580 in other debts their income total should be $6000. You might not want to put in your advertisement the dollar amounts as is confusing. You have a right to have standards as long as they are applied the same to everyone. In denying a prospective tenant, they may ask for further explanation, this is when it's important to explain your even keeled fairness with a policy.
4 Reply
Tom Casey
Real Estate Agent · Chicago, IL · Member since 2019 · 29 posts · 14 votes
5y
@Danny Chan It's very important to establish boundaries and standards for your tenants. I would recommend being very clear on how much their income/rent ratio must be in order to rent from you. Discriminating based on amount of income is VERY different from discriminating based on source of income. Never discriminate based on source of income, as that would be illegal in Illinois as well as many other states.
However, discriminating based on how much someone makes is not illegal. Actually, it is very important for establishing a solid business as a landlord. If you don't set those criteria, you will end up with tenants who cannot pay their rent and you will have to deal with all kinds of issues down the road! Save yourself and your future tenants these problems and make it very clear how much they need to make in order to rent from you. Write it everywhere that is appropriate and even tell them before they fill out an application! You would be doing yourself and future tenants a disservice to rent a property to them that they cannot afford.
Whoever says not to make that clear is incorrect!
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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
Originally posted by @Tom Casey:
@Danny Chan It's very important to establish boundaries and standards for your tenants. I would recommend being very clear on how much their income/rent ratio must be in order to rent from you. Discriminating based on amount of income is VERY different from discriminating based on source of income. Never discriminate based on source of income, as that would be illegal in Illinois as well as many other states.
However, discriminating based on how much someone makes is not illegal. Actually, it is very important for establishing a solid business as a landlord. If you don't set those criteria, you will end up with tenants who cannot pay their rent and you will have to deal with all kinds of issues down the road! Save yourself and your future tenants these problems and make it very clear how much they need to make in order to rent from you. Write it everywhere that is appropriate and even tell them before they fill out an application! You would be doing yourself and future tenants a disservice to rent a property to them that they cannot afford.
Whoever says not to make that clear is incorrect!

I agree, communicate standards at every possible moment. This not only saves the landlord time, but saves the perspective tenant from wasting time on properties that they cannot afford to rent. We place income standard in our listing, ask it as a prescreening question before showing the property and state it up front in our application.
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Jeyo PunnakottilPro Member
Rental Property Investor · Houston, TX · Member since 2019 · 141 posts · 48 votes
5y
@Crystal Smith
I agree with you too .Source of income is different from saying 3X Rent .And totally keep that same for all Applicants .Not very familiar with Chicago rules .But that is how we do in Texas.
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Danny Chan
OP
Chicago · Member since 2019 · 7 posts · 3 votes
5y
Thank you very much everyone for your insight. This helps a lot.
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
5y
@Jeyo Punnakottil definitely if you own in Chicago you will want to have a great team that includes a good RE attorney. I run a lot of these types of questions by my attorney Anthony so that I know I am in a good spot. Chicago leans tenant friendly, but we still have (a few) things going for us here that let us do well as housing providers!
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Forrest Williams
Real Estate Agent · Chicagoland · Member since 2018 · 314 posts · 199 votes
5y
To tag onto this, remember that unemployment income is a source of income and protected.
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Alexis Hart
Attorney · Chicago, IL · Member since 2018 · 1 post · 0 votes
5y
Hey everyone! I am a RE attorney and housing provider in Chicago and I wrote the article! Glad it is starting a discussion. First, for everyone - be mindful that not only do states have their own regulations, cities, counties and municipalities may have them as well - they can be hyper local - so if you don't have experience with that specific area be careful about the information and direction you give. Also, for the person requesting make sure you are getting information from a knowledgeable, local source - some questions are best left to the attorneys.

In this instance, it is a hyper local issue that is relevant to Cook County and to Chicago - there are 2 ordinances that have to be followed.

Second, the examples I gave came specifically from the Fair Housing Laws for Chicago Housing Providers presentation given by Chicago Lawyers' Committee for Civil Rights (CLCCR). The organization that was a catalyst in adding the "source of income" discrimination to the fair housing law. They specifically address the "You must earn 3x rent" statement at 7:30 in their presentation that you can watch here: https://www.illinoislegalaid.o... CLCCR also does the testing for the fair housing law to see if you are violating its requirements.

That statement is discriminatory because it may exclude people who have housing choice vouchers because their income may not reach the the 3x level (depending upon the rent). So the statement by default discriminates against housing choice voucher holders.

Example: Rent is $2,000 - 3x rent is $72,000. Housing choice voucher holders may not make this much money. It does not mean they cannot afford the $2,000 rent (they may have a $1,500 voucher and pay $500 out of pocket).

Most people on this thread only thought about it from a limited perspective and could have ended up in a fair housing violation situation. That is why it is important to have a trusted attorney who is knowledgeable in that particular area on your team.

Lastly, this article was written in 2018 - there may be changes and updates since then you may need to make yourself aware of.

I hope this helps fellow housing providers stay compliant with the law!

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Jeffrey Muehlfelder
Member since 2019 · 11 posts · 6 votes
5y
source, not amount
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