You want the best tenants in your property, so you have to be choosey, particular or… dare I say… “discriminatory”! But not all forms of discrimination are illegal. It is illegal discrimination only when you discriminate against people who are a member of a “protected” class.
The Fair Housing Act of 1968, as amended, prohibits discrimination on the basis of race, color, religion, nationality, familial status, age, and gender. Many state and local laws also forbid discrimination on the basis of sexuality or source of income and the Americans with Disabilities Act makes it illegal to discriminate against disabled people.
If you harbor any such prejudices and would allow them to come into play when renting a housing unit, then you’re probably not cut out to be a landlord. However, many sincere real estate investors make honest mistakes that result in discrimination lawsuits.
The best way to avoid these lawsuits is to be informed. The Fair Housing Act may appear to be common sense and most people would never think of discriminating against people of different races or religions or on the basis of gender. However, it’s important to note that the Act extends beyond the screening process and into advertising as well, so watch the wording in your ads. This is where many landlords and property managers make critical mistakes.
Some people scour the classifieds looking for inappropriately worded ads so they can pounce on them and threaten a lawsuit. While someone must have the standing to bring suit, these scoundrels often work in coalitions to ensure that all of their bases are covered.
For example, if you own a rental property in a predominantly Jewish community, its proximity to the local synagogue could be a major feature. However, if your ad says “within walking distance of the synagogue,” you could be sending the message “Gentiles need not apply”— even though this wasn’t your intent.
Keep in mind also that you may not discriminate on the basis of whether a couple is married and whether children are to live in the unit. You may also not discrimination the basis of age. Often, novice landlords aren’t aware of these areas of concern—and while it’s good that citizens are more aware of their rights today, it can create a bad situation for well-meaning landlords who are out of step with the law.
Be aware of your local laws and use good business sense. State law and local ordinances can extend similar protections granted under the Fair Housing Act to other groups. For example, California, Minnesota, and North Dakota prohibit discrimination based on the source of income. In other words, landlords can’t discriminate against would-be tenants who rely on public assistance.
Putting the political perspective of the landlord aside, such discrimination makes little business sense because people on welfare or social security are virtually assured of a fixed income. The Americans with Disabilities Act (ADA) prohibits discrimination against the disabled and also requires landlords to make “reasonable accommodations” to disabled tenants. Who decides what’s reasonable?
Typically, courts, if it comes to that; but while most landlords are aware of the ADA and would never stoop to discriminate against a person in a wheelchair. However, many are unaware that the ADA also protects mentally disabled tenants. A mental disability could also include recovering alcoholics and drug addicts. This could present a predicament where you know your tenant is addicted to drugs and are afraid of drug dealing activity. Obviously, you can regulate illegal conduct on your properties, but you can’t throw someone out just because you find out they are addicted to drugs.
Thankfully, jerks, idiots, and morons are not “protected” classes of people. If someone is not a member of a protected class and just seems like a person you don’t want to rent to because of their abrasive personality, you are free to give them the boot!
A final word that having a mentor that is thoroughly familiar with rental laws or an attorney specializing in real estate is always a good idea!
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Attorney William ("Bill") Bronchick, host of Legalwiz.com, has authored six best-selling books and is sought nationwide for his 25+ years of real estate and legal knowledge. He has been interviewed by numerous media outlets, such as CNBC, TIME Magazine, USA Today, Investor Business Daily, Forbes, and the LA Times, to name a few. William Bronchick is the co-founder and past President of the Colorado Association of Real Estate Investors and the Executive Director and founder of the College of American Real Estate Investors. Click on the "About" link above for more information on William Bronchick.