Owning a successful rental property can take a lot of work, so it’s worth knowing important legal issues around being a landlord. One important factor is finding tenants in a fair and legal manner. No one wants to make the mistake of approving tenants illegally, or while not respecting the Fair Housing Act laws. Favoriting certain tenants over others can lead to a very expensive lesson to be learned.
The unfair treatment of renters was why the Federal Fair Housing Act of 1968 was enacted and put in place. Historically, housing discrimination was very common, especially with race, color, and religion.
What is the Fair Housing Act?
The Fair Housing Act was passed in 1968, a mere 7 days after the assassination of Dr. Martin Luther King, by President Lyndon B. Johnson.
The goal of the Act was to bring an end to the widespread discrimination in housing that had existed in those days. In that period of time, the Act only protected four classes of people. Those were: religion, national origin, race, and color.
Several years later, amendments to the Act netted more classes. Sex, disability, and familial status were added to the list in 1974, 1988, and 1988 respectively.
Most recently in 2017, a federal judge ruled that gender identity and sexual orientation be protected classes under the Federal Fair Housing Act.
According to the National Fair Housing Alliance (NFHA), in 2018 about 25,000 housing discrimination complaints filed.
There are still many Americans that don’t realize that they have been discriminated upon. Or, simply don’t know what steps to take when discriminated against. With social media and the internet, it’s not hard for tenants to get free advice from others online or to simply research their rights as tenants when it comes to renting properties.
5 Things Landlords Should Know About The Fair Housing Act
The landlord-tenant relationship is one that is governed by many laws, including the Fair Housing Act. Understanding this law can help you avoid many disputes or even lawsuits with prospective or existing tenants
1. You need to properly advertise your property.
While yes, you do have the right to choose your tenants in most instances. It’s best to so without discriminating against prospective tenants. This is typically why accidental-landlords or new landlords prefer to hire property management to screen potential tenants.
Never include the following statements in any rental ads:
- “Guys preferred” or “No young women.”
- “Nice, quiet, mature neighborhood perfect for older couples.”
- “Quiet Christian neighborhood.”
- “No Kids of Families allowed”
- “Mostly Asian residents” or “Mostly Jewish area”.
Instead of describing your ideal tenant, it’s best to focus on the best qualities of the property.
2. Know how to screen your tenants.
Screening your tenants is one of the most important factors when renting out your property.
Screening tenants is not against the law, but you should ensure that the process abides by the provisions of the Federal Fair Housing Act.
The following are some examples of instances that may be considered discriminative.
• Asking a prospective tenant whether they have a service dog. As innocent as this may seem, it’s discriminative. The tenant may take it to mean that you don’t rent to disabled people.
• Asking a tenant about their race. This question can get you in trouble. Race is a protected class.
• Asking a tenant about how many kids they have. Using the number of kids a tenant has as a qualifying standard is illegal as per the law.
• Selective background checks on some tenants and not others. In order to be fair, you need to run every tenant on the same exact process.
3. Make a reasonable effort to accommodate people with disabilities.
First and foremost, it is illegal to deny housing to a person with a service dog. Disability is a protected class. Whether or not you allow pets, you must not use a service dog as a basis of denying housing to a prospective tenant.
The law requires you to make reasonable accommodations to people living with a disability. This may signify making some modifications to your property.
Disabled people are defined as those people who:
• Have a history of disability.
• Have a disability (physical or mental) that impacts one or more major life activities. Good examples include impairment to their mobility, hearing, and visual abilities. Others include chronic alcoholism, mental illness, HIV/AIDS, etc.
• Others regard to have such a disability.
4. Follow the law when evicting tenants.
Evicting tenants sounds like a nightmare because it certainly can be if you do not follow the correct process. You cannot just harass your tenant into moving out. For instance, by doing things like:
• Shutting off your tenant’s utilities so they have no access to gas, electricity or hot water.
• Throwing out the tenants’ personal property from the property.
• Changing the locks on the property so tenants cannot access the unit.
All these are “self-help” tenant eviction methods. They are illegal. The only person mandated by law to authorize a tenant eviction is a judge.
5. Do research on additional protected classes.
At the federal level, the Fair Housing Act only protects seven classes of people: color, national origin, race, religion, sex, familial status, and disability.
Many states have enacted laws that extend this coverage to more classes of people. For example, member of the military, status as a student, occupation, marital status, sexual orientation, and income.
It is extremely important to research what protected classes are covered by the Fair Housing Law at the state and local level.
The key to running a successful business is by treating all tenants with fairness, respect, and dignity. It’s only after doing this can you set yourself up on the journey towards earning great passive income for years to come.