When the U.S. Congress passed the Fair Housing Act in 1968, it protected individuals and families from discriminatory or deceptive practices by those renting or selling residential properties. An amendment in 1988 further defined protected classes covered by the law, including race, religion, sex, disability, and family status.
While the legislation is well-intended, it can cause confusion and nervousness for landlords. Nobody wants to get in trouble with the law, but no landlord wants to feel forced to rent their property to just anyone. For example, if you have two tenant applicants with equal qualifications and one is in a protected class, must you accept that candidate over the other?
It’s important, therefore, to understand all the federal, state, and local fair housing laws that apply to your rental property. Here is what landlords need to know.
Know the Law
As with other federal laws that guarantee certain protections, the Fair Housing Act helped pave the way for states to create or amend their own laws. In California, for example, a medical condition, marital status, and sexual orientation have been added to the list of traditionally protected classes.
On top of that, county and local governments can have their own regulations. If you’re a rental property owner in Santa Clara County, one responsibility of a Santa Clara property management company is to be familiar with all federal, state, and local laws regarding fair housing. If you manage your own rental property and don’t follow the law ignorance is not a defense in court should you face litigation.
Consequences can be Steep
The U.S. Department of Housing and Urban Development is charged with enforcing fair housing laws. In 2021, HUD announced new penalties of $21,663 for first-time violators, $54,157 for a second violation within five years, and $108,315 for a third violation within seven years.
Those civil penalties are on top of whatever court costs, attorney fees, and damages are due to a plaintiff who wins a fair housing case in court. Violating the law can be very costly to your wallet and your reputation as a rental property owner.
The bottom line is that if you’re a rental property owner, you cannot legally refuse to rent to someone based on anything other than that prospective tenant’s financial qualifications. Does that mean that in a situation of tenant applicants with similar financial qualifications, you must accept the one in a protected class? Not necessarily.
But to guard against potential litigation, you should be able to prove that your decision was not discriminatory. That means the forms, processes, and reasoning used to make your decision should be uniform and documented. A company that provides Santa Clara property management services, for example, should not only avoid potential discriminatory practices but also be able to provide documentation that shows fairness. Transparency can make all the difference. Show your work.
Laws also Protect Landlords
As nerve-wracking as fair housing compliance can seem, the law protects owners and managers of rental properties as well. The easiest way to stay out of court is not to commit any wrongdoing, and clearly laid-out rules and regulations — properly documented — give rental owners and managers a clear path to avoid lawsuits.
Murky law invites the possibility of frivolous lawsuits. But knowing the guidelines, following them, and demonstrating that you follow them can keep you on the right side of the legal issues. Working with an experienced property manager will help rental owners avoid these kinds of legal issues.
Use an Experienced and Knowledgeable Property Management Company
If you’re unsure of your ability to accomplish all of the above while managing a property yourself, hire an experienced and knowledgeable property management company. Doing so will give you peace of mind and reduce stress. Professional management companies that earn high marks from rental property owners and tenants alike can be worth their weight in gold regarding fair housing compliance.
The professionals at Valley Management Group have been providing trustworthy and affordable property management services to rental owners in Santa Clara, San Jose, and throughout Santa Clara County for over 40 years. If you own a rental property in Santa Clara County, contact Valley Management Group for a free property management quote and one free month of property management services when you sign up for services.