The Fair Housing Act (FHA) is a federal law that ensures every American is treated fairly and equally in the housing market. As a landlord, it is important to understand the implications of this Act.
Failure to comply with this federal statute could result in discrimination charges. It pays to understand the origins, principles, and implications of the FHA.
In this article, we will go over the major points you should know about in order to avoid making any costly mistakes.
#1: What is the background of the Fair Housing Act?
Three major efforts preceded the FHA and contributed to its eventual creation:
- The Civil Rights Movement (1960s)
- The Rumford Fair Housing Act (1963)
- The Civil Rights Act (1964)
Homebuyers used to face the threat of major discrimination. The various steps leading to the FHA helped to counter these unnecessary hardships. The FHA was established in 1968, with official recognition of the Act taking place one week after the assassination of Martin Luther King Jr.
#2: What is the purpose of the Fair Housing Act?
The core aim of the FHA is to prevent any discrimination in the housing market. Without the statute, sellers and landlords could discriminate against people from certain social classes.
Regardless of class status, every American can buy or rent and receive a mortgage. This is a right that no home seller or landlord may oppose in any way. There are no exceptions to fair housing.
#3: Which classes of people receive protection under the Fair Housing Act?
The FHA protects people belonging to seven distinct classes. These classes of people faced potential discrimination before the enactment of this federal regulation.
The classes are based on the following characteristics:
- Disability
- Familial Status
- National Origin
- Race
- Religion
- Sex
Most of these are quite straightforward; however, the class of Familial Status tends to raise some questions. People in this class must meet at least one of the following criteria to qualify:
- Parents who have one or more children living with them that are under the age of 18
- Legal guardians who have one or more children living with them that are under the age of 18
- People currently in the process of receiving legal custody of a child under the age of 18
- Pregnant women
- Designees of parents or legal guardians who have a child under the age of 18
What about Gender Identity and Sexual Orientation? A federal judge ruled in 2017 that these constitute as protected classes under the FHA. The amendment to incorporate these classes as an explicit part of the FHA is under way.
#4: Is the Fair Housing Act completely universal?
There are scenarios that exempt a transaction from the FHA’s protective status, such as the following:
- Private clubs and organizations that have a members-only policy
- Single-family homes rented or sold without the help of a broker
- Owner-occupied homes with less than four units for rent
#5: How to recognize discrimination in real life
Sometimes it is hard to see how legal regulations are put into practice. The following list exemplifies discriminatory practices that the FHA was created to counter.
All of these actions have to be directed toward a person from one of the protected classes to qualify under the FHA:
- Taking direct action to make housing unavailable
- Lying about the housing availability
- Advertising or marketing the property in a way that excludes any of the protected classes
- Refusing to provide information about a mortgage
- Switching amenities based on the applicant’s background and class
- Changing the terms and conditions depending on the applicant’s background and class
- Making discriminatory statements in written or oral form
- Appraising the property using unfair methods
#6: Who enforces the Fair Housing Act?
The FHA is enforced by the U.S. Department of Housing and Urban Development (HUD). Complainants can file a claim with HUD or file a lawsuit in a federal district court.
HUD finds people breaching the FHA by utilizing two approaches:
- HUD has staff who pose as potential renters and homebuyers. In-person conversations as well as phone conversations and advertisements must be free of any discriminatory statements.
- HUD starts investigating the matter after a claim is filed with them. An experienced team will investigate the issue in-depth. As a result of this process, they will come up with the appropriate solutions to counter the discrimination.
#7: What happens after violating the FHA?
The penalties vary according to the severity of the violation.
- If the violation is deemed “simple discrimination,” there are grounds to a fine, imprisonment for a maximum of one year, or both.
- If the case involves bodily injuries or a threat, attempt or use of explosives, weapons, or fire, the consequences range from a fine to imprisonment for up to ten years (or both).
#8: What are the actions landlords can take to comply with the Fair Housing Act?
Landlords need to take great care to comply with the FHA. Any discrimination may result in unwanted legal consequences.
Here are the main tips to avoid any discrimination issues:
- Always maintain the same standards and requirements for all your applicants.
- Think through what you are saying on the phone and in person or writing in the ads.
- Tenant screening needs a consistent set of rules that are the same for all applicants.
- Be aware of personal biases that you have toward the applicants. Recognize the biases and remove these from the decision-making process.
- Respect all your applicants regardless of their identity and background.
- There may be additional protected classes in your state. Double-check this to avoid trouble.
The Bottom Line: What you have to know about the Fair Housing Act
The FHA is on the frontline in the fight against housing market discrimination. You need to ensure that you comply with this federal statute in every step of the transaction:
- Advertising and marketing materials and listings
- Phone calls, online chats, and other similar interactions
- Meetings in real life, home showings, and advertising events
- Writing, discussing, and signing the rental or lease agreement
If you’re looking for someone to keep your rental properties legally compliant, Bigham is here to help. Enjoy peace of mind knowing your properties are cared for with our professional management services.
