A Guide to the Fair Housing Act

Passed in 1968 and amended in 1988, the Fair Housing Act introduced regulations designed to eliminate discriminatory practices surrounding homeownership and rental agreements. Landlords are required to abide by the terms of the Fair Housing Act, which can affect everything from how to go about acquiring tenants to building new multi-unit housing projects. This guide offers an overview of the regulations and explains how to stay in compliance with current guidelines.

Key Point Module

  • 1 Under the Fair Housing Act, it is illegal to discriminate against tenants based on race, color, religion, sex, national origin, disability or family status.
  • 2 Age is a specific exclusion from fair housing stipulations, thereby allowing property owners to create senior housing developments.
  • 3 Standardized applications processes and approvals can mitigate the risk of a fair housing violation.
  • 4 Filing an FHA complaint can be expensive, and there is the potential for both civil penalties and punitive damage awards.

What Is Covered Under the FHA

When first passed in 1968, the Fair Housing Act prohibited discrimination based on race, color, religion, sex and national origin in any transactions dealing with the sale, rental or financing of a dwelling. In real terms, it made redlining practices illegal and encouraged landlords and lenders to adopt standardized application processes. In 1988, the amendment added additional protected classes that included disabled individuals and families with children. Under the new law, a landlord must not ask prospective tenants or homeowners about resident children or anything else that may violate the family’s status as a protected class. Examples of prohibited activities against protected classes include:

  • Refusing to rent or sell to someone
  • Making housing unavailable
  • Setting different terms for different tenants or buyers
  • Lying about housing availability
  • Intimidating tenants or using rumors of “blockbusting” to encourage them to sell or move

A landlord may not consider someone’s race, color, gender, nation of origin, disability or family status when selecting tenants. Any of the above-mentioned activities may represent a violation and can lead to legal action.

Disability discrimination falls into a separate category since it is a complex issue. While many landlords may not deliberately discriminate against a disabled tenant, the physical structure of a building may pose serious challenges. To mitigate these issues, the U.S. Department of Housing and Urban Development offers building guidelines designed to make sure new constructions meet the terms of the FHA. Accessibility is the number one priority facing all new housing projects begun after March of 1991. Ensuring new residences can accommodate wheelchairs and tenants that struggle with stairs is a major consideration when building an apartment complex or turning an existing building into multiple units. Basic accessibility requirements for common areas include stipulations stating that hallways and doors be wide enough for wheelchairs. Individual units inside a building must have:

  • Wheelchair routes throughout the unit
  • Reachable light switches, electrical outlets and environmental controls
  • Reinforced bathroom walls to allow secure grab bar installation
  • Wheelchair accessible kitchens and bathrooms

What Isn’t Covered Under the FHA

Landlords renting out homes may not discriminate based on one of the protected classes, but there are other groups that are not specifically protected under the Fair Housing Act. For example, sexual orientation is not currently a protected class, and neither is marital status. However, it is important to note that the FHA represents the minimum set of standards required to protect certain classes, but local or state laws may include these groups under their own fair housing regulations. All landlords must abide by local and state laws when they differ from federal.

Age is another class that is specifically excluded from FHA regulation. In fact, senior housing is a specialty category that allows landlords to exclude children from rentals and limit tenants to those over age 55 or age 62. The law does not allow for discrimination based on any other protected groups, so landlords may limit their tenant group to seniors, automatically excluding children, but race, sex, religion, origin, color and disability are all protected as long as the applicant meets the age restriction.

While landlords can not discriminate against the disabled, the construction of a building may naturally limit a person with mobility challenges. FHA regulations require new construction to meet accessibility guidelines, but older buildings are often grandfathered in and do not require major renovations. Smaller, new constructions may also be exempt. Currently, accessibility rules only apply to new construction for buildings with at least four residential units. For example, owner-occupied homes with a basement apartment are exempt from having to make structural changes to accommodate a disabled tenant.

Landlords must allow disabled tenants to make reasonable changes to their unit and common areas at their own expense. A tenant that can’t walk up and down the stairs might install a chair lift if a building does not have an elevator. A person at risk of falling might install an additional handrail, while a person who is wheelchair-bound might install ramps. Owners or landlords can require tenants to return the property to its original condition at the end of the lease and may require escrow funds to cover the removal of any installations. In addition to physical changes, landlords should also be prepared to make reasonable accommodations and policy changes for disabled tenants. Allowing the use of a service animal despite a no-pet policy is one example. Dedicating a parking space for a disabled tenant might be another.

Disability is not limited to the physical. Those recovering from drug addiction who are not currently using may qualify, along with those diagnosed with a mental illness. However, active drug users are not protected by FHA guidelines, regardless of any other disabilities they may have.

Landlords Exempt from Fair Housing Rules

All rentals must be available to those from any race, but religious organizations and private clubs are not bound by FHA restrictions pertaining to any other protected class, as long as property owners restrict their advertising to only reach members of the organization. For example, a fraternity may offer its pledges housing, but it is not obligated to rent space to the non-member public. Any private organization may restrict their rentals to members only.

Losing Exemptions

An organization or property that might otherwise qualify for an exemption from general fair housing requirements must still meet the advertising restrictions. Any discriminatory advertising means a property is instantly held to all FHA regulations. Advertising an apartment with language such as, “no wheelchairs,” or, “singles preferred,” can place even a member organization at risk of an FHA violation.

What Fair Housing Means for Property Owners

While the Fair Housing Act lists activities prohibited by law, it doesn’t provide guidance on how to properly handle vacancies and rental applicants. In general, it is important to have a standard rental rate that is offered to all prospective tenants. Providing a detailed list of guidelines and information about successful applications is also helpful. For example, while you can’t discriminate against protected classes, you can ask tenants to complete a credit check and advertise your acceptable credit range. You can also ask for references. The best way to ensure fair housing compliance is by standardizing your application process and offering units on a first-come, first-served basis to all qualified candidates.

Those involved in property development should consider the accessibility requirements for each type of property. For example, an apartment complex must be wheelchair accessible for all ground floor units if it contains more than four dwellings. Individual townhomes within a development may be exempt because each home is a separate and private living space — not a multi-unit building — so there is no need to consider accessibility when building.

How a Property Management Company Can Help

Failure to comply with fair housing regulations can come with stiff financial penalties for landlords. Prospective and current tenants can file lawsuits in federal court for up to two years after the alleged discrimination occurred. Victims can request financial reimbursement for out-of-pocket expenses related to finding alternative housing and for other damages that aren’t necessarily economic in nature, such as mental anguish and humiliation. HUD’s Office of Administrative Law Judges may award civil penalties of up to $21,039 for a first offense. Multiple instances result in increasing fines. A third violation within seven years may result in penalties of up to $105,194. In addition to the civil penalties, property owners may also be forced to pay punitive damages and cover legal fees for the tenant bringing the complaint.

Complying with fair housing regulations can be tricky, and landlords may unintentionally violate some of the restrictions due to a lack of awareness or thorough understanding of the rules. Avoid costly errors and lawsuits with help from a property management company. Even if you win a lawsuit, the cost of hiring an attorney to defend you against a complaint is often more than the cost of hiring a professional third-party that knows how to ensure you are complying with fair housing practices.