How Fair Housing Ignorance Can Cost You Money
July 1, 2005
Few landlords want to illegally discriminate against prospective or existing tenants despite what Fair Housing officials believe. Yet too many landlords are unaware of some of the important provisions of the Fair Housing Act, and that is costing them money. But it is for reasons other than you might think.
Most rental owners know that the national Fair Housing Act prohibits discrimination on the basis of race, religion, national origin, color, gender, familial status or handicap. Some local and state laws also add source of income and sexual orientation. And still other local laws might add a couple more. What too few landlords understand completely is that we can discriminate for whatever reason we want, as long as our discriminating has nothing to do with the fact that the applicant or tenant is a member of one or those “protected classes.”
Here’s how landlords shoot themselves in the foot and lose money. A landlord, living in fear of unintentionally violating the Fair Housing Act, having no applicants he or she considers acceptable, takes a property off the market for a couple of months hoping that when it goes back on the market it will attract an acceptable applicant.
Think how much an empty unit costs. If you leave it vacant for two months, you lose not only the rent that it would have generated had it been rented, but the mortgage payment, the maintenance, the insurance payments and the property tax payments. There is no need for that.
The reason the landlord had to take the property off the market is that he or she did not know exactly who an acceptable applicant would be. That is because too many landlords have no set, objective rental standards. How can you know when an acceptable tenant comes along if you don’t have a concrete idea of the minimum standards of acceptability?
Landlords too often rent on “gut feeling” and hope, and without even reference or credit checks. Their gut feeling tells them that the applicants they have would not be acceptable. Ask them why, though, and they can’t give a real answer.
A real, businesslike answer would be, “oh, this applicant has an eviction on his record.” Another would be “this applicant doesn’t earn enough money to pay the rent. We require at least three times the rent in gross income.” Another businesslike answer, “this applicant’s credit score is too low; we require at least a 620 FICO.”
We can always discriminate against an applicant who has been evicted. We can always discriminate against an applicant who has bad or nonexistent landlord references. We can always discriminate against an applicant who doesn’t earn enough money. We can always discriminate against an applicant whose credit report doesn’t meet our standards. The key is to have real, written standards that say so. Sometimes “gut feeling” tells us something is wrong, but we need to ferret out what is wrong objectively by going back to our rental standards.
That’s what protects against a Fair Housing complaint and ensures we get tenants worthy of renting from us.