There are many things that are key to running a successful rental business. For example, finding the right tenant, charging the right rent, and building a good relationship with your tenant.
One thing that often goes under the radar is equal and fair treatment of tenants. Fairness comes in many forms. However, playing favorites – regardless of whether it is intentional or not – is always a bad mistake.
In fact, the unfair treatment of renters was the reason why the Federal Fair Housing Act of 1968 was enacted. Back then, housing discrimination was commonplace, especially in regards to race and color.
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.
Just recently, in 2017, a federal judge ruled that gender identity and sexual orientation be protected classes under the Federal Fair Housing Act.
Did the passing of the Fair Housing Act and its consequent amendments bring an end to housing inequality in America? No, it did not! Housing discrimination is still alive today as it was prior to 1968 albeit at a lesser magnitude.
In fact, according to the National Fair Housing Alliance (NFHA), last year alone saw about 25,000 housing discrimination complaints filed.
Bear in mind that these are the cases that have been formally reported. NFHA estimates the cases could be well over 50,000.
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.
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 potential disputes with prospective or existing tenants.
1. You need to properly advertise your property.
Granted, you have the right to choose what type of tenant you want to reside in your property. That said, you should do so without discriminating against prospective tenants. In other words, the process needs to be fair to all applicants.
You need to make sure that your rental advertisement doesn’t include statements such as:
• “Males preferred” or “No young women.”
• “Nice, quiet, mature neighborhood perfect for couples.”
• “Mostly Asian residents” or “Predominantly Jewish neighborhood.”
• “Nice Christian neighborhood.”
• “No blacks” or “Whites only”
Instead of describing your ideal tenant, focus your attention on describing your property’s features.
2. Know how to screen your tenants.
Tenant screening is an essential process when leasing. It’s the dream of every landlord to rent to the right tenant.
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.
• Running background checks on some tenants and not others. For the process to be fair, you need to run every tenant on the same exact process.
3. Make 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 activity. Good examples include impairment to their mobility, hearing, and visual abilities. Others include chronic alcoholism, mental illness, HIV/AIDS, and mental retardation.
• Others regard to have such a disability.
4. Follow the law when evicting tenants.
It may be your property but to evict your tenant, you need to follow the due process. You cannot just harass your tenant into moving out. For instance, by doing things like:
• Turning off your tenant’s utilities so they have no access to gas, electricity or hot water.
• Removing all of the tenant’s possessions from the property.
• Changing the locks on all of the tenant’s doors so they cannot enter their own home.
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.
Some 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.
You need to familiarize yourself on what protected classes are covered by the Fair Housing Law at the state 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.