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Fair Housing Important Part Of Rental Process

by M. Anthony Carr

So you got the foreclosure at a good price, fixed it up under budget and on time, and now you just need to get a good renter to start raking in the cash. Before you start eliminating applicants from your pool of tenants, make sure you are eliminating for all the right -- and legal -- reasons.

Federal fair housing laws prohibit you from discriminating against potential renters in seven categories:

Race
Color
National origin
Religion
Sex
Familial status
Handicap

Keep in mind that this information is in regard to the Federal laws. Your local and state laws may include other fair housing requirements, such as sexual orientation, age, matriculation, political affiliation, appearance, source of income and others. Research your local fair housing laws before accepting your first application.

The Fair Housing Act covers most housing, according to the U.S. Department of Housing and Urban Development. In some circumstances, various type of properties are exempt from the Act, including: owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations and private clubs that limit occupancy to members.

Outside of these special circumstances, you cannot do the following based on the above mentioned protected classes:

Refuse to rent or sell housing
Refuse to negotiate for housing
Make housing unavailable
Deny a dwelling
Set different terms, conditions or privileges for sale or rental of a dwelling
Provide different housing services or facilities
Falsely deny that housing is available for inspection, sale, or rental
For profit, persuade owners to sell or rent (blockbusting) or
Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.

The Fair Housing Act was written to protect people in the enjoyment of their housing as well, thus it's also illegal for anyone to:

Threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right. This means a person cannot harass a neighbor because of his or her color or familial status or the other protected classes.

Advertise or make any statement that indicates a limitation or preference based on these classes. For instance, advertising your property as "great for single adults," may violate the Fair Housing Act.

If you violate the Fair Housing Act, you could find yourself up against some very stiff consequences, including payment of fines, retribution payments to the claimant and even the attorney expenses. The Fair Housing Act also allows fair housing groups who sue on behalf of victims to sue for legal expenses. So if you discriminate, you're not just threatening a law suit from the victim, but the government and nonprofits as well.

The bottom line is treat everyone the same. Don't hold rules up for one group to follow and bend them for another. As you qualify potential tenants, RentGrow.com, a background checking organization that processes rental applications, suggests basing your decision on the following criteria:

Check the credit history. Obviously.

Consider the extent of credit established (it's not good enough to just have credit).

Income. Is there any and how deep in debt is the applicant?

Length of housing history. Is it stable, long-term, did they pay rent ON-TIME?

Verify rental experience. The screener should call past rentals. Is the rent current? Were they asked to leave? Would the applicant be welcome back?

Length of employment history. Have they demonstrated a stable work habit? Will they continue their employment so rent can be paid.

Employment verifications. The property manager wants to know if the salary statements, including length on the job, in the position, etc., is accurate.

Criminal record search. Need I say more?

Eviction records search. This checks for judgments filed at the courthouse and any evictions from the past.

Co-applicant status. Not only do you want to feel comfortable with the roomie, but can this person help or hurt the primary applicant in qualifying for renting that next penthouse condo?

As you can see, none of these questions were based on the seven fair housing classes. Following these processes can save you a lot of trouble and give you a worry-free investment experience.

Published: January 23, 2004

Use of this article without permission is a violation of federal copyright laws.

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Mr. Carr has covered real estate since 1989. He is the author of Real Estate Investing Made Simple.

Got a personal real estate issue? Post your questions and comments at Anthony’s blog: commonsenserealestate.blogspot.com.

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