The Federal Fair Housing Act protects renters and homebuyers from discrimination related to race, color, religion, sex, national original, disability, and familial status. Landlords and real estate agents must adhere to the act’s guidelines when selling, renting, and showing properties to potential tenants or buyers. The act ensures that everyone gets a fair shake when buying or renting real estate.
At least it does when it’s followed. Unfortunately, some real estate professionals choose to ignore the act, but those who do face steep penalties. That was definitely the case for the Lee Garland and Rita Jensen Team (Lorgroup) in Jackson, MS. The real estate professionals were found to be in violation of the Federal Fair Housing Act after an investigation by the National Fair Housing Alliance (NFHA). That resulted in a fine of $46,000. The group must also put fair housing signs in its office and take fair housing training.
This illustrates the importance of following the act. Failure to do so could put your entire business at risk.
The Reason for the Investigation
The investigation began after the Department of Housing and Urban Development (HUD) received a large number of complaints about Lorgroup. According to the complaints, the real estate team neglected African-American homebuyers and steered white homebuyers away from neighborhoods that were predominately African-American. HUD contacted NFHA to let the agency know about the large number of complaints.
NFHA opened an investigation to find out if the complaints were accurate. It wanted to catch Lorgroup in the act, so it conducted in-person and phone tests. The tests included nine people of different races. The people contacted Lorgroup to inquire about housing. In each instance, the people needed the same type of home in the same price range. The African-American test subjects were slightly more qualified to buy homes. That way, the NFHA would know if Lorgroup was actively catering to white people.
Lorgroup worked hard to find the white test subjects homes and, as indicated by previous complaints, steered them away from neighborhoods that were predominately populated by African-Americans. The African-American testers received a different service. In fact, Lorgroup typically ignored their inquiries.
After conducting the investigation, it was clear that Lorgroup was in violation of the Federal Fair Housing Act. It was working harder to find white people homes, and it was essentially trying to segregate communities. It was clear the group intended to keep white people out of communities that were mainly populated by African-Americans.
What’s Next for Lorgroup?
Lorgroup can continue selling homes, but it will have to operate within the law. Along with paying the fine, the members of the team have to take a six-hour Fair Housing Act course. It also has to keep records that prove it promotes fair housing. HUD will monitor the group for a year and will ensure that it does everything by the books. If it commits any additional violations, the penalty will likely be much steeper. The government doesn’t like kindly to repeat offenses, so Lorgroup needs to make sure it is in full compliance at all times.
What Landlords Need to Know about the Fair Housing Act
Landlords need to fully comply with the Fair Housing Act. If you are a landlord and you fail to fully comply with the law, you could end up with a hefty fine and a tarnished reputation.
Let’s look at what landlords need to know about the Fair Housing Act. This will give you a better idea of what you are expected to do as a landlord.
You need to advertise your vacancies to find renters. Unfortunately, landlords often make mistakes with their vacancy advertising, and those mistakes cause them to violate the Fair Housing Act.
When advertising a listing, focus on the rental’s amenities and not on the type of tenant you’re looking for. Simply saying that something is great for a retired couple could get you in trouble. Someone might report you for discriminating against people with children. Never include anything about the type of tenant. Instead, just focus on the actual property. Talk about what makes the property a great choice for renters. This will keep you in compliance with the law.
It’s easier than you might think to violate the Fair Housing Act during the screening process. You likely have certain criteria in place for screening applicants, but if you don’t let people know about that criteria, you could be in trouble. For instance, you likely have a minimum credit score requirement. If people don’t realize that, they might think you denied them for some other reason.
You cannot screen people based on their race, color, religion, sex, national original, disability, and familial status, and you should not ask questions related to those classes on your application. For instance, asking someone if he or she is disabled is a bad idea. You can, however, ask them questions about their finances, such as previous bankruptcies, as well as questions related to their rental history.
Include information about your screening process on the application, and screen everyone fairly. Never make the mistake of screening out a protected class. You will be in serious trouble, and it could cost you your livelihood. Treat each application fairly, and give each person the same chance to get into your property. If an applicant meets your criteria, you need to rent the place to him or her. There should not be exceptions to this rule.
Finding Property for Renters
Lorgroup was found guilty of steering clients, and that is something you need to avoid as a landlord. Don’t try to steer someone to a specific area. Instead, show each potential renter all the properties you have available. If you do that, you won’t have to worry about being accused of steering potential tenants to specific areas. Instead, you will have a reputation for letting your clients choose for themselves.
As a landlord, you are allowed to set rules, but the rules cannot be discriminatory in nature, and they must be the same for all tenants. You cannot have one set of rules for one tenant and another set for another tenant.
To keep rules unbiased, you need to be careful about the language you use. For instance, don’t state that children cannot yell in the hallway. Instead, state that residents cannot yell in the hallway. Singling out a specific group of people can get you into trouble.
Come up with a list of rules and then look over them. They should be reasonable and fair. If they are, hand them out to all your renters. Simply forgetting to give them to one person could get you in trouble, so be very careful with this.
Training Your Employees
Your employees need to understand the importance of treating everyone fairly and ethically. You cannot assume that people will follow the Fair Housing Act. Instead, you need to train each employee that comes into your company. Also have refresher courses once a year. This will ensure everyone is on the same page at all times.
If possible, handle the training yourself. That way, you will know that the proper message is getting across to your employees. If you are unable to train the employees yourself, make sure that someone you trust handles it. You need someone who is by the book to handle the training. That way, everyone will be on the same page at all times.
Dealing with Maintenance Requests
You can end up with a problem on your hands if you fail to deal with maintenance requests in the same way for all your tenants. For example, if an elderly person puts in a request and you ignore it but drop everything to handle a request for a young couple, you could get in trouble.
Most landlords don’t ignore people on purpose. They get caught up in other tasks and accidentally forget something. Unfortunately, it doesn’t matter if it is an accident. If it is viewed as a violation, you can get fined.
Accept maintenance requests online so you don’t have to worry about losing track of requests. You can also track your communications regarding the requests to prove that you follow up with everyone the same way. This will make it much easier for you to stay on track of all the requests. That way, you won’t have to worry about anything.
You might get charged with a Fair Housing violation, even if you do everything by the books. You can defend yourself by keeping records. You should keep records of everything, from applications to calls made to tenants.
Your records need to be as detailed as possible. That way, if someone accuses you of a violation, you can pull all the records and prove you treat all tenants and applicants the same. That is the best way to defend yourself.
Make sure you keep your records in a safe place. If possible, store them online so you can access them anywhere. Then, you can always pull out your records at a moment’s notice.
Collecting Deposits and Rent
You also need to make sure you handle deposits in a fair way. Charge the same deposit for the same type of property. If you charge more based on race, gender, family status, or another factor, you will be in violation. Now, if a property is more expensive, you can charge a higher deposit. Just make sure there is a reason for charging the higher deposit.
The same is true for rent. You can’t charge one group more than another group unless the property warrants it. Of course, you can charge more for a two-bedroom house in an upscale neighborhood than a two-bedroom apartment in a rundown neighborhood. However, you cannot charge more if the properties are exactly the same but the tenants are different. That will get you into serious trouble.
The idea of evicting a tenant can be scary, especially since you don’t want to violate the Federal Fair Housing Act. However, you can lawfully evict people from your property when they are in serious violation of your leasing agreement. Just keep in mind that if two tenants commit the same violation, you need to file eviction proceedings for both. Failing to do so could put you in violation of the law.
You do need to make sure you create an eviction notice that follows all state and federal guidelines. Then, you will need to share it either electronically or by certified mail. Follow everything to the letter, including setting up a court date if necessary. If you do everything properly, you won’t need to worry about violating the law.
Is Your Property Exempt?
It’s worth noting that some properties are exempt from the Federal Fair Housing Act. Exempt property includes:
- Owner-occupied buildings that have less than five rental units.
- Single-family housing that you rent out without using advertising or a broker, as long as you don’t own more than three of these homes at once.
- Some housing owned by private clubs and religious organizations.
Even if you are exempt, it is still a good idea to follow the guidelines set forth by the Fair Housing Act. It will help you gain the respect of your tenants and the local community.
It’s Time to Get Organized
Now is the time to get organized so you can safely rent to people in Jackson, MS, and beyond. Regardless of where you live, you need to follow the rules, and if you do, you can build a lucrative career as a landlord. You will gain respect from your tenants and fellow landlords, and you won’t have a problem filling your property. Use all the tools you have at your disposal to keep good records, stay organized, and serve your tenants in the best way possible. That is the key to success.