Is Max Occupancy Limit Illegal /Discriminatory to Large Families?

[Tricia O'Brien]

What are your thoughts about how to screen out some high risk applicants you don't want??

Specifically households with more than 4 people total?

I have a 3 bedroom / 1 bath SFH rental in Indiana in a class D area (about 1290 sq feet) and I have a maximum occupancy of 4 people - full time and part time residents. I bought it in 2018, and the first tenants I leased to had a family size of 3. I didn't advertise a max occupancy limit in 2018 or currently in 2021, that's just who I ended up picking in 2018.

It's vacant now, and when I told a property manager a couple of weeks ago that I wanted a max occupancy of 4 (as one of my preferred criteria)  he said that might be seen as discriminating against large families and it might be a violation of some Fair Housing Law.  He said the fire marshall in most cities allows 2 people per bedroom so 6 would be normal max occupancy.

He recommended NOT putting in a Facebook or Zillow or Avail.co or  realtor.com  listing that the max occupancy is 4.  However,  if someone applied with 5 or 6 or 7 people in the household , I could reject them for another reason, like credit score too low.  I believe he was  recommending  NOT telling people to their face that we don't accept families with more that 4 people total.

What are your thoughts?? 

Should I tell people by phone we don't accept families with more than 4 people (either before or after they do an application)?...

Maybe  say something like "It has always been my policy since 2018 to have a max occupancy of 4 people because it's less than 1400 sq feet and only has 1 bathroom." 

I decided to self manage for now.  Someone emailed   a pre-screening form Sunday  who said her family size is 5-6 people and total gross income was only $3,100/month (above my preferred  income requirement) . So I just failed to respond to her email because I don't want her to apply.  I'm confident she cannot afford to live there and is  a high risk for non payment of rent.

After paying rent and utilities, she'd only have at best $2k/mo for all other expenses for 1 adult and 4 or 5 children if they lived there.

My house has: 

Rent: $760/mo with tenant responsible for paying all utiliites ( runs $200-$350/mo)

Rent plus utilities: runs  about $960/mo to $1110/mo (depending on household size and habits) 

My Preferred Criteria for Tenant Applicants:

1) Maximum occupancy 4 people - full and part time residents

2) Gross Income at least $3040 / month (4x rent amount but 3.1x expected  rent and utilities for 3-4 person household)

3) No evictions in  past 5 years of any household member

4) No felony convictions ever of any household member

Am I on the right track to take the PM's advice and NOT be up front about the max occupancy ??

  Less than 10% of people who have inquired so far have a family size more than 4, but I'm feeling awkward about how to handle it when it happens.

Any advice would be appreciated!  Thanks!