Investment Property: Balancing Fair Housing with Management Interests

  Fair housing litigation essentially requires that no tenant or prospective tenant be discriminated against and treated unfairly by a landlord or property manager.  Consequently, most real estate investor/owners believe that they are bound to treat everyone exactly the same—which is certainly not the case.  Fair housing calls for consistent, nondiscriminatory enforcement of all policies. That doesn’t mean every jerk that comes through your rental property should be given a place to live and treated like a saint.  Don’t make the mistake of accepting a bad tenant because you are afraid of the Fair Housing Act (FHA).

      This is every landlord’s nightmare: a young, single, disabled Hispanic mother of two is looking for a place to rent.  This is fine.  The problem is, she is incredibly hateful and making nasty and threatening remarks to you and your staff.  Obviously, you do not want her as a tenant—not because of who or what she is, but because of the way she behaves.  You must protect your interests by not accepting her application.

      Landlords have learned to fear the FHA, however, since the young woman could easily file a discrimination claim against you, and you would then have to prove in court that you denied her application for valid reasons.  In this case, that might be a tough sell, and a jury might think it more likely that you rejected her tenancy because of her race, ethnicity, disability, family, or whatever else.  Then you, the landlord, would be in violation of the law.

      So then how do you avoid taking on bad tenants while not getting sued under the FHA?  Basically, the answer is to have very clear policies when it comes to criteria for tenant admission, and very consistent enforcement of them.  If you include a “no-jerk” clause in your policy, which basically states that it is up to the management’s discretion whether or not a tenant’s behavior is suitable for the property, then you will have something concrete to refer to if a claim is ever brought against you.

      Again, the key is to be consistent.  If that same hateful, threatening, obnoxious personality comes to you in the form of a 40-year-old employed white man, you obviously can’t accept his tenancy.  If you reject his application on the same grounds as the above example, then you have a solid policy and consistent enforcement of it.  This should be obvious.  The problem is that for some landlords/property managers, it’s not obvious. 

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