What is Fair Housing?
The Fair Housing Act is a federal law that prohibits discrimination in housing based on race, color, national origin, religion, sex (including sexual orientation and gender identity as of 2021), familial status (families with children under 18), and disability. For real estate investors who rent, sell, or finance property, Fair Housing compliance isn't optional — it's the law, and violations carry severe penalties including fines, damages, and potential criminal prosecution.
The Act was originally passed in 1968 as Title VIII of the Civil Rights Act and has been amended several times, most significantly in 1988 to add familial status and disability as protected classes. Many states and local jurisdictions add additional protected classes (age, source of income, marital status, veteran status, student status), so investors must comply with federal, state, and local Fair Housing laws simultaneously.
What Fair Housing prohibits
The Act prohibits discrimination in all aspects of housing transactions, including:
- Refusing to rent or sell to someone based on a protected class
- Setting different terms, conditions, or privileges based on protected class
- Providing different services or facilities based on protected class
- Advertising that indicates a preference or limitation based on protected class
- Making statements that indicate a preference or limitation
- Retaliating against someone who files a Fair Housing complaint
- Steering (directing people toward or away from certain neighborhoods based on protected class)
- Blockbusting (profiting from racial turnover by inducing fear)
Advertising compliance
Advertising rules are where many landlords unknowingly violate Fair Housing. You cannot describe the ideal tenant in terms that reference protected classes. Examples of violations:
| Violation | Why it's illegal | Compliant alternative |
|---|---|---|
| "Perfect for young professionals" | Age/familial status discrimination | "Close to downtown employment centers" |
| "Great family neighborhood" | Familial status preference | "Near schools and parks" |
| "Christian community" | Religious preference | Don't reference religion |
| "No children" | Familial status discrimination | Can state occupancy limits based on square footage |
| "English speakers only" | National origin discrimination | Don't reference language requirements |
The rule of thumb: describe the property, not the desired tenant. "3 bed/2 bath, hardwood floors, fenced yard" is always safe. Any description of who should live there risks a Fair Housing issue.
Reasonable accommodations and modifications
For tenants with disabilities, Fair Housing requires two specific accommodations:
Reasonable accommodations are changes to rules, policies, or services that allow a disabled person equal opportunity to use and enjoy the property. Common examples: allowing an assistance animal in a no-pets building, providing a reserved parking space closer to the entrance, allowing a tenant to pay rent on the 5th instead of the 1st if their disability income arrives on the 3rd.
Reasonable modifications are physical changes to the property that the tenant needs for accessibility. Examples: installing grab bars, widening doorways, adding a ramp. The tenant generally pays for the modifications, and the landlord can require that the tenant restore the property to its original condition upon move-out (except for modifications that don't affect the next tenant's use).
Tenant screening compliance
Fair Housing applies to tenant screening. You must apply the same screening criteria to every applicant — same credit score minimum, same income requirements, same background check standards. Selective enforcement of screening criteria based on an applicant's protected class is discrimination even if you never explicitly reference their protected status.
Document your screening criteria in writing before you start accepting applications. Apply them consistently to every applicant. Keep records of every application received, every decision made, and the reasons for approval or denial. If challenged, you need to demonstrate that your decisions were based on consistent, non-discriminatory criteria.
Penalties for violations
Fair Housing violations can be filed with HUD (Department of Housing and Urban Development) or in federal court. Penalties include: compensatory damages to the victim (lost housing, emotional distress), punitive damages, civil penalties up to $16,000 for a first violation (up to $65,000 for repeat violations), attorney's fees, and injunctive relief (court orders requiring you to change your practices). In extreme cases, criminal penalties including fines up to $100,000 and imprisonment are possible.