Tenant screening has long been standard in the rental application process. Background checks and reference requests come as no surprise to renting hopefuls in this day and age. They understand it is the responsibility of the landlord and is also important to the overall health and quality of a property management business.

However, at times, and as with anything, there have been people who’ve taken the filtering process a bit too far. Of course, landlords have every right to be discerning with their decision-making; but, according to the Fair Housing Act, renters also have rights. They have the right to be considered, fairly and impartially, for a real estate transaction.

Unfortunately, if you’re not careful, you can agree with everything stated here and still somehow find yourself in hot water in the eyes of the law. Read on to understand more about Fair Housing Laws, how they apply to you, and how you can take action to protect and improve your business.

What is the Fair Housing Act?

While many remember the 60’s as a time of peace, love, and flowerchildren, the decade also marks a period of civil unrest. The Civil Rights Movement of the time can be credited with a lot of the landmark anti-discrimination legislature that still governs business practices today. This includes the 1968 Federal Fair Housing Act.

Enforced by the U.S. Department of Housing and Urban Development, or HUD, the law prohibits discrimination in the sale or rental of housing on the basis of person’s status in a particular category of people. The federal government defines seven specifically protected classes.

Race: Individuals cannot be mis- or unfairly treated due to physical characteristics like skin color, complexion, hair texture, and facial features.

Color: While seemingly the same thing as race, there can still be differences in physical traits that occur within members of the same race or ethnicity that also require protection from bias. These include skin shade, tone, or pigmentation.

Religion: This stipulation serves to protect all religions from unfavorable treatment or unfair scrutiny. It also extends beyond what most would consider traditional religions to one’s personal ethics or moral beliefs.

National Origin: Usually indicated by appearance or accent, where in the world a person is from or their ethnic background warrants protection in this class.

Sex: In today’s world, protection on the basis of sex is not limited to gender, but also includes sexual orientation, transgender status, and other gender roles and identities.

Disability: Contrary to what you might find on a job application these days, landlords are prohibited from inquiring about a person’s disability status. Additionally, if the tenant or potential tenant has disclosed impairment-related information, it is the responsibility of the landlord to make reasonable accommodations – even if this is at the property manager’s own expense.

Familial Status: Typically, this refers to a tenant having at least one dependent, or child under the age of 18. It also protects renters who are pregnant or in the process of adopting a child.

In addition to Federal Fair Housing Laws, many state and local governments include protections for things like citizenship, marital status, age, veteran status, source of income, and more. Because each region has its own stipulations, it’s best to consult the experts. Get in touch with your local state fair housing agency for greater detail on how you can ensure compliance.

What’s at Stake?

If a violation does inadvertently occur, tenants can file discrimination complaints with their local legislature. This is not a situation you want to find yourself in, as it is often costly and tedious. Once a complaint is filed, the defendant has 20 days to respond and decide whether the case is to be tried by the Federal District Court or HUD Administrative Law Judge (ALJ).

If you go with the latter, and the ALJ finds, in their judicial opinion, that an infraction has occurred, you can find yourself looking at fines and fees upwards of $15,000 for your first violation alone. And that’s not the worst of it. If the Federal Court deems your business in the wrong, punitive damages and penalties can go as high as $100,000. That is potentially an incredible amount of time and money poorly spent.

How to Protect Your Tenants and Yourself

You’d be hard pressed to find a landlord out there who is purposefully and intentionally violating Fair Housing Laws. Yet, infractions still happen all the time. Why is that?

Consider the childhood game of telephone, in which one message travels from the mouths and to the ears of many in a sequential chain. If you are a veteran of the game, you know how it ends. No matter where you play or whom you play with, the result can almost be 100% guaranteed. The message shared at the end is completely twisted and almost recognizable to the one at the start.

This is because, despite your most earnest intentions, everyone hears things differently. What may seem entirely innocuous to one person could raise multiple red flags for another. This puts landlords, who are charged with interfacing with and making decisions about numerous candidates, in a tricky situation. But there is a solution.

Setting forth a clear and structured tenant screening process will cover all your bases in one fell swoop. Not only will the utilization of a standardized system protect you from claims of discrimination, but the transparency will also help to create a more level playing field for interested tenants. Furthermore, streamlining your steps overall will only help to improve your efficiency and turnaround times throughout the screening process.

Fair Housing Laws are Your Friend

After reading this, you might feel like Fair Housing Laws are the big, hairy monster lurking around the corner, waiting for their next unsuspecting landlord victim, but you would be wrong. Understood and used appropriately, Fair Housing Laws are actually your friend.

Because what enemy lays his or her cards out on the table, is transparent, and shows you how to be a better business? If you truly take these regulations to heart, and effectively put a well-defined screening process in place, you only stand to gain. This boogeyman will help you avoid discrimination, be fair and unbiased, and even fast-track your back of house business. Now that’s a frenemy we can get behind.