Earlier this month, owners of several apartment complexes in Pearl, Mississippi, and their real estate agent, agreed to pay $123,000 to resolve a racial discrimination lawsuit after they were found to have violated the Fair Housing Act. “Housing discrimination has no place in our society, and a person’s race should never determine where that person can live,” said Assistant Attorney General Kristen Clarke of the Civil Rights Division. “The Justice Department will continue to vigorously pursue and hold accountable those who would deny equal housing opportunities because of the color of one’s skin.”
While housing discrimination is against the law, multiple studies show that it continues to happen. A working paper from the National Bureau of Economic Research (NBER) shows that African-American and Hispanic renters face widespread housing discrimination that impacts housing outcomes across the 50 largest metropolitan areas in the United States. And a report by the Urban Institute shows that the racial wealth gap would diminish if homeownership were racially equalized.
The Fair Housing Act aims to do just that. Let’s talk about the Act, how it protects against discrimination, and how it can be implemented.
What is the Fair Housing Act?
The federal Fair Housing Act, or “FHA” for short, is a law that was passed in 1968 to protect people from discrimination in the buying, renting, selling, or financing of housing or when seeking housing assistance. The 1968 Act was created as a follow-up to the Civil Rights Act of 1964 and was signed into law during the Martin Luther King, Jr. assassination riots. It is also known as Title VIII of the Civil Rights Act of 1968.
The federal law specifically prohibits discrimination based on race, skin color, national origin, religion, sex, disability, or the presence of children. All landlords, real estate companies, lending institutions, mortgage brokers, agents, and insurance companies must comply with the law.
The Department of Housing and Urban Development (HUD) is the primary enforcer of the Act. While state and local governments can expand on these protections in some jurisdictions, they may not detract from or reduce them. In New York, for instance, a bank or landlord cannot inquire about a person’s criminal record or discriminate based on immigration status or lawful occupation.
Examples of housing discrimination
Discrimination isn’t always obvious, so the U.S. Department of Housing and Urban Development lists some examples on its website. These include:
- A landlord refusing to rent to a prospective tenant after finding out he is Black.
- A leasing officer telling a hijab-wearing woman there are no available units even as the building is advertising several.
- A real estate agent steering an Asian man and his family away from a neighborhood based on his race and showing him properties elsewhere with more “people like them.”
- A landlord threatening to evict a woman who is behind on her rent if she refuses to go out with him.
- A modern multifamily condominium that fails to meet accessibility requirements.
What does the FHA protect against?
The FHA prohibits discrimination in housing based on race, color, national origin, religion, sex (including gender identity and sexual orientation), marital status, familial status, and disability.
Discrimination based on race or color
When Congress enacted the Fair Housing Act in 1968, its primary objective was to prohibit racial discrimination in the sales and rental housing market. However, even today, most mortgage lending cases under the Fair Housing Act and Equal Credit Opportunity Act allege discrimination based on race or color.
Discrimination based on religion
The number of cases alleging religious discrimination is lower than some other categories, but instances frequently come to light. It is unlawful to create zoning ordinances to limit private homes’ use as places of worship. There is, however, a limited exception to the FHA, which allows non-commercial housing operated by a religious organization to reserve such housing to persons of the same religion.
Discrimination based on sex
In addition to making it unlawful to discriminate based on gender, fair housing laws also seek to protect tenants from sexual harassment in all types of housing. This is mainly to guard against landlords targeting women, especially women with limited means and/or children, who may have no choice but to put up with the sexual harassment or risk losing their homes.
Discrimination based on national origin
Discrimination based on national origin can refer to either an individual’s country of birth or their ancestors’ origins. The Department of Justice has taken action against municipal governments that have tried to reduce or limit the number of Hispanic families living in their communities and sued lenders who have imposed more aggressive underwriting standards on Hispanic borrowers.
Discrimination based on familial status
It is unlawful to refuse to rent or sell to families with children under 18. In addition to outright denial, the Act prevents housing providers from placing unreasonable restrictions on tenants with families or limiting their access to recreational services provided to other tenants. However, some “senior” housing may be designated as Housing for Older Persons (55+ years of age).
Discrimination based on disability
Federal nondiscrimination laws define a person with a disability to include any:
- Individuals with a physical or mental impairment substantially limit one or more major life activities
- Individuals with a record of such impairment
- Individuals who are regarded as having such an impairment
The enforcement of the FHA in this area takes two forms: ensuring that the sale or rental of housing is not denied to individuals with disabilities and that newly constructed multifamily housing is built per the FHA’s accessibility requirements.
Housing providers must make reasonable accommodations and allow appropriate modifications and amendments to enable persons with disabilities to use and enjoy their housing. Certain family housing must also be made available.
Rules of the Fair Housing Act
The HUD clearly defines what actions constitute discrimination and has laid out specific criteria that all parties in a real estate transaction must follow.
Sales and renting
According to the FHA, it is considered illegal and discriminatory to use race, color, religion, sex, disability, familial status, or national origin to refuse to rent or sell housing to a person. Similarly, you cannot refuse to negotiate for housing, make housing unavailable, set different terms, conditions, or privileges for the sale or rental of a property, or provide a person with different housing services or facilities based on those criteria.
Additionally, the Fair Housing Act protects against discrimination by falsely denying that housing is available or imposing different rates. You may not limit privileges, services, or facilities or try to persuade homeowners to sell their homes by suggesting that people or a particular protected class are about to move into the neighborhood.
In mortgage lending, it is considered discrimination if a person is denied a mortgage loan or other financial assistance based on protected characteristics. A financial institution may also not refuse to provide information about loans, impose different terms or conditions (such as interest rates, points, or fees), condition the availability of a loan on a person’s response to harassment, or refuse to purchase a loan.
The FHA prohibitions also apply to publishers, such as newspapers and directories, and people who place real estate advertisements. At no point can someone doing so make, print, or publish an advertisement that indicates a preference based on the criteria laid out above.
There are accessibility rules for properties built after March 13, 1991, with four or more units and an elevator. In addition to other necessary standards, all such buildings must have public and common areas accessible to people with disabilities and doors and hallways wide enough for wheelchairs.
Enforcement of the Fair Housing Act
An individual who has faced housing discrimination or been a victim of an illegal housing practice can file a discrimination complaint with the HUD’s Office of Fair Housing and Equal Opportunity (FHEO). Here’s the process of what happens once a complaint is filed.
- File a complaint: Complaints can be filed online in English or Spanish or downloaded in additional languages, including Arabic, Cambodian, Chinese, Korean, Russian, Somali, and Vietnamese. You will need to do this as soon as possible since the FHEO will only investigate complaints filed within one year after the alleged discrimination occurred. You’ll need to provide your name and address, as well as information about the person or organization involved and details of the alleged violation.
- Cooperate with the investigation: Once a complaint has been filed, the FHEO will either assign an investigator to the case or refer it to one of its Fair Housing Assistance Program partners. These are state or local agencies certified by the HUD to investigate complaints. You’ll be asked to provide details, including a timeline of events, the location of events, the name and contact information of people who were present at the time, and the contact information of anyone who may have information regarding the complaint. You’ll also be asked to provide all relevant documents, such as your lease or advertising material.
- The party you filed a complaint against will receive a notice of your complaint and will have the opportunity to respond. Once the investigation is complete, you will receive a written report. The goal of the investigation is not to determine guilt but to decide whether the complaint should move forward.
- Consider a resolution: Through the entire process, you will be given the opportunity to resolve with the respondent, though this is entirely voluntary. If you resolve this without taking it further, a Conciliation Agreement or a Compliance Agreement will be prepared. You can proceed to legal action if you don’t agree to a resolution.
- Take legal action: The FHEO issues a “Determination of Reasonable Cause and a Charge of Discrimination,” often just called a “Charge,” and the HUD can now do one of two things: either send the case to its Office of Hearings and Appeals (OHA) or refer the case to the U.S. Attorney General to file a lawsuit in federal court. It is your decision which course of action you’d like to take. Either way, the government will file a case on your behalf, and HUD will assign you an attorney free of charge. You are also free to hire counsel.
- Receive the verdict: The OHA hearing, which is like a trial, is usually shorter and less formal than a trial. Either way, you will receive a determination on your case.
The bottom line
While laws exist to remove housing discrimination in our industry, it is still an entrenched problem that we must all work to erase. At Arrived, our mission is to give everyone—regardless of their background and income levels—the chance to get on the property ladder. Through our platform, you can purchase shares of rental properties for as little as $100 and start building a portfolio—and a rental income—today. Please browse through our available properties here.