Avoid Being Sued for Discrimination: Follow Fair Housing Standards in All Real Estate Ads

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Realtors®, property managers and leasing agents: you can inadvertently and unintentionally become liable for racial discrimination if you aren’t careful in  advertising for housing, whether in MLS or other publications.     

What you may not know about ads and Fair Housing

The Fair Housing Act makes housing discrimination based upon race illegal.  You may not realize that under the developed federal case law: 

  • A blanket prohibition regarding an applicant’s criminal history, as well publishing or communicating of such a prohibition, (e.g., a rental company, HOA or leasing agent saying “no felonies” or “clean criminal history required”) constitutes unlawful race discrimination under the Fair Housing Act. 

It is unlawful discrimination as it fails to distinguish between criminal conduct that does indicate a demonstrable risk to resident safety and/or property, and criminal conduct that does not.   Therefore, under the law, such blanket limitations have a “disparate impact” on African Americans and fail to serve any substantial, legitimate, nondiscriminatory interest. See, e.g., Jackson v. Tryon Park Apartments, Inc., 2019 U.S. Dist. LEXIS 12473 (W.D.N.Y. Jan. 25, 2019).

In addition, it is an acceptable practice under federal law for there to be “Testers.”  A Tester is someone who has no actual intention to enter into the transaction, like a residential lease. But the Tester responds to an advertisement that contains  a blanket prohibition on any criminal record. The Tester then probes further – typically by sending a text or email to the broker who placed the advertisement  to express his  or her interest. The Tester asks and receives confirmation from the broker that, yes, a “clean” criminal history  or “no felonies” is a requirement for acceptance.  The text or email serves as his written proof that the exchange took place. 

That act on the part of the real estate professional creates instant liability, and if suit is brought,  the likelihood of successfully defeating it is very slim.  It’s important to remember that it doesn’t matter if the Realtor® had no intention of ever committing an act of discrimination.   His or her state of mind, no matter how innocent, will be of little help.   A Tester has standing as a plaintiff to bring claims for “actual damages” to include anger, embarrassment, and emotional distress.  See e.g., Banai v. Secretary, HUD, 102 F.3d 1203, 1207 (11th Cir.1997).  The amounts awarded for emotional distress, even in cases involving a Tester, can be up to $10,000.   Even worse, the defendant can possibly be subject to an adverse attorney’s fee award, which will be tacked on to the damages awarded. 

Here’s how to avoid Fair Housing Act problems

The chance of being sued can be greatly reduced if certain practices and procedures are put into place, including the following:

  • First, remember that the Fair Housing Act is not limited to prohibiting discrimination based on race.   It prohibits the publishing of advertisements that indicate a preference, limitation or discrimination because of race, color, religion, sex, disability, familial status, or national origin. Examples of advertising that may violate the Act can include saying “no wheelchairs,” which indicates disability discrimination, or “no children,” which indicates discrimination based on family status.  
  • A management level employee should review HUD, “Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions” (April 4, 2016).   The link can be found at https://www.hud.gov
  • Create an internal written policy that all employees or agents that are involved in the advertising and screening of applicants must understand and follow.   
  • If a real estate professional is requested by a client (such as a landlord or an HOA) to insert a blanket prohibition on criminal history or other discriminatory language, you’ll have the knowledge and company backing based on company policy to carefully explain why it won’t be possible.  
  • When running a background check on an applicant, it might be helpful to evaluate whether all the financial and other qualifications have been met before evaluating an individual’s criminal record.   It may not even be necessary to evaluate the applicants’ criminal history, if the applicant is already disqualified for other reasons.  
  • Advertisements should have generic language referring to requiring a background check.  For example, never have application questions that ask about prior arrests that did not result in a conviction. 
  • Finally, make certain that employees, client landlords, and applicants all understand that the policy is to carefully evaluate and consider each applicant on a case-by-case basis.  

Contributing Author:
James R. Myers, Esq.
Chartwell Law
12486 Brantley Commons Court
Fort Myers, FL  33907
www.Chartwelllaw.com

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published May 5, 2021

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