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CLAIMPREVENT® BLOG

CRES Risk Management Webinar: How to Prevent Fair Housing Complaints with Rental Ads and Application Reviews

In this webinar, James Myer from Chartwell Law, and Dave Miller, Regional Vice President with Fidelity National Home Warranty, talk about how real estate professionals can prevent discrimination and Fair Housing complaints in advertising, and how to advise landlords to appropriately handle applications.

This informative webinar covers:

  • The background and purpose of the Fair Housing Act
  • Why blanket prohibitions against criminal history should be avoided in ads
  • Why it’s important for employees and real estate licensees involved in the advertising and screening of applicants to understand the Fair Housing Act
  • The real estate professional’s role in educating landlords and homeowners’ associations
  • Who the Fair Housing Act applies to (includes Airbnb properties)
  • What property managers, real estate brokers, and others involved in advertising for housing can do to avoid discrimination and prevent lawsuits

To find out more, watch the full webinar here:

 

Webinar Transcript

Laura Prouse:

Thank you for joining us today on avoiding discrimination under the Fair Housing Act.  I’m Laura Prouse with CRES Insurance Services, and today we welcome attorney James Myers from Chartwell Law. James has been defending real estate professionals throughout Florida for more than a decade and is a very active member of the CRES legal panel.

Along with James, we have Dave Miller, regional vice president with Fidelity National Home Warranty. CRES E&O insurance members can use Fidelity home warranties to reduce your out-of-pocket claims costs. Dave, I’ll let you get started

Dave Miller:

Jim, we’re going to talk today about a risk management alert that you put out regarding the Fair Housing Act. Why are we talking about this today and what issues are still going on with the Fair Housing Act?

James Myers:

The Fair Housing Act was passed back in 1968. It was basically a follow up to the Civil Rights Act of 1964, and its purpose was to prohibit discrimination in housing, based upon sex, religion or national origin. It’s administered by the Department of Housing and Urban Development (HUD). In 2016, HUD issued some guidelines regarding criminal background screening for housing applicantsthat can get housing providers in trouble based upon discrimination.

The goal essentially is to provide a meaningful second chance for people with criminal backgrounds to reintegrate into society. In order to do that, access to housing is an essential component of that.  Unfortunately, African Americans and Hispanics are arrested, convicted, and incarcerated at higher levels as compared to the rest of the population. This creates problems with criminal screening where housing providers have blanket prohibitions for any criminal background activity. It creates a disparate impact on those groups of people. So, that’s what those guidelines address.

Dave Miller:

So what typical lawsuits are you seeing regarding Fair Housing that are coming across your firm’s desk there?

James Myers:

The problem is when property managers, real estate brokers or anyone else who advertises for housing, puts into an advertisement words such as “clean criminal background required” or “no felonies required.” Those can be considered unlawful discrimination. Even if there is no intent whatsoever to discriminate, intention doesn’t matter. Under the law, blanket prohibition of any criminal background does have a disparate impact. Criminal background screening can be done. Where it becomes unlawful is if it fails to distinguish conduct that: indicates a risk to the housing provider such as resident safety, or is considered a risk to the housing provider.

For example, a DUI conviction that’s 15 years old is very, very different than someone who is a violent criminal sex offender that’s just been released. Those things have to be distinguished, but housing providers can and will run into trouble and liability when they have these blanket prohibitions. The other point that unfortunately exists, but is part of the law, is that the accepted case law is testers are even allowed. These are people who can test an advertisement, even if they have no actual intention of renting or being provided that housing. If they look up an ad and see that it says no criminal background permitted, they can contact the broker or agent and say, “Is this true?” If the agency says, “Yes, that’s true,” that in and of itself can create liability and create a lawsuit that the broker will lose under the established law.

Dave Miller:

Do you feel that Departments of Real Estate are doing a good job with the Fair Housing Act and maybe with forms and disclosures they’re having the real estate professionals use.  Or is there still a hole somewhere?

James Myers:

I think there’s probably a hole. , This could be a problem really in any state, and it’s something that I think all real estate professionals really need to be aware of.

Dave Miller:

Let’s talk a little bit more about the nuts and bolts for our real estate professionals, whether on the listing side or the selling side. What do real estate licensees need to know with regards to the Fair Housing Act and applying it to their transactions?

James Myers:

I think the important thing to remember is to not have any kind of blanket prohibitions on criminal conduct. Instead, use something generic, like “background check required.” If a homeowner’s association or a landlord wants you to say, “We don’t want any criminal background at all,” tell them, “Under the law, what I can say is, ‘background check required’.

Then, they ‘re going to be safer because once the application comes in, they will be looking at more than just a criminal background check —they’ll also be looking at things like credit scores. Maybe they don’t even have to get into an analysis of what sort of criminal record this is, is it something that I can consider and disqualify the person, or is this something that we should be careful about not discriminating against.

I would think that most people with a pretty severe or dangerous criminal background record probably also have a bad credit score, so that can be used to disqualify an applicant that may be less desirable to have in a given community. Also, brokers should really have an internal written policy that employees and licensees who are involved in the advertising and screening of applicants should understand and follow. Licensees need to educate their landlords and homeowners associations as to the law, that an arrest record is not justification, because lots of people get arrested and not convicted. So for example, an arrest but no conviction on a felony charge is not grounds to disqualify someone.

Dave Miller:

Are you seeing in these real estate transactions that one side is more vulnerable to a Fair Housing Act claim? Is it more the listing side or the buyer’s side?

James Myers:

The listing side, those who advertise for rentals are what we’re seeing.

It’s mostly the rental market, condominium associations, homeowner’s associations, individual landlords who want to rent a property. Naturally people want clean records, they want someone safe and so forth in their property as a tenant, but brokers and licensees just have to step carefully with this, because it can create liability if they’re not.

Dave Miller:

You just brought up a good point with properties that people rent. Talk about property managers and maybe Airbnb, does this now apply to all of that industry as well?

James Myers:

Yes, because under the law, it just says housing providers. It doesn’t distinguish between condominium associations, Airbnb, sellers, or landlords of individual homes, it just says housing providers.

Once a background check is run, a good way to avoid a discriminatory practice is to really examine the application from each applicant on a one by one basis, evaluate each one individually, and make sure that everyone is treated the same. If some sort of criminal conviction would disqualify an African American, but they feel it wouldn’t for a non-African American or a white person, that’s discriminatory. Be cautious in terms of really making sure that applicants are valued on an individualized, case by case basis . 

 

In the related post that was published (Rental Ads Cannot Prohibit Applicants Based on Criminal History), there’s a link to Guidance on Application of Fair Housing Act standards. I think it’s a good idea for at least brokers to read it, and then develop some internal procedures for their licensees to follow. Something that’ss published internally may be more likely to be read. And setting guidelines in this area will really help keep licensees out of trouble.

Dave Miller:

So for those that are a little bit newer to this, would you recommend they have anattorney review their internal Fair Housing Act procedures for ads and applications? James Myers:

I think they could. Really it‘s just important to make sure that you don’t have advertisements with blanket prohibitions against criminal records. The important thing is to just say in an advertisement and to any applicant who asks that the landlord or the property manager is requiring a background check in addition to a credit check or a work history check or other things that landlords often require. Once that’s done, they’re safe from being targeted by what we call testers for one thing, and that in and of itself is a tremendous elimination or reduction of risk.

Laura Prouse:

Thank you both. Great information to have.  We’ll see you soon at another CRES Risk Management webinar.

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