Failure to comply with landlord-tenant laws, whether it’s security deposit limits or notice requirements to enter rental property, can have negative financial consequences for your property management business. Violating antidiscrimination laws can be especially costly if a prospective or current tenant files a fair housing complaint or a discrimination lawsuit.
This article explains how to avoid housing discrimination in the first place, and the basics of discrimination complaints and lawsuits, including the value of hiring a discrimination lawyer.
How to Avoid Discrimination When Screening Tenants
Before you place an ad on Craigslist or advertise a vacancy, it is crucial that you understand fair housing laws and what you can say and do when selecting tenants. This includes the language in your ads and the questions you ask on a rental application or when interviewing potential tenants.
The federal fair housing law (the Fair Housing Act of 1968, as amended (42 U.S. Code §§ 3601-3619 and 3631)) specifically prohibits housing discrimination on the following grounds (called “protected categories”): race, religion, ethnic background or national origin, sex, familial status (such as having children under age 18), or physical or mental disability. The federal Acts make it illegal for landlords to discriminate against people who fall into one of the protected categories—for example, by falsely denying that a rental unit is available to an African-American person or setting more restrictive standards for a family with small children.
In addition, many states and cities prohibit additional types of discrimination. For example, California fair housing laws prohibit discrimination on the basis of sexual orientation and marital status: California laws also cover small landlords (who might otherwise be exempt from federal law which does not cover owner-occupied properties with four or fewer units).
An act of discrimination may expose you to challenges from more than one level of government, so knowing antidiscrimination law—federal, state, and local--is key to avoiding problems.
For details on antidiscrimination laws, start by checking the U.S. Department of Housing and Urban Development or HUD website, which includes a list of fair housing resources by state (including local agencies).
How Fair Housing Agencies Handle Illegal Discrimination Complaints
Tenants in all states have several ways to fight housing discrimination. These include filing an administrative complaint with HUD or a state fair housing agency or a local agency charged with overseeing discrimination complaints. Tens of thousands of tenants file fair housing complaints with HUD every year (approximately half of which involve claims concerning disability discrimination).
A federal HUD complaint must be filed within one year of the alleged violation, but state statutes or local ordinances may set shorter time periods. Fair housing agencies take many months to investigate a complaint. Unless an agency dismisses the complaint outright, it will usually attempt to reach a conciliation agreement or compromise between landlord and tenant. Outcomes vary—for example, a tenant might agree to drop his or her complaint in exchange for a sum of money or your promise to rent the person an apartment.
If conciliation is unsuccessful, the fair housing agency will hold an administrative hearing (a trial before a judge but without a jury) to determine whether discrimination has occurred.
How Housing Discrimination Cases End Up in Court
A tenant (or prospective tenant) may also sue you in state or federal court, even after filing a complaint, as long as an administrative hearing has not yet begun or the tenant has not already signed a conciliation agreement. If the tenant goes to federal court, he or she must do so within two years of the alleged violation.
In a typical federal lawsuit, the tenant has consulted an attorney immediately after the landlord’s alleged discriminatory conduct. The attorney prepares a complaint and asks the court for an expedited hearing, hoping to get an order from the court directing the landlord to cease the discriminatory practice without a formal hearing.
Penalties for Housing Discrimination
A court or housing agency that finds that discrimination has taken place may order you to do one or more of the following:
- rent the particular rental to the person who has brought the discrimination charge
- pay “actual” damages to an applicant you illegally rejected, such as additional rent the tenant had to pay elsewhere as a result of being turned down for your rental
- pay “compensating” damages, such as for the tenant’s humiliation or emotional distress, and/or
- pay a civil penalty to the state federal government ($16,000 for the first violation alone).
For especially outrageous discrimination, you may have to pay punitive damages of thousands of dollars, plus the tenant’s attorney fees.
Getting Legal Help for a Discrimination Lawsuit or Complaint
Even if you are ultimately vindicated, the costs of defending housing discrimination lawsuit or administrative complaint can be devastating. Cases can be quite complicated, and typically require an attorney’s help.
It’s crucial that you hire someone experienced with defending landlords in discrimination complaints and lawsuits. For advice on finding a good lawyer, see the Nolo article How to Find an Excellent Attorney. Also, check out Nolo’s Lawyer Directory for California landlords who specialize in landlord-tenant law.
Resources on Landlord-Tenant Law
For detailed information on discrimination and fair housing, see the Nolo books Every Landlord’s Legal Guide, by Marcia Stewart, Ralph Warner, and Janet Portman, The California Landlord’s Law Book: Rights and Responsibilities, by David Brown and Janet Portman.