When it comes time to find a new tenant for your rental income property, one of the biggest issues facing a real estate investor is federal and state discrimination laws.
Income property owners must be careful not to violate discrimination laws because penalties for discrimination can be costly, and it can damage an otherwise good reputation as a property owner.
Worse, whether discrimination is intentional or unintentional, it is still illegal. No matter how well intentioned a property owner might be when initiating certain policies, it does not justify discrimination. Moreover, there are subtle forms of prejudice that can get you into trouble if you are not careful.
1. Race and Religion. A property owner cannot use a person’s personal belief as a reason not to rent to that person– no matter how strange it may seem. Moreover, a property owner must be cautious not to write ads or send subtle messages with forms of written or oral communication that would benefit, support, or discriminate against any race or religious group.
2. National Origin. A property owner cannot require that all tenants be U.S. citizens, or give discounts to people who are of a particular origin. Even in cases where you might suspect that an applicant is here illegally, you cannot ask for paperwork that might prove citizenship unless you ask every applicant for this proof.
3. Family Status and Age. A property owner cannot refuse to rent to families with children, or to someone based on the applicant’s age unless the applicant is not a legal adult or the apartment complex is legally categorized as senior housing only.
4. Disability. A property owner must treat every tenant the same and cannot ask tenants whether they have disabilities of any sort. Federal law protects anyone who has a physical or mental disability–including mental retardation and AIDs—from being refused occupancy unless it can be shown that the tenant’s behavior poses a threat to the health and safety of other residents or the property.
5. Gender. A property owner cannot discriminate against a person solely on whether they are male or female, or make decisions about where they live in a rental unit based on their gender.
6. Source of Income. In many states, it is illegal for a property owner to refuse to rent to someone based on the source by which the income is earned such as public assistance.
7. Marital Status. In many states, it is illegal for property owners to refuse to rent to a couple that is not married or unmarried couples based on the property owner’s religious beliefs.
8. Sexual Orientation. Some states and many cities make it illegal to discriminate against tenants based on sexual orientation.
Understanding discrimination is a vital part of managing your real estate investment property. You would be smart, indeed, to understand the laws at every level–federal, state, and city—if your real estate investing plan includes income property for rental to tenants, and always better off if you remain cautious not to violate those laws.
