Since this spring the U.S. Department of Housing and Urban Development has issued several new guidelines and rulings to the Fair Housing Act, a law passed in 1968 that prohibits housing discrimination based on race, color, national origin, religion, sex, disability or family status.

These new guidelines clarify certain actions or policies by landlords, property managers, real estate agents or lenders that could be classified as discrimination against those protected under the act. HUD has the ability to charge violators or have the U.S. Department of Justice take on a case on behalf of the complainant. Those who violate the law could be required to pay damages to the complainant, as well as pay civil penalties and punitive damages.

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In April, HUD issued guidance on the use of criminal records in real estate transactions, noting blanket refusal of housing based on an arrest record constitutes as discrimination since a disproportionate amount of Americans with criminal histories are racial minorities.

Several months later in September, HUD clarified the link between limited English proficiency and national origin, reinforcing how language-related housing restrictions violate the Fair Housing Act.

And also last month, HUD published a rule that defines “quid pro quo” and “hostile environment harassment” as violations of the Fair Housing Act. This rule goes into effect on Oct. 14, 2016.

In the nearly five decades since the Fair Housing Act was passed, new rules and guidelines have helped to define housing discrimination and close loopholes to ensure equal opportunity for housing throughout the U.S. But as trends in housing shift, clarification of fair housing and education on legal requirements is necessary within the industry.

Why the New Guidelines?

Changes to the Fair Housing Act are important as the rental community in the U.S. continues to grow, with homeownership at the lowest rate in more than 50 years, according to the U.S. Census Bureau.

“You’re seeing the shift [and we’re] becoming more a nation of renters,” says Lukas Krause, CEO of Real Property Management, a residential property management franchise company with locations across North America.

This shift is also altering the relationship between the housing provider and consumer. While home purchases must still adhere to fair housing laws, renting involves a more prolonged interaction between the landlord and property manager throughout the duration of a lease. Work with a real estate agent or lender is typically brief since it ends once the transaction is complete.

Due to the significant rise in renting since the start of the Great Recession, Krause notes the industry grew faster than regulation and education on fair housing. “A lot of times [housing providers] are just completely ignorant to what the requirements are, and they’re not complying. And that’s why you’re starting to see more of this guidance, just because it’s becoming a bigger industry,” Krause says.

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The September ruling on limited English proficiency, for example, attempts to eliminate any gray area regarding language barriers when it comes to housing. The guidance makes it clear that refusal to lease an apartment to renters who aren't fluent in English, whether an intentional decision or not, constitutes as discrimination of individuals based on their national origin. Any landlord who does not rent to a tenant because they are not proficient in English would therefore be in violation of the act.

But of course, the law applies to all aspects of housing. “It’s not just landlords but also lenders,” says Amy Glassman, an attorney focused on real estate and housing and partner at Ballard Spahr law firm in the District of Columbia. This means lenders will have to be able to translate forms and allow for interpreters in meetings, which may have been an obstacle that previously kept non-English speakers from obtaining a mortgage.

While the new guidelines may seem explicit, they remain open-ended in many ways. “It’s very hard to establish a regulation and spell out every single circumstance,” Glassman says. One example she notes is in the final rule regarding quid pro quo harassment. The rule places responsibility on the housing provider for incidents of tenant-on-tenant harassment where there is reasonable “power to correct” the situation.

Currently, it’s difficult to determine what a reasonable power to correct is, as landlords and property managers try to stay out of issues between tenants as often as possible to avoid dramatic situations forcing them to take sides. Glassman says she expects further ruling on the matter, either by HUD itself or in legal cases to establish precedence. “That’s something the courts and HUD will have to define,” she says.

What’s Next?

As housing trends evolve, additional regulations will be necessary to clarify the responsibilities and restrictions for housing providers. Stacy Brown, operations manager for Real Property Management, expects more guidelines from HUD, as well as state legislation to further establish clear industry standards. A more regulated industry on the federal and state level would also prompt education opportunities for housing providers to help reduce the incidence of fair housing violations.

“The hope is that the states will then take it upon themselves to say yes, there is a gap here, and yes, we do need to have education for this very specialized niche within the real estate community and now we’ve actually got to step it up and provide real training” for landlords, property managers and other housing providers to understand their responsibilities within fair housing guidelines, Brown says.

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Krause expects regulations to continue eliminating subjective opinion in the leasing process. For this reason, he often recommends property managers remove the landlord from the decision-making process.

“You take out any sort of human judgment in there because even if it’s well-intended, there could be something that would have ramifications that would run counter to the HUD guidelines,” Krause says.

Industry regulation and new guidelines are often based on what violations of the Fair Housing Act HUD observes through investigation, which begins with the department's suspicion of a problem or an individual filing a complaint. Glassman points to the HUD website as a particularly useful resource for tenants, as it spells out protections under the act and how to properly file a complaint.

Tags: real estate, housing market, housing, Department of Housing and Urban Development, renting, discrimination, pending home sales


Devon Thorsby is the Real Estate editor at U.S. News & World Report, where she writes consumer-focused articles about the homebuying and selling process, home improvement, tenant rights and the state of the housing market.

She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.

Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at dthorsby@usnews.com.