Property Management – what you should know
Property management of your own or someone else’s units means you and your team must understand federal, state and local fair housing and discrimination laws in order to run a compliant rental business. Under federal law, Fair Housing is the right for anyone to rent a place to live regardless of their race, color, religion, national origin, sex, familial status or disability. As a landlord, you must to treat every single person, group and family the exact same way when they inquire about, apply at and/or rent your property.
While the federal law seems straightforward, there are many components that you need to understand in order to stay compliant. In addition, each state and many local governments have their own fair housing laws that you should be aware of.
A working knowledge of fair housing laws will help you find and manage tenants legally. In this guide, we break down five important components of the federal fair housing laws so you can better understand how to comply and what actions to avoid.
Protected classes and discrimination
The Fair Housing Act was originally passed in 1968 on the heels of the Civil Rights Act, and it was subsequently broadened in 1988. The laws were created to foster ”diverse and inclusive communities and to prohibit discrimination” based on someone’s inclusion in one or more protected classes, which on a federal level consist of race, color, religion, national origin, sex, familial status or disability. State and local laws may include additional protected classes.
| PROTECTED CLASSES UNDER FEDERAL LAW | STATE AND LOCAL PROTECTIONS CAN INCLUDE: |
|---|---|
|
|
In 2014, over half of the housing discrimination complaints reported were in relation to a disability. As a landlord, there are extra protections you need to be aware of for accommodating a renter. First, a disability can include a mental or physical condition, but you cannot ask whether or not a person has a disability or illness, which can include (but is not limited to) renters with visual, hearing, and mobility impairments; mental illness; mental retardation; HIV/AIDS; a history of disability; and chronic alcoholism (if it’s being treated).
Remember, you can only ask questions that could be asked of every applicant or tenant — even if it’s well-meaning. As a rule of thumb, avoid any questions that would question a renter about their health, disability or illness.
There are two additional provisions for disabled renters that are relevant to landlords: reasonable accommodation and reasonable modification.
Be sure to document your communications with everyone who interacts with your rental: people making inquiries, applicants and tenants. This way, if someone files a compliant, you have a record of what was discussed. Being familiar with the protected classes can help you avoid asking potentially sticky questions, and maintaining a well-documented process can help guard against violations.
Property Management and Advertising
How are you finding tenants for your rental properties? Most likely, you’re advertising on some level. In your search for a qualified tenant, make sure your advertising is compliant with fair housing laws by focusing on the property and the amenities — not on who you think an ideal renter would be.Advertising can be discriminatory if it appears to favor or exclude a particular group of renters. For example, don’t say that your property is a great for a young couple or senior citizens — this could be perceived as discrimination against families with children. You are also not permitted to falsely state that the property is no longer available in order to dissuade specific applicants.
Steering renters
The act of steering is when a landlord tries to attract or defer a potential tenant based on their inclusion in one of the protected classes. An example is showing a property in an Asian community to Asians only, or neglecting to show a recreational area to a disabled renter because you assume they won’t use the facilities. In both of these situations, you are directing, or steering, a renter toward a specific property or area.
All renters need to have equal access to your listings. Show the vacancies you have, and allow renters to indicate what units they want to see. When describing the property and community, focus on facts, not assumptions about the residents or neighborhood.
Property Management and Renter Applications/Screening
As part of your process, establish and document the criteria that an applicant needs to meet to be considered for tenancy, and use the same criteria when reviewing all applicants. Properly qualify renters using a rental application; renters can be required to have a verifiable source of income, a good credit score or a clean criminal record. Questions regarding financial history, prior evictions or reasons for moving are also allowed and will give you a more complete picture of the applicant.
Using a standardized rental application helps ensure that your chosen tenants are qualified; those who do not meet your tenant screening criteria can be identified based on appropriate, uniformly applied standards. If you decide to reject a renter, you need to inform them that they weren’t approved and provide a reason. Keep all completed applications and screening documents on file so you can verify that you rejected a renter for non-discriminatory reasons, such as poor credit or a criminal record.
I personally use: www.tenantbackgroundsearch.com
For about $30 and with the applicants permission you may run a credit check, criminal record search, evictions database search and sex offender registry search. The program verifies previous addresses and runs an algorithm that uses debt, income and history to give you a percent change that the applicant will default on rent in the next 2 years. Very handy and in my experience, pretty accurate.
Apartment policies and rules
As a landlord, you have every right to create policies and rules for your properties to create a safe and comfortable living environment. The rules need to be standard across all groups of people and cannot single out any one group or type of resident. Rules should be fair and aimed at all residents and their guests, not the demographic you think might cause a problem. Have building-wide quiet hours that apply to all residents; do not call out specific types of tenants, such as students.
Never make rules just for families with children, such as forbidding children from swimming in the pool or riding bikes on the premises. You can, however, make rules that protect their safety, such as “Children under 12 must be supervised in the pool by a parent or guardian.”
More on maximum occupancy…
As part of your policies, you can set a maximum occupancy for your rental. However, there are no federal laws outlining occupancy standards, only guidelines based on a variety of factors. Keep the occupancy language to “persons,” and never specifically limit the number of children — also bear in mind that infants under the age of 1 do not count as an occupant.
Be familiar with your state’s laws about maximum occupancy, which generally consider the square footage, bedroom size and configuration of your unit. Some landlords use the Keating Memorandum, a national guideline for occupancy, while others use square footage guidance from the Building Officials and Code Administrators (BOCA) code. Either way, be sure to standardize and document the policy, and familiarize yourself with local regulations. In Boulder, normally occupancy is restricted to no more than 3 unrelated persons – but there are some exceptions!
| MAXIMUM OCCUPANCY GUIDELINES | |
|---|---|
| Keating Memorandum | BOCA Code |
|
|
Property Management Documentation
The importance of maintaining uniform policies and procedures for reviewing applications and renting your property cannot be overstated. Document every interaction with renters and applicants — customer relationship management (CRM) software is helpful for this — so if you are on the receiving end of a fair housing complaint, you will have a paper trail to support your case and can demonstrate that your actions were consistent with your policy. Also, if you are presented with a complaint, do not retaliate, and do contact a legal professional. Keep all rental applications and credit reports for proof that applicants were screened using non-discriminatory criteria. Check with your state to see how long these documents need to be kept.
The bottom line: Allow everyone a fair and unbiased opportunity to apply for your unit. Focus on the property and the amenities. Don’t make any assumptions about renters, applicants or the neighborhood, and evaluate everyone using the same criteria.