Real estate investment is a great way to earn extra income. However, it may entail more work than you realize. For example, landlords must stay on top of all federal, state, and local regulations. The most significant of these is the federal Fair Housing Act.
How Property Managers Help With Compliance
Property managers can handle virtually all aspects of the rental process. Their services often include advertising, applicant screening, preparing leases, and property maintenance. Many of these tasks must meet HUD specifications for the Fair Housing Act.
When you look for a property management company, ask about its history with the Fair Housing Act and how they ensure compliance. This is a major component of their role, and they should be able to provide solid answers to your questions.
They Remove The Personal Factor
As a landlord, you must comply with all facets of the Fair Housing Act, regardless of your personal feelings about a particular applicant. Working with a property manager removed the personal connection between you and your house, so that aspect is completely removed from the equation.
They Know the Laws
The Act is fairly complex, making learning it in its entirety a time-consuming task. This is one of the reasons many landlords hire a property management company. Competent managers stay up-to-date on all applicable housing laws, including the Fair Housing Act. They also handle all advertising, applications, and screenings, so you don't have to worry about violating those laws.
They Arrange Maintenance
Managers also make sure all property maintenance is performed on schedule. This removes any questions about whether you are keeping the property in a safe, appropriate condition for all tenants.
The Fair Housing Act Explained
The Fair Housing Act was established in 1969 to create equitable housing opportunities for everyone. It confers protection from discriminatory practices that were common in the industry, including among landlords, real estate agents, insurance companies, and mortgage lenders.
What Fair Housing Laws Aim To Accomplish
The housing market has a long history of discrimination based on many factors. For example, people who are otherwise qualified to rent a property have been turned away due to their skin color, sexual orientation, or national origin. The federal government developed the Fair Housing Act to stop these practices.
Their main goal is to stop discriminatory rental, sale, and lending practices in the housing market. As a result, they aim to create a fair housing market for all buyers and renters. It also criminalizes harassment based on any of the qualifying factors.
What Is Not Allowed
The Act works by making it illegal to discriminate against individuals seeking housing. A long list of actions is not allowed under the Fair Housing Act. For example, you can not take any of the following actions because of an applicant or tenant's national origin, family status, disability, sex, gender identity, sexual orientation, religion, race, or skin color:
- Discourage them from renting a unit
- Limit access to portions of a rental unit
- Evict them or a guest
- Use special rental conditions or application processes
- Change the price of your rental
- Refuse to negotiate over a rental
- Refuse to rent a house
This list is not comprehensive, but it does give you a good idea of the complexity of the regulations. It's a good idea to talk to an experienced property manager if you have concerns about adhering to these requirements.
Who Fair Housing Laws Apply To
The federal Fair Housing Laws apply to most residential rental housing units. This includes apartments, single-family homes, and multi-family homes. There are limited exceptions for small, owner-occupied multi-family homes, such as brownstones. There are additional rules that apply to federally-subsidized housing.
Penalties for Violating the Fair Housing Act
Violations are considered civil offenses. Penalties are based on your number of offenses. A first offense carries a $23,000 civil penalty. That amount can climb to $115,000 if you have two or more offenses within the past seven years. You may also have to compensate tenants for damages resulting from the discrimination.
Fair housing laws serve to stop discrimination in the housing market. They are established at the federal level, but your state or local municipality may have additional regulations in place. You must know these laws to avoid legal claims of discrimination when renting out residential property. Hiring a management company can help because it will stay updated about current laws and any changes affecting the properties under its care.
