Window to the Law: Housing Vouchers and Fair Housing

Window to the Law: Housing Vouchers and Fair Housing

Sep 13, 2021
4:37
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Recent lawsuits alleging source of income discrimination for rejecting Section 8 tenants illustrate the importance of understanding and complying with state and local fair housing laws in addition to the federal Fair Housing Act. These best practices can help guide real estate professionals in this area.

Window to the Law: Housing Vouchers and Fair Housing - Transcript

Hi, I’m Chloe Hecht, Senior Counsel at the National Association of REALTORS®. The Housing Choice Voucher Program, also known as Section 8, is a federal program that helps low-income families, people with disabilities, and the elderly afford private housing. There is no requirement under federal law that housing providers accept vouchers; however, many states and localities have added “source of income” as a prohibited basis for discrimination under their fair housing laws. This means that, in many parts of the country, refusing prospective tenants who use vouchers, or who pay rent with Social Security Disability benefits, spousal support, veterans benefits, or other lawful sources of income, may expose housing providers, including real estate professionals, to fair housing liability, as illustrated by two recent lawsuits in New York.

The federal Fair Housing Act prohibits discrimination in the sale or rental of housing based on seven prohibited bases: race, color, national origin, religion, sex, familial status and disability. Many state and local governments have adopted their own fair housing laws often with additional protected categories. For example, the Illinois fair housing laws include additional protected categories of pregnancy, ancestry, sexual harassment, age, marital status, military status, unfavorable military discharge, order of protection status, and retaliation. The City of Chicago includes the additional categories of lawful source of income and parental status.

The Housing Choice Voucher Program provides qualifying individuals with funds covering the gap between the individual’s income and their housing costs. For those states or municipalities where source of income is an additional protected category, refusing an applicant because they are using a housing choice voucher may constitute source of income discrimination. This type of discrimination could include telling applicants that Section 8 funds are not accepted, asking whether the applicant is receiving any government assistance and then denying the application, and advertising units with phrases like “no programs” or “no section 8”. When source of income is a protected category, the housing provider may refuse a prospective tenant only if the tenant is disqualified under other screening criteria, not because the tenant is using a voucher.

Recent lawsuits in New York State, whose fair housing laws include source of income as a protected category, illustrate these risks. Housing Rights Initiative, a non-profit organization focused on housing issues, used testers to investigate discrimination against low income tenants. In one suit filed in March, Housing Rights Initiative alleged that 88 real estate companies, including brokerages, discriminated against low income tenants by refusing vouchers. The Housing Rights Initiative filed a second lawsuit against 36 housing providers after a similar investigation in Westchester County, New York. 

These lawsuits illustrate that it is critical for real estate professionals to understand and comply with federal, state and local fair housing laws. Here are some best practices to consider:

  • Review your state and local fair housing laws to determine if they include any additional prohibited categories, beyond the federal Fair Housing Act. Keep in mind that if your state includes source of income as a prohibited basis, you risk fair housing liability if you reject tenants because they use Housing Choice vouchers.
  • Apply screening criteria consistently to all prospective tenants. Applying more stringent screening criteria to those prospective tenants that fall within a prohibited category increases your risk of a fair housing violation allegation.
  • Finally, document your decision-making process when refusing tenants in case a prospective tenant alleges a fair housing violation in the future.  Check out NAR’s fair housing resources on nar.realtor/fairhousing.

Thanks for watching this episode of Window to the Law.

Window to the Law is a monthly video series that provides valuable risk management tips and information to help real estate professionals navigate legal issues facing the real estate industry.
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