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A case study on Source of Income as a Protected Class for all of Illinois

Writen by Betsy Urbance |

Published: February 24, 2023

Effective Jan. 1, 2023, the Illinois Human Rights Act was amended adding Source of Income (SOI) as an additional protected class. SOI is defined as any lawful source of income that a person would use to pay rent or mortgage payments, where the source may not be the sole reason for denying or limiting housing to applicants.

Here are some examples of lawful sources of income:

  • W-2 Wages
  • Veterans’ Benefits
  • Social Security Payments
  • Alimony
  • Child Support
  • Commissions
  • Housing Choice Vouchers (HCV or Section 8 subsidies) – all guidance thus far suggests that HCVs will be considered as income for rental applicants participating in this program

This non-exhaustive list of possible sources of income demonstrates that the HCV is not the only source of income being protected under the recent amendment. However, there seems to be some misunderstanding that the housing choice voucher is the only rental payment method covered by the amendment. While that is not the case, it is important to learn about how to participate in the Housing Choice Voucher process.

Prior to this amendment, housing providers in Illinois (excluding municipalities or locales where SOI is already protected under a local ordinance) could opt out of the HCV program so long as they were consistent in their processes. It was common to see “No Section 8” or similar statements in the Multiple Listing Service Remarks Sections. This will no longer be permitted. Unless there is a substantial financial hardship affecting a housing provider (proven by fact-based analysis) by participating in the program, the housing provider will need to consider HCV recipients like any other market applicants seeking rental properties.

To address this new requirement, and to demystify the process, Illinois REALTORS® recently held a panel discussion as part of its Winter Business Meetings where three program experts took the audience on the HCV rental journey from start to finish.

General Outline of the Process for Participation with the HCV Program:

(Note: There will be some variations depending on the Local Housing Authority)

  • Housing providers check with the local housing authority on the procedure to become qualified. Typically, this involves participation in an orientation program.

  • Tenant applicants go to the local housing authority to get qualified and to enroll in the housing choice voucher program. There is often a waiting list. When approved, the applicant will get an idea  of affordable properties available to them.

  • The housing provider uses a consistent application process for all rental applicants. If the rent will be paid using an HCV, the housing provider analyzes affordability in a consistent manner and the applicant is approved or denied.

  • When the approved applicant is an HCV recipient, the applicant completes a Request for Tenancy Approval (RFTA), which is submitted to the housing authority where a leasing specialist will assess applicant’s contributions together with the HCV subsidy amount to determine what rent will be affordable to the applicant.

  • The housing authority may inform the housing provider of the rental amount the applicant can afford and will discuss what the Housing Assistance Payment (HAP) amount will be and what portion the tenant will pay. There might be some negotiation here between the housing provider and the housing authority on agreed rental amount. It is also important to consider who will be responsible for utilities, and if the HAP and tenant portions will be sufficient to cover the rent and the utilities.

  • When the rent amount is agreed, an inspection will be scheduled. The inspector is to consider items identified in the Housing Quality Standards, or HQS, guidelines. Our resident housing provider stated that his properties are typically well kept and passing the inspection is not usually a problem. He also notes that he might carry small items, such as new smoke detectors, with him which can be fixed on site during the inspection.
  • When the inspection passes, the housing provider and the tenant sign the housing provider’s lease. They will also sign the Housing Assistance Payments Contract (HAP contract) so that the housing provider can get paid the HCV amount each month. There is also a section in the HAP contract containing provisions to which the housing provider and the tenant agree to abide. These provisions are common sense and might even dovetail with existing lease provisions.
  • If inspection fails, the housing provider corrects deficiencies and sets a date for re-inspection.
  • Once the inspection has passed and the lease is signed, and according to our housing provider, the utilities are transferred into the tenant’s name, the housing provider turns over keys and possession. All parties sign the lease and the HAP contracts.
  • The housing provider sets up their preferred way to be paid. Each month the HAP (housing authority payment) is deposited directly into their account. The tenant portion is collected any way the housing provider and the tenant agree.
  • During the term of the lease, if there are issues, some housing authorities will “mediate” between the housing provider and tenant using case workers. Other housing authorities stress that the housing provider seek enforcement of the lease following their usual process. It is worth noting the HCV tenants are highly incented to follow the terms of the lease, because if they don’t or they become evicted, they can be dropped from any federally subsidized program for a long time.

  • Initial leases will be for one year, but they can be amended thereafter for different time periods. Typically, the housing provider will receive 30 days’ notice when a tenant will be moving out. Some local housing authorities also do move-out inspections.

NOTE: As previously stated, the process for the local housing authorities may vary somewhat, but this outline attempts to give some general information regarding this worthwhile program.

Positive Takeaways

  • 1
    Housing providers get paid every month (even during COVID).
  • 2

    If a tenant’s financial situation changes negatively, sometimes the Housing Assistance Payment portion will be increased to cover additional rent amounts.

  • 3

    Once the process is familiar, it is very manageable, according to our local housing provider.

  • 4
    There are many success stories where tenants were assisted by the HCV program to further their education, and/or to otherwise positively change their circumstances, on their road to becoming self-sufficient…and buying their own homes.

About the writer: Elizabeth A. (Betsy) Urbance, General Counsel and Vice President of Legal Services has served the association’s members as General Counsel since 2018 and prior to that she was Legal Hotline Attorney since 1994. Urbance is a 1984 graduate of Western Illinois University and received her law degree from the University of Missouri School of Law in 1987. She is licensed in both Illinois and Missouri.

Your Illinois REALTORS® Legal Team