April 2018 marks a milestone in the real estate industry as REALTORS® observe the 50th Anniversary of the Fair Housing Act, which was signed into law on April 11, 1968.  In honor of this notable anniversary, the Legal Update focuses on three fair housing issues.

Q. In a residential lease transaction, is it appropriate for a landlord to refuse to rent to tenants who are recipients of the federal Section 8 or housing choice voucher (HCV) program? 

A. Generally speaking, landlord participation in the federal HCV program is still voluntary UNLESS there is a local ordinance which includes source of income as a protected class and the source of income class includes the HCV program. It is extremely important for licensees to be aware of local ordinances which can be stricter than federal or state fair housing laws. For example, both the city of Chicago and Cook County have local ordinances protecting source of income as a class, and both interpret their source of income class to include receipt of HCV subsidies. As a result, if the property is located within these areas, a landlord or property manager may not deny an applicant based on participation in the HCV subsidy program. The applicant could be denied for other permissible reasons, such as a bad credit history, bad tenant history, poor employment history, and in some cases, a history of criminal convictions.* 

Brokers and landlords should take great care to determine whether source of income is a protected class in the areas where the subject property is located. There are a few other locations within the state of Illinois that include source of income in their local fair housing ordinances. So, it is important for the broker and/or the landlord to seek legal advice if they get this question.

* Stay apprised on the question of using criminal records for checking residential tenant applications. For more information on this important subject read this article by the National Association of REALTORS’® [http://bit.ly/FairHousingAct_CriminalHistory]. Also, be aware that there are local governmental entities seeking to limit the use of an applicant’s criminal history in rental applications.

Q.  A landlord received an application from a well-qualified individual who wants to rent the landlord’s unit. The tenant applicant is deaf and has a service dog to help him with his daily activities. The dog alerts him to the doorbell, the phone and alarms among other assistance activities. The landlord’s building has a “no pets” policy so the landlord wants to know if he can decline the lease to this applicant based on the policy. If not, how should the landlord proceed? Are answers the same for other situations that might be similar but involve different types of tenant challenges and/or different animals?

A. The short answer regarding the ability of the landlord to deny the well-qualified applicant is no, the landlord could not deny based on his “no pets” policy and would need to provide this “reasonable accommodation” for the tenant. On these facts, it appears that the dog is a legitimate service animal that helps his person carry out basic life functions. The landlord could ask for some basic proof from the prospective tenant that he needs the service animal, if the need is not obvious. This might be accomplished by a note from the tenant’s physician explaining the tenant’s need for the assistance animal. The landlord is not entitled to detailed medical records supporting the tenant’s request. In addition, if the situation is obvious as to why a person needs an assistance animal, the landlord may not ask for further proof. An example is where a visually impaired person requires a guide dog.

Once it has been established that the tenant needs the service animal to assist him in his daily life, either because it is obvious or because the tenant has provided some basic assurance to the landlord (or the landlord’s agent), the landlord should know that he can’t legally charge a higher security deposit based on the presence of the service animal. At this point the animal is not a “pet.” This is considered a form of impermissible discrimination. When the tenant moves out, the tenant might be responsible for the actual costs of any needed repairs beyond regular wear and tear in the unit.

The service or assistance animal does not have to come with any specific training. In the example presented, the service dog is likely trained for specific duties to assist his non-hearing person. However, if a tenant has an “emotional support” animal and some basic level of proof defining the assisted person’s need, similar analysis should apply and the assistance animal must be accepted for an otherwise qualified tenant who seeks housing.

An exception to this general rule is where the specific assistance animal poses a danger to others. However, an animal could not be automatically denied based on its breed. These questions are addressed on a case-by-case basis. The real question is whether that particular animal poses any danger to others.

A good source of information on this and related questions is a document entitled FHEO-2013-01, issued April 25, 2013, produced by the U.S. Department of Housing and Urban Development. http://bit.ly/FairHousing_ServiceAnimals.

Q.  Jane Doe is a residential property manager for Mr. Owner. Is it still permissible for Jane to use credit history as a factor in evaluating applicants for Mr. Owner’s residential units?

A. Yes. Credit history is neutral on its face. Jane and Mr. Owner should be able to continue using this information when considering rental applications for housing. Information like credit, tenant and employment histories (although be cognizant of source of income as a protected class in some locales) have long been held to be lawful factors in assessing residential rental applications. Sometimes an applicant might not have a “traditional” credit history, so alternate methods might need to be employed to evaluate a tenant’s ability to pay the rent. An example is actually contacting the utility company and other service providers to check for timely payments. A landlord should be willing to consider other information if an applicant does not have a “credit score” of history.

There would need to be more factors present before a court could be asked to declare that Jane’s use of the “protected class neutral” credit check produced a discriminatory effect or impact on particular applicants seeking to rent Mr. Owner’s property.

Generally, facially neutral processes will be allowable for rental questions such as the example given.  However, it is important for real estate professionals and owners to be aware that in 2015 the U.S. Supreme Court held that a cause of action could proceed on the basis of a discriminatory effect or an after-the-fact disparate impact on protected classes, even where the policy, regulation or statute was neutral on its face. The question could go forward to determine whether the policy, rule, regulation or statute is being implemented to realize a legitimate goal in a manner that does not disproportionately affect protected classes. Analysis on these disparate impact cases will be very fact specific. Legal advice on how to legally proceed should be sought on these important questions.

50 Years Of Fair Housing

In 1968, President Lyndon B. Johnson signed the Fair Housing Act into law. Fifty years later, Illinois REALTORS® commemorates the progress that has been made to provide equal housing opportunity for all and looks at the challenges that remain.