Avoiding Liability When Selecting Tenants
From the Blog of Randall Pentiuk

The federal government recently amplified its pledge to reduce discriminatory practices that limit opportunities for minority groups. The U.S. Department of Housing and Urban Development issued a new rule on March 5, 2012 that prohibits discrimination based on sexual orientation in HUD assisted programs.

In addition, the Consumer Financial Protection Bureau issued a bulletin reinforcing prior commitments to strict enforcement and compliance with equal credit opportunity laws. HUD’s proposed rule reiterates its promise to forbid housing business practices that have an unequal impact on protected classifications. Title VIII of the Civil Rights Act, as amended prohibits the sale, rental, or financing of dwellings and in other housing-related activities on the basis of race, color, religion, sex, disability, familial status, or national origin. HUD has long interpreted the Fair Housing Act to prohibit housing practices with a discriminatory effect, even where there has been no intent to discriminate.

Landlords, private lenders, and others should assess “credit” and “housing” application practices, approval criteria, and discretionary pricing policies for unequal impact based on race, color, religion, national origin, sex, marital status, age, sexual orientation, or handicap. Businesses should also appraise practices for prejudiced impact based on classifications that the state and local units of government guard. For example:

· The Elliott-Larsen Civil Rights Act prohibits discrimination based on religion, race, color, national origin, age, sex, height, weight, familial or marital status.

· The Ann Arbor and Detroit Municipal Codes prohibit discrimination based on sexual orientation, gender identity, HIV/AIDS status, or expression of a person’s friends, cohabitants, or associates.

· The Lansing Municipal Code prohibits discrimination based on student status, veteran status, political affiliation or belief, sexual orientation, gender identity or expression, or mental or physical limitation.

Practices designed to achieve a genuine business function, but that have a discriminatory outcome based on a protected classification, should be replaced if a different practice achieves the same purpose, but has less of a discriminatory impact.