2021 introduced new legislation regarding tenant screening practices. These recent changes to state anti-discrimination laws and federal fair housing laws affect the criteria that property owners and managers can use to determine rental eligibility.
Colorado has passed two anti-discrimination ordinances that impact the tenant selection process in their state and the Department of Housing and Urban Development (HUD) will expand its scope to investigate allegations of discrimination based on sexual orientation and gender identity.
Colorado Tenant Income Source Law
Colorado’s new regulation that went into effect in January of this year requires homeowners to accept any legal source of income, including vouchers for subsidized housing.
The new state law prohibits housing discrimination against individuals based on their source of income, so that all legal sources of income are acceptable when qualifying potential tenants. This includes subsidies, income from self-employment or homework and housing allowances provided by the employer.
Despite the fact that many tenants rely on subsidized housing, many landlords have shied away from accepting these vouchers due to what they see as the paperwork involved in participating in a voucher program. Once this barrier is removed, housing options increase for those who have received assistance.
Those looking for rental properties with non-traditional income also face difficulties, as income from self-employment and other sources of income can cause concerns about their fluctuation in amount and consistency.
While Colorado homeowners are not considered exempt, they must now accept any legal source of income as proof of income, accept subsidized payments, and complete the housing program.
Exceptions for owners with:
- 3 rental units or less
- no more than 5 rental units in total (which include single-family homes) are not required to accept Federal Housing Choice Coupons for those single-family homes.
As with all changes in legislation, consult your legal advisor and research state regulations for exact details of regulatory changes and exceptions.
Colorado tenant citizenship status
Colorado has also passed new citizenship legislation. Under the new Immigration Tenant Protection Act, Colorado owners are not no longer allowed to ask applicants for their citizenship status nor will they be able to deny them for that.
A landlord cannot ask questions regarding status or require citizenship as a criteria to be approved for housing.
The only exception is if the accommodation is linked to a job offer such as on-site maintenance or property managers. Employers offering housing under the employment program must follow state and federal hiring practices, which may include confirmation of citizenship to qualify for employment.
Remember | Non-discrimination laws also prohibit the listing of restrictions or preferences in any material or advertisement such as rental listings and advertising. This also applies to asking questions in person or about rental inquiries related to these federally protected state classes.
Updates on the Federal Fair Housing Act
President Biden signed an executive order last month to tackle discrimination based on sexual orientation and gender identity and gave agencies 100 days to set policy and begin enforcement of this order.
Although the Fair Housing Act has provisions against discrimination in housing based on race, color, religion, sex, disability and family status, it will expand the class to include sexual orientation and gender identity.
In a recent press release, Housing and Urban Development (HUD) announced that it will begin to implement the policy implemented by this new decree and outlined the next steps its agency will take to comply.
Read the full press release here | HUD to enforce Fair Housing Act to ban discrimination based on sexual orientation and gender identity
A warning about unintentional discrimination
It’s important not only to know your state and federal discrimination regulations, but also to make sure that you treat all potential tenants and current tenants in a consistent manner to avoid even the appearance of discrimination.
When policy and actions are inconsistent, they can be characterized as discriminatory; even if unintentional. The term disparate impact generally refers to unintentional discrimination, while disparate treatment is deliberate.
Although disparate treatment has been illegal since the Fair Housing Act of 1968, in 2015 the Supreme Court ruled in favor of recognizing disparate impact as a valid claim for a lawsuit for discrimination under the Fair Housing Act. These disparate impact claims aim to target artificial, arbitrary and unnecessary barriers to equal access to housing.
Like all fair housing laws, the decision is passed with the aim of providing a protected category of people with equal housing. In the case of rental housing, a landlord or property manager could be charged with a fair housing lawsuit for disparate impact reasons if their selection criteria or rental policies prevented a protected group from accessing. to housing.
Even where a rental policy does not have a clear discriminatory intent, if the policy negatively affects a protected group’s access to housing, that policy can violate the Fair Housing Act with disparate effects. For example, disparate impact arises when a practice produces different effects between racial groups, even though the practice was not racially motivated.
What do these legislative changes mean for homeowners?
To avoid a disparate impact or a lawsuit for housing discrimination, it is important to
- Stay up to date with local and federal laws.
- Define a non-discrimination policy in accordance with the regulations.
- Keep staff informed of changes in policy and legislation on equal housing opportunities.
- Create legal tenant screening practices and approval and denial criteria.
Legal screening criteria can be based on an applicant’s credit report and criminal history, rental history, income and employment verification, provided the landlord can prove that each applicant has been screened to the same standards and that the reason for rejection was due to the potential inability of an applicant to pay rent or considered dangerous to the property or neighborhood.
To protect against disparate impact claims, a landlord must have supporting documentation that all applicants are treated exactly the same and that a tenant has been accepted or rejected based on legal selection criteria.
By gathering all of this information, not only can landlords make an informed decision about potential tenants, but they can also show the court that they had valid reasons for choosing one tenant over another.
Federal and state fair housing laws change often, so it’s always a good idea to reassess your rental company policies and seek legal advice from someone familiar with the landlord-tenant laws in your state before doing so. define new ones to proactively resolve these potential issues before it’s too late.
So whether you advertise your property, filter new tenants, or by setting apartment and community rules, make sure you are in compliance with the law and that any actions or policies apply to everyone (with supporting documents), and cannot be interpreted as affecting some people but not others.