On April 11, 1968, President Lyndon Johnson signed the Civil Rights Act of 1968, which was a follow-up to the Civil Rights Act of 1964. Title VIII of the Civil Rights Act of 1968, known as the Fair Housing Act of 1968, expanded on previous legislation and prohibited discrimination concerning the sale, rental, and financing of housing based on race, religion, national origin, and sex—and, as amended, disability and family status.
The enactment of the federal Fair Housing Act of 1968 came only after a long and challenging journey. From 1966–67, Congress regularly considered the fair housing bill but failed to garner a strong enough majority for its passage. However, President Lyndon Johnson urged for the bill’s speedy congressional approval after Rev. Dr. Martin Luther King, Jr., was assassinated on April 4, 1968. Since the 1966 open housing marches in Chicago, Dr. King’s name had been closely associated with fair housing legislation. President Johnson viewed the act as a fitting memorial to the man’s life work and wished to have the act passed before Dr. King’s funeral in Atlanta.
Fair Housing Act, Title VIII of the Civil Rights Act of 1968
One of the most recent changes to fair housing law, which has had a major impact on IREM members, came about not by legislation but through regulation. In 2013, the U.S. Department of Housing and Urban Development (HUD) published a final rule holding landlords liable for policies that have a disparate impact on members of a protected class.
A policy that has disparate treatment has been illegal since the passage of the FHA. A policy with disparate impact, however, does not have to be explicitly discriminatory to violate the law. For example, having a blanket rule against renting to any convicted felon wouldn’t be disparate treatment, as it would affect any felons equally regardless of their race. However, it would have a disparate impact on racial minorities. This is because of the broader issue in U.S. society, created by historical and institutional inequities that have resulted in racial minorities being disproportionately convicted of felonies.
In January 2015, the disparate impact rule was brought before the United States Supreme Court with the case Texas Department of Housing and Community Affairs v. Inclusive Communities Project. The Inclusive Communities Project claimed that the Texas Department of Housing and Community Affairs had discriminated against a racial minority group by issuing more tax credits for building low-income housing in predominantly African American neighborhoods than in white communities. In a 5-4 decision, the court upheld the use of disparate impact as a basis for discrimination under the FHA, stating that the language of the FHA focuses on the results of actions and not on their intent.
On April 4, 2016, HUD published new guidance that marked a significant change in the federal agency’s expectations for compliance with the FHA’s disparate impact rule. Although a guidance doesn’t have the legal authority of a court decision or a statute, it carries considerable weight with judges.
The HUD guidance states that landlords shouldn’t use arrest records to exclude applicants since an arrest that does not lead to a conviction does not prove that an individual engaged in illegal activity. According to HUD, if a landlord uses criminal records to screen, the policy must be narrowly tailored. The guidance states that a landlord must prove that this “tailored” policy is necessary to serve a “substantial, legitimate, nondiscriminatory interest.”
It’s also HUD policy that a landlord must consider the nature, severity, and age of a conviction. HUD recommends that landlords conduct an individualized assessment of each applicant. For example, when renting a unit next to a daycare center, someone convicted of embezzlement 15 years ago should be considered differently than an applicant convicted of sexual assault of a minor two months ago.
IREM policies on fair housing, disparate impact, and source of income
IREM believes in equal opportunity in housing and supports the right of all people to freely choose where they will live without the constraint of prejudice or discrimination. IREM opposes practices and policies that have a known discriminatory effect or are known to have a disparate impact on any demographic group defined by race, color, religion, national origin, sex, disability, familial status, sexual orientation, or gender identity.
IREM supports the ability of real estate professionals to continue such policies or practices if there is a legitimate business purpose for the policy, and that purpose cannot be accomplished in a readily identifiable and not unduly burdensome means with a less discriminatory impact. IREM further opposes actions that require unreasonable research into whether such policies or practices have a disparate impact or discriminatory effect.
Source of income discrimination
Some state and local governments have designated “source of income” as a protected class under their fair housing laws, compelling property managers to accept tenant-based subsidies. By accepting these subsidies, landlords must also accept lease amendments to comply with government requirements. We support government-assisted housing and affordable housing that’s available to all citizens. However, we believe that involvement in these programs should be voluntary.
Few would argue that there isn’t more work to be done in achieving a more equal housing market. IREM believes that a balance can be struck between expanding housing opportunities and maintaining a healthy, prosperous rental housing market. In fact, these two goals are so closely linked that one can’t be accomplished without the other.
Thanks to the Fair Housing Act, we’ve made incredible strides over the past half-century toward a housing environment with equal opportunity for all. IREM looks forward to continuing our work toward this goal by educating our members and working with HUD to ensure efficient and effective policies.