Finding a model tenant who pays rent on time, studiously cares for the rental unit, and is a good neighbor can be a challenging endeavor, driving landlords and property managers to be overzealous in the tenant screening process and stepping precariously close to crossing the lines of housing discrimination.
About the only thing worse than seeing a car parked on your lawn, a party on the porch, and your freshly-painted, well-kept apartment in shambles is being named in a housing discrimination lawsuit, the likes of which are proliferating here in the San Francisco Bay area and throughout California.
It should go without saying that under State and Federal Law, it is illegal for rental housing providers to discriminate against a person because of the person’s race, color, religion, sex, marital status, national origin, ancestry, familial status, disability, sexual orientation, or source of income. Indeed, the California Legislature has declared that the opportunity to seek, obtain and hold housing without unlawful discrimination is a civil right, a proclamation codified in Government Code Section 12921(b) and in the Unruh Civil Rights Act, Civil Code Section 51.
Tenant hoarders, emotionally challenged people who require a comfort animal, even ex-offenders, are reshaping housing policy in California, which defines disability more broadly than Federal law, but today, the focal point is a tenant’s source of income.
Most rental property owners know that you can set income requirements as income requirements do not conflict with Fair Housing laws. It is common practice for landlords to require that income is 2 or 3 times the amount of rent to instill more confidence in the tenant’s ability to pay rent and meet other obligations such as car payments, insurance, utilities, and the like, and these parameters are entirely acceptable. In a pool of candidates, it is also legal to rent to the highest qualified income earner.
Although rental housing providers are on solid legal footing to set income guidelines, it is landlords’ balking at the source of income which exposes them to potential liability. Expressing a preference for one occupation over another is another pitfall we’ve seen all too often.
It doesn’t matter who signs the check.
California Government Code §12921 prohibits housing discrimination based on source of income as does §12955(d). Section 12955(p) defines “source of income” as “lawful, verifiable income paid directly to a tenant or paid to a representative of a tenant.” Since “source of income” is a protected class, it is illegal to dictate or selectively choose where the tenant’s income comes from. The law makes no distinction between income sources, so long as it is “legal.” These legal sources of income may include disability insurance, Social Security benefits, alimony, child support, pensions, veteran benefits, and the like. Many people sow their entrepreneurial oats and are self-employed, creating the infusion of legal income which can be documented through bank statement records or tax records to verify income.
The takeaway is that if the applicant’ income is legal and verifiable, it must be accepted.
When it comes to these type of communications, less is more.
As we noted in an earlier article on an Airbnb host’s blatant racial slur, most forms of housing discrimination are less recognizable and surface in extended conversations that attempt to weed out undesirable candidates or prying too much over the phone.
For instance, you tell an applicant, “I’m really looking for someone with a Google paycheck,” or a self-employed prospect is told, “Congratulations on starting your business, but we prefer someone who has a more stable income.” Maybe you encounter someone receiving government benefits and you say, “Thanks for your interest, but there is too much paperwork involved, and I don’t want the hassle,” or “I’ve found that there are other problems with people on welfare, so I really want to avoid these problems.” If someone has alimony or child support, some landlords may be inclined to utter something like, “That sounds like a messy process with the courts, I’m sorry but I’d rather not risk it.” If you make statements like any of the above, you have a discrimination lawsuit brewing, folks.
A word about Section 8 housing
Section 8 Housing Choice Vouchers are not considered tenant income under California law, and thus, landlords are not required to accept a voucher, with exceptions. There are a handful of municipalities that have taken matters into their own hands by enacting local ordinances that require housing providers to accept Section 8 and other rental assistance.
One such city is Berkeley, which passed Ordinance №7,568-N.S., adding to the Berkeley Municipal Code Chapter 13.31. With a shortage of landlords enrolled in Berkeley’s Housing Voucher Programs and the city’s perceived discrimination to explain the lackluster participation, the city prohibits landlords from, among other things, discriminating against housing assistance payments. Read the full ordinance here (PDF)…
The overarching point is that if you say “no” to a tenant receiving Section 8 assistance, it may be tantamount to discrimination, and so it’s advisable to seek the guidance of an attorney before closing the door on Section 8 applicants.
Certainly, most affordable housing properties that are financed with federal funds and tax credits are required by law to accept Section 8 vouchers.
As always, Bornstein Law is happy to answer any questions and protect your rights as a rental property owner, a mission we continue after 23 years of practicing landlord-tenant law.