Let’s say that you have a biker gang who wants to rent several units in your apartment complex.
Are you allowed to say no?
What if you like Biker Gangs and want more of them? Can you exclude others?
We recently had a property owner who encountered this situation. In their case, they wanted to say no.
However, a situation like this is to be evaluated carefully because if any members are part of a protected class, it could be asking for trouble.
You must have a good reason for saying no, especially if any members are part of a protected class.
Recent updates and enforcement trends make one thing clear: fair housing risk is not theoretical and will be enforced. Before you are investigated- make sure you are compliant to avoid the risk.
1. The Foundation: What Fair Housing Actually Requires
A common misconception is that fair housing means treating everyone the same. However, Fair housing is not about identical treatment—it is about equal opportunity. In some situations, it actually requires treating people differently (for example, when providing reasonable accommodations for disabilities)
Under federal law, protected classes include:
- Race
- Color
- National origin
- Religion
- Sex
- Familial status
- Disability
HUD also treats sexual orientation and gender identity discrimination as sex discrimination.
Pennsylvania law adds protections such as age (40+).
Many municipalities add additional protected classes—including marital status, veteran status, domestic violence victim status, and importantly for investors, source of income.
2. Source of Income: Not Federally Protected – But Watch Local Law
At the federal level, source of income is not currently a protected class under the Fair Housing Act.
That means federal law does not require landlords to accept Housing Choice Vouchers (Section 8) or other rental assistance programs purely as a matter of protected status.
However, some municipalities in Pennsylvania do treat source of income as a protected class. In those jurisdictions, refusing to rent to a qualified applicant because they use a voucher or rental assistance can trigger liability.
- Currently, Philadelphia City is the largest area where source of income is a protected class. Other municipalities have been working on similar rules, notably Pittsburgh region.
- However, the PA State Supreme Court has found that local ordinances on Source of Income impose requirements and duties on businesses not allowed under PAs Home-Rule laws. This ruling preempts any local source of income protections, leaving the investor in an uncertain spot in this location.
This is where investors get into trouble.
- A blanket “No Section 8” policy may be lawful in one township and illegal two miles away. Your screening criteria must align with the jurisdiction where the property is located.
Takeaway:
- Verify local municipal ordinances before implementing or advertising voucher policies.
- Avoid inconsistent application of income verification standards.
- If you inquire about income documentation, require the same categories of documentation from all applicants
3. Disparate Impact: The Quiet Risk
Sometimes the impact of well-meaning intentions affects people in a disproportionate share. For instance, studies have show that African- American and Latino men are incarcerated at a higher rate. Having a heavy policy on criminal background checks can affect this group more than others.
There is a difference in how this plays out:
- Disparate Treatment – intentional discrimination (“I won’t rent to you because…”)
- Disparate Impact – a neutral policy that disproportionately affects a protected class
Examples:
- A criminal background policy that disproportionately excludes one racial group.
- An occupancy policy that indirectly excludes families with children.
- A credit requirement that screens out voucher holders at higher rates.
Even if a policy is facially neutral, it may be challenged if it creates a discriminatory effect and is not necessary to serve a substantial, legitimate, nondiscriminatory business interest.
Now here is the political reality.
The Trump administration has historically been less aggressive in pursuing disparate impact enforcement. That does not mean it disappears. Courts still recognize the doctrine. State agencies and private fair housing organizations continue to bring claims. And policies implemented during one administration are often revisited under the next.
Investors should not rely on political cycles as a risk management strategy.
Best practice:
- Ensure policies are narrowly tailored.
- Document the business justification behind screening standards.
- Conduct periodic internal reviews of approval and denial patterns.
If you can’t articulate the legitimate business purpose of a policy, revise it.
4. Sexual Harassment and Liability
Sexual harassment continues to generate some of the largest landlord verdicts and settlements.
- HUD receives over 30,000 complaints annually; with thousands more filed through state and local agencies. Landlords routinely face six-figure settlements. The largest losses in 2024 included awards exceeding $600,000, with sexual harassment and disability discrimination among the top categories.
Landlords are:
- Automatically liable for employee conduct (vicarious liability).
- Potentially liable for tenant-on-tenant harassment if they knew and failed to act
A complaint process alone is not enough. Prevention, training, and swift response are critical.
For multifamily owners, this means:
- Written anti-harassment policy.
- Clear reporting structure.
- Mandatory staff training.
- Documented investigation process.
5. Disabilities, Accommodations, and Assistance Animals
Disability claims remain the largest category of fair housing complaints nationwide.
A disability includes any physical or mental impairment that substantially limits major life activities.
Key points:
- Reasonable accommodations (policy changes) are landlord-paid.
- Reasonable modifications (physical changes) are typically tenant-paid unless public housing.
- Assistance animals are not pets. They are defined as an animal that is trained to provide assistance for a task of daily living for someone with a disability.
- You cannot charge pet rent or deposits for assistance animals.
- You are allowed to ask for documentation of disability, and not just have a blanket acceptance for ‘Emotional Support Animals’.
- If you understand the difference between ‘Assistance Animals’ and ‘Emotional Support Animals’ it is ok to say no. In order for it to be a ‘Assistance Animal’, the person must: 1) have a medical practitioner diagnosis that they have a disability and 2) the Animal must be trained to provide a assistance for a daily task.
The interactive process for accomadations is critical.
Never deny a request without exploring alternatives. For instance, if a disabled tenant says they want to come into the rental office to pay every month, and the rental office is not accessible for them, what does the Landlord need to do?
A simple solution like installing a doorbell outside the steps, so that the receptionist can walk out and meet the disabled tenant, works to meet their need with minimal cost.
- Thing solution focused, not the worse case scenario.
6. Advertising and “Perception Is Reality”
The Fair Housing Act prohibits advertisements indicating a preference or limitation.
For instance, if you advertise your pool, ‘Perfect for family days’, are you excluding singles?
Avoid:
- “Perfect for singles”
- “Ideal for young professionals”
- “Safe for kids”
- Any language implying preference
Include equal housing opportunity language in marketing materials.
Putting it together: The Investor’s Risk Management Framework
From an investment standpoint, fair housing compliance is asset protection. Make sure you or your property management company has careful policies to ensure compliance.
To reduce exposure:
- Know the protected classes in your Municipality, State and Federal levels.
- Audit written policies annually.
- Train all employees immediately upon hire.
- Document every accommodation request and screening decision.
- Apply standards uniformly.
- Avoid retaliatory actions after complaints.
Remember: complaints can arise from actions, inaction, statements, or even perceptions
Final Thought
Multifamily real estate is a people business governed by federal, state, and local law. Enforcement intensity may shift with political administrations, but private litigation and state agencies remain active regardless of federal posture.
The investors who treat fair housing as a compliance system to be integrated into their properties are the ones who protect long-term value.
Many clients we work with are focused on quality investments and long-term viability, which we advise as the best path to build long term wealth. CONTACT US to schedule a consultation call, and get started enhancing your portfolio today; and stay ahead of challenges. Mention you read this article for a free lunch on us.
Sources
– https://www.cohenseglias.com/attorney/steven-williams/ -Instructor
-GHAR Fair Housing Classes
