One of the biggest risks for property owners and managers is a lawsuit claiming discrimination. The lawsuit can come from an existing or past tenant or someone turned down for a rental. Even if the claim is without merit, the property owner will be in the position to prove otherwise or pay costly compensation. It’s important for property owners to not only understand the laws regarding tenant discrimination, but also in the event of a lawsuit be aware that General Liability insurance would not respond. What’s needed is Tenant Discrimination insurance as part of a property owner’s comprehensive insurance portfolio. Coverage provides defense expense and loss reimbursement insurance for administrative charges and lawsuits brought by current, prospective, or former tenants alleging discrimination.
Understanding the Law
The federal Fair Housing Act of 1968 and the federal Fair Housing Act Amendments Act of 1988 prohibit discrimination on the basis of the following criteria: race or color; religion; national origin; familial status or age—includes families with children under the age of 18 and pregnant women; disability or handicap, or sex. The federal Fair Housing Acts apply to all aspects of the landlord-tenant relationship. A landlord may not:
- Advertise or make any statement that indicates a limitation or preference based on race, religion, or any other protected category
- Falsely deny that a rental unit is available
- Set more restrictive standards for selecting tenants or refuse to rent to members of certain groups
- Before or during the tenancy, set different terms, conditions, or privileges for rental of a dwelling unit, such as requiring larger deposits of some tenants or adopting an inconsistent policy of responding to late rent payments
- Terminate a tenancy for a discriminatory reason
There are steps property owners should take to minimize their exposure to allegations of tenant discrimination. We suggest providing insureds with these general guidelines:
- Establish neutral policies that apply to all potential tenants. Everyone must have the same opportunity to lease the property. For example, background checks and credit checks must be done for all applicants, not just a few. One of the best ways to avoid discrimination is by having a uniform screening process for every single applicant.
- Give the same information to everyone, and be careful about narrowing options for people. Provide prospects with a list of all available choices. For instance, don’t eliminate a particular unit because someone is disabled or has a family. Making those kinds of judgment calls can be seen as discriminatory.
- Be neutral when advertising: Advertisements can discuss the amenities, size, the number of units and other factors, but they should not describe the “type” of person who can rent.
- Train staff to follow the same policies in their everyday practices.
- Make the property accessible: The Americans with Disabilities Act (ADA) requires that all buildings open to the public be accessible for people with disabilities. This means requiring the building to provide ramps, signs in braille and other “reasonable modifications.” If there is a qualified tenant with a disability, arrangements need to be made for that person.
RPS offers Tenant Discrimination insurance for property owners of apartment buildings and other residential rental properties and commercial and retail space. Our policy includes an expanded definition of the insured as well an expanded definition for wrongful discrimination. It also provides coverage for allegations of wrongful eviction and personal injury resulting from false arrest or claims of cyber bullying. Prior act coverage is included as well as a feature for property additions and deletions. For more information, please give us call.