Ensure Adverse Actions Against Tenants Aren’t Discrimination
Owners of a Minneapolis apartment complex must pay $650K for discriminatory actions that displaced minority tenants.
When adverse actions like penalty fees, rent increases, stricter criminal restrictions, or evictions are found to be discriminatory, the price to property owners and managers can be high. While adverse actions can’t be avoided entirely, taking the following precautions can greatly reduce risk.
Stick with the market
Make sure that rental rates and increases are in line with comparable area properties. In a recent Illinois lawsuit claiming that a rent increase was discriminatory, a panel found no probable cause, noting the increase was due to market demand. Property owners have a right to seek fair market value for the property. If a rent increase is justified by market demands for similarly situated units, this can be a defense against discrimination claims.
Be cautious about upgrades
In addition to basing rental rates and increases on comparable area properties, you should be careful about making upgrades that will require a substantial increase in rent. When the owners of a Minneapolis apartment complex renovated to attract a more upscale clientele, displaced tenants successfully claimed the resulting rent increases and other policy changes constituted discrimination. The owners must pay $650K in fees and tenant damages, in addition to revising their Fair Housing training.
It’s one thing when rent increases with natural market shifts. But when you are the cause of a rent increase that could displace tenants, as in the case above, you risk being found guilty of discrimination. This is especially true when the rent increase is one of multiple actions that have a discriminatory effect on a protected class.
Apply adverse actions equally
The most important way you can avoid discrimination claims when it comes to adverse actions is to make sure that every tenant is treated equally. Rental rates and increases should be consistent among all comparable units. Penalties should be charged against every person who violates the applicable rule, or not at all. Evictions should be carried out in every case that dictates one, never selectively.
Read more about the latest cases affecting housing law in Vantage Pro, our monthly compliance reporting for Platinum Vision clients. Find out how you can get Vantage Pro.