I try to write a blog that is timeless rather than timely. But sometimes, that is impossible, especially regarding new rules and regulations. It seems like every year, new laws that are mostly more restrictive to landlords come up.
Navigating Constant Change in Property Management
Regardless of how well you learn, you will NEVER know everything you need to know about managing properties correctly. The reason is simple: Things change. What was acceptable yesterday could suddenly become illegal today.
Criminal History and Housing Laws: A New Landscape
Let’s look at one example. In the past, it was easier, if not easy, to deny applicants based on an applicant’s criminal history. That just changed, at least in Cook County, IL. According to the Chicago Tribune article (https://digitaledition.chicagotribune.com/infinity/article_share.aspx?guid=cd9ba147-cead-41dc-8a45-984beb170789) titled “Rules to address bias in housing,” it is “illegal to refuse to show (a) property or rent housing to people with certain criminal records.” This amendment will be in addition to what HUD said (https://www.hud.gov/sites/documents/HUD_OGCGUIDAPPFHASTANDCR.PDF) in 2016, which says (amongst other things) you cannot blindly deny applicants because of their criminal history.
HUD Guidelines: Vague Rules and Real Consequences
While we are talking about HUD, another reason we will never learn everything is because some of the rules are intentionally left vague for the landlords and property managers to determine the best course of action.
Occupancy Limits: More Than Just Numbers
Oftentimes, landlords and property managers use 2 people per bedroom or 2 people per bedroom plus 1 person as the “standard” way to determine the occupancy limit. However, according to the HUD document published in 1998 with a very confusing title, “Occupancy Standards Statement of Policy; Notice” (https://www.hud.gov/sites/documents/DOC_35681.PDF), you have to consider not only the size of the room but also the age of the occupant. We were always taught not to discriminate against people based on their familiar status, but this may be an exception.
Consider the 2 scenarios in the document mentioned above. One unit has a large bedroom; the applicants are 2 adults and an infant. You may approve their applications. But if you have a small bedroom and the applicants are 2 adults and a teenager, you may reject the applicant. Of course, now the question is, what happens when the infant becomes a teenager? How do we define a “small or large bedroom”? What if the child was 6 years old? I digress.
Source of Income Protections: What Landlords Need to Know
In 2023, the source of income became a protected class. In other words, you can’t deny someone because you don’t like where the applicants earn money. You can still deny if the income cannot be verified or comes from an illegal source. For example, it became illegal to deny applicants just because the applicant has a voucher, commonly known as Section 8. What surprises me is that even in 2024, many landlords deny them. How do I know? Because the applicants tell me so. Whenever I get a call from an applicant asking me if I accept vouchers, I say yes. After that, I let the applicant know that they don’t have to ask because we must take vouchers, and the applicant almost always tells me that they are still getting denied, so they feel like they need to ask first.
The Impact of 2024 Housing Laws on Rental Payments
In 2024, forcing tenants to pay rent online became illegal. While most of my residents still pay online, I have to have an alternative payment method available.
Immigration Status as a Protected Class
Another law added in 2024 is that immigration status essentially became a protected class. This creates a tricky situation as immigrants often don’t have the same documents as US citizens. They may not have a social security number, which makes it impossible to run the credit. (Not that it would matter because immigrants who just came to the US probably don’t have any credit.) So, what should we do in that case? That’s for another blog post.
As with many laws, the challenge for those who manage properties is that rules are oftenunclear. You must read the law and consult an appropriate professional to make the right decision.But don’t be surprised if even an experienced (and costly) real estate attorney gives you an ambiguous answer. If the law is vague, such as making a “reasonable effort,” “normal wear & tear,” or “criminal background (without offering when, what, etc.),” then it will be vague to everyone, even to an attorney.
Indirect Discrimination: Unintentional but Risky
Another thing we need to consider is that even if you are not discriminating directly, you may get in trouble if you are indirectly (and possibly unknowingly) discriminating. Very few, if any, will say, “We don’t accept women.” But what if you say, “We don’t accept people with long hair,” is that legal because people with “long hair” are not a protected class? In my opinion, this is an example of indirectly discriminating against someone. You may say, “Well, I never say that, so I don’t have to worry about it.” Not so fast.
In the Chicago Tribune article (https://www.chicagotribune.com/2023/07/27/cook-county-landlords-face-legal-challenges-alleging-eviction-screening-policies-discriminate-against-black-tenants/) published on 7/23/2023 and updated on 3/12/2024, Hunter Properties Inc. is getting sued by Legal Aid Chicago because the application portal says “prior evictions filings will result in denial” of housing applications. It’s common for landlords to reject applicants with eviction records. Why is Hunters Properties Inc. getting sued? It’s becauseLegal Aid Chicago thinks that since eviction affects African American women disproportionately, it violates the federal 1968 Fair Housing Act. If I have to guess, Hunter Properties Inc. was not thinking about discriminating against African American women. This is the indirect case of potentially discriminating against someone in the protected class.
Why Staying Informed is Crucial for Property Managers
So, what should you do? This is not legal advice, but I would play on the safer side. One time, I had an applicant with an arrest record of a domestic battery. This person was going through a divorce. In my head, I pictured this person committing violence against their spouse. Do I want to rent to a violent person? No. Did I deny the applicant based on this fact? No. I was ready to move forward with the applicant because being arrested is different than being convicted. Also, the HUD document mentioned above says, “A housing provider must, however, be able to prove through reliable evidence that its policy or practice of making housing decisions based on criminal history actually assists in protecting resident safety and/or property.” Can I prove that denying the applicant will protect the resident's safety and/or property? My answer is no.
News like this will not get delivered just because you manage properties. You must pay attention, or it’ll pass right by you, and you may violate laws without knowing it. This is why it’s essential to follow the industry, talk to the right people, and continually educate yourself. 2025 is right around the corner, and there will be more new laws.
