Supreme Court Ruling: What’s the Story?
CAROLINE ELMENDORF, ESQ.
THE BOZZUTO GROUP
Can real estate managers still use income verification and credit
checks to vet potential tenants? Can
a criminal background check be used
to protect other tenants of an apartment complex? Will you get sued if
you use a common business practice
when acting in your role as a property manager? On June 25, 2015 the
U.S. Supreme Court ruled that the
disparate impact housing theory was
valid under the Fair Housing Act.
The Texas Department of Housing
and Community Affairs v. Inclusive
Communities Project, proved to be
a case that would have many consequences for real estate managers
across the nation.
What is disparate impact?
A housing provider can be liable under the Fair Housing Act if a neutral
policy or practice has a “disparate”
or “different” impact on a “protected
class”—even when there is no intent
Plaintiffs must show actual data to
prove racial or other disparity, and
that the challenged practice actually
caused the disparate impact since
disparity alone is insufficient. Housing providers can defend against
claims by showing the practice meets
a legitimate business purpose, and
there is no less discriminatory practice available.
Experts predict an uptick in litigation from government agencies and
advocacy groups. Murky waters lie
ahead as lower courts try to interpret
the Supreme Court ruling.
On the upside, the ruling creates
an opportunity for property managers to really scrub their practices and
procedures to make sure they still
make sense. It also opens the pool
of prospects that otherwise wouldn’t
qualify under old standards. Revising harsh-sounding rules and signs
may create a more inviting and pleasant environment for all prospective
residents and tenants.
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