Why Is It So Important for a Property Manager to Understand and Tell Clients About Fair Housing Regulations?
As Phoenix property management company, understanding Fair Housing laws is important. All licensed real estate professionals must understand these legal requirements and inform clients about them. This is especially important for the applicant screening process because the law demands strict policies and procedures for every applicant.
To make sure that our property management company is in compliance, we start by making a policy and procedure manual. In that manual, our first step is a credit check. This check is done to make sure that the applicant has qualified credit for the rental. We also see if the applicant has any pets because some owners do not allow them. The idea is to ask the same exact questions and request the same documents from everyone.
Next, we wait until we have documents that prove the applicant's income. Then we call their previous landlords for their references. Each step in the process has minimum criteria, and the applicant is given a pass or fail based on how well they meet these criteria. We follow all our policies and procedures in a strict order so that no step is skipped. By making sure that we follow step-by-step procedures, we ensure that our process is in compliance with the Fair Housing laws.
During the credit approval process, it is important that you never tell your client any information that violates Fair Housing laws. From my years of working with property owners, I know that there are two common questions that violate Fair Housing laws. Clients want to know if the applicant has children and if they are male or female. Our clients need to be educated that these questions can get them into trouble with the law.
While we have a duty to give our clients information, we are bound by laws that protect the individual's rights to rent a property. We cannot share the application or disclose credit scores. We are not even allowed to share the credit report with the applicant.
Another issue we commonly face is with pools. We have had cases where the property had a pool that was not fenced in. The owner did not want to install a pool fence, so he asked us to avoid advertising to families. Unfortunately, this kind of advertising can lead to a lawsuit. We need to make the home available to everyone and cannot pick applicants based on their family status. In pool properties, safety is a necessity. Even if you were to find a childless couple, they could still have visitors with children. Neighborhood children could also sneak into the pool. In either case, you would be liable. If your property has a pool, you must protect yourself by installing pool safety features.
In the past, we have had a few company reviews that said we acted like assembly line workers in the way we process, handle and respond to applicants. In reality, that is exactly our goal. To make sure we comply with Fair Housing laws, we have to make sure each policy and procedure is followed with every applicant. If we treated one applicant differently than another, the applicant could file a Fair Housing complaint against our company and the property manager.
As a part of our procedures, we ask the first qualified applicant to bring in their earnest money. The timeline starts as soon as the applicant submits all of their documents and takes a maximum of three days. After three days, we reach out to the first qualified applicant. They have exactly one day to bring in the earnest money. At noon on the second day, we reach out to the second qualified applicant for their earnest money. By carefully following the order of qualified applicants, we make sure that no one can blame our company or our property owners of favoritism.
It is difficult to stress how important it is to follow Fair Housing laws. Non-compliance with these laws can lead to a lawsuit that eats up the equity in your property. If a Fair Housing complaint is filed, HUD reaches out to you to determine if the complaint is valid. If this ever happens to you or your business, call your lawyer. Get out your checkbook because HUD will also investigate your files and records.
A civil penalty can be $6,000 to $100,000. You may also be charged for punitive and non-economic damages. The best way to protect your company financially and legally is by complying with Fair Housing laws. With this in mind, our property management company carefully follows strict procedures so that our owners and ourselves are protected.