Fair Housing Laws: Commercial Property Exemption Explained

The Fair Housing Act (FHA) is a federal law that protects tenants and homebuyers from discrimination when renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities. While the FHA covers most housing types, it does not apply to all. So, do fair housing laws apply to commercial properties?

The Fair Housing Act and its exemptions

The Fair Housing Act (FHA) is a federal law that protects tenants and homebuyers from housing discrimination. It applies across the United States, including all 50 states, Washington, D.C., and all U.S. territories and possessions. The FHA covers most housing situations, and landlords must pay close attention to its provisions as it likely applies to their rental properties.

While the FHA applies to most types of housing, there are some exemptions. These include:

• Owner-occupied buildings with four or fewer units: The FHA generally does not apply when a building has two to four units, and the owner lives in one of them. However, it is important to note that these dwellings may still be subject to state or local fair housing laws, such as the Pennsylvania Human Relations Act, which applies to owner-occupied buildings with two units.
• Single-family homes rented or sold without a broker: The FHA does not apply when a single-family house is sold or rented without a broker, as long as the owner does not own more than three such houses.
• Religious organizations: Religious organizations can legally limit occupancy or give preferences to people of their religion when leasing apartments, as long as they are not operating for a commercial purpose. However, they cannot discriminate based on race, color, or national origin.
• Private clubs: If leasing apartments on behalf of a private club and not for a commercial purpose, the FHA allows limiting occupancy to club members.
• Senior housing: While the FHA includes "familial status" as a protected class, senior housing communities that meet certain criteria may be exempt from this provision. These include properties that are specifically designed and occupied by elderly persons under a government program, properties that are 100% occupied by persons 62 or older, or properties where at least 80% of the occupied units house at least one person 55 or older, with policies demonstrating an intent to cater to this age group.

It is important to note that even if a property is exempt from the FHA, it must still comply with the law's prohibition on discriminatory statements, notices, or advertising. Additionally, there may be local or state fair housing laws that provide broader protection and apply to a greater number of properties.

Local fair housing laws

In terms of applicability, local fair housing laws can apply to situations where the FHA doesn't. For instance, while the FHA generally doesn't cover owner-occupied buildings with four or fewer units, local laws may offer protection in such cases. An example is Massachusetts' fair housing law, which applies to all but owner-occupied, two-family houses. This demonstrates how local laws can provide broader coverage and include property types that might otherwise be exempt under the FHA.

Additionally, local fair housing laws may prohibit additional forms of discrimination beyond what is covered by the FHA. This could include specific actions or policies that have an adverse impact on protected groups, even if unintentional. For example, local laws may address practices such as imposing restrictions on families with children or using tenant screening policies that disproportionately affect people of colour.

It's important to note that local fair housing laws can vary significantly across different cities, counties, and states. Therefore, landlords, property managers, and renters should familiarise themselves with the specific regulations in their jurisdiction. Consulting with legal professionals who are well-versed in local fair housing laws can help ensure compliance and promote equitable housing practices.

Discrimination based on protected characteristics

The Fair Housing Act (FHA) prohibits discrimination in housing based on specific protected characteristics. These characteristics are outlined by the FHA, which applies across all 50 states and Washington, D.C., as well as all U.S. territories and possessions. The FHA covers most housing situations, including landlords, real estate companies, municipalities, banks, and insurance companies. While there are some exemptions, such as owner-occupied buildings with four or fewer units, the FHA's reach is extensive.

The protected characteristics under the FHA include seven classes:

• Race: The FHA prohibits race discrimination in sales and rentals, addressing instances where providers give false information about availability or steer homeseekers to specific areas based on race.
• National Origin: The FHA prohibits discrimination based on an individual's country of birth or their ancestors' origin. This includes instances of lending discrimination against specific ethnic groups.
• Religion: The FHA prohibits discrimination against members of a particular religion and indirect actions, such as zoning ordinances limiting the use of private homes as places of worship. Religious organizations leasing non-commercial properties may legally limit occupancy to people of their religion.
• Sex: The FHA makes it unlawful to discriminate based on biological sex, gender identity, and sexual orientation. This includes sexual harassment by landlords, creating an untenable living environment.
• Disability: The FHA defines disability broadly, including physical and mental impairments that limit major life activities. It mandates reasonable accommodations and accessibility in newly constructed multifamily housing.
• Familial Status: The FHA, with some exceptions, prohibits discrimination against families with children under 18. It prevents special requirements or conditions on tenants with children and allows for senior housing exemptions.
• Colour: The FHA prohibits discrimination based on colour, addressing instances of housing discrimination related to skin colour.

It is important to note that even if a property is exempt from the FHA, discriminatory statements, notices, or advertising are prohibited. Additionally, local or state fair housing laws may apply and prohibit additional forms of discrimination.

Housing discrimination complaints

If you believe your rights have been violated, you can file a complaint with the Department of Housing and Urban Development (HUD) or your regional Fair Housing and Equal Opportunity (FHEO) office. You should provide as much information as possible, including your name and address, the details of the person or organisation your complaint is against, the address or identification of the housing, a description of the incident, and the date of the alleged violation.

There are several ways to file a housing discrimination complaint:

• Using an online form on the HUD or FHEO website.
• Calling a toll-free number: 1 (800) 669-9777 for HUD or contacting your regional FHEO office.
• Printing and completing a form, then dropping it off or mailing it to the specified address.
• Writing a letter with all the relevant details and mailing it to the Fair Housing Hub closest to you.

It is recommended to report housing discrimination as soon as possible, as there are time limits for filing allegations. Additionally, it is important to note that retaliation against anyone filing a complaint or participating in an investigation is illegal.

To prevent housing discrimination, it is crucial for landlords to understand the Fair Housing Act (FHA) and its exemptions. The FHA applies across the country and covers most housing situations, protecting tenants and homebuyers from discrimination. However, there are some exemptions, such as owner-occupied buildings with four or fewer units and single-family homes rented or sold without a broker.

Penalties for housing discrimination

Housing discrimination is illegal in nearly all housing types, including private housing, public housing, and housing that receives federal funding. The Fair Housing Act (FHA) protects tenants and homebuyers from discrimination when renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities. While the FHA applies to most housing, there are some exemptions, such as owner-occupied buildings with four or fewer units and single-family homes rented or sold without a broker.

Penalties for violating fair housing laws can vary depending on the jurisdiction and the specifics of each case. Here are some potential consequences for housing discrimination:

• Fines and Civil Penalties: Those found in violation of the FHA may face significant civil penalties. The U.S. Department of Housing and Urban Development (HUD) sets penalty amounts, which are adjusted for inflation. As of 2021, the maximum civil penalty for a first violation was $21,663. Repeat offenders face higher penalties, with a maximum fine of $54,157 for a second violation within five years and $108,315 for two or more violations within seven years. These civil penalties are in addition to any actual damages, attorney's fees, and costs that may be awarded to the victim of housing discrimination.
• Compensatory Damages: Landlords may be held responsible for compensatory damages to the plaintiff, covering out-of-pocket expenses, alternative housing costs, and legal fees associated with processing the claim.
• Non-Economic Damages: Courts may also award non-economic damages to compensate for the plaintiff's humiliation, mental anguish, or psychological injuries caused by the discrimination.
• Punitive Damages: In cases where there is clear evidence of willful or malicious intent, federal district courts may award punitive damages to punish the wrongdoer.
• Injunctions: Courts can issue injunctions to prevent immediate and irreparable harm if prompt action is necessary.
• Public Record: HUD maintains a public record of all charges filed through them, ensuring that past cases of housing discrimination remain visible.
• Legal Fees: In addition to any penalties and damages, those found guilty of housing discrimination may also be responsible for covering their own legal fees.
• Reputation Damage: Violating fair housing laws can damage the landlord's reputation and business prospects, as fair housing advocates emphasize the benefits of inclusivity in attracting quality tenants and growing one's business.

Frequently asked questions