MHCO Columns

Refusing Housing Vouchers Is Source of Income Discrimination

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Manufactured Housing Communities of Oregon

On the national level, while landlords won roughly two of every three cases in 2023, the most significant fair housing case of the year was a landlord loss. It involved what is rapidly becoming a major source of fair housing litigation, namely, source of income discrimination, which occurs when a landlord excludes an applicant or tenant who has the money to pay rent because of where that money comes from.

      Although source of income isn’t a protected class under the FHA, the contention is that excluding recipients of child support, Section 8 vouchers, unemployment benefits, veterans benefits, etc., has a disparate and discriminatory impact on the disabled and people of certain races, national origins, etc., who disproportionately rely on these sources of income. Source of income is also a protected class under the fair housing laws of over 80 cities and 20 states.

      Situation: A nonprofit housing group brought a massive lawsuit accusing real estate agents, brokerage firms, management companies, and landlords of violating New York City and State source of income discrimination laws. Based on the use of testers, the group claimed that the defendants refused to accept City vouchers that enable prospective tenants with income at or below 200 percent of the federal poverty level to rent apartments. The defendants denied the allegations and challenged the group’s “standing”—that is, legal status to bring the case.

      You Make the Call: Did the group have a valid claim for source of income discrimination?

      Answer: Yes

      Ruling: The New York court denied the defendants’ motion for summary judgment, concluding that there was ample evidence supporting the group's claims, including the alleged remarks of a leasing agent that the landlord was looking for an “excellent applicant” for a rent-stabilized apartment and wouldn’t accept City vouchers for the unit [Housing Rights Initiative, Inc. v. Elliman, Index No. 154472/2022, 2023 NY Slip Op 31496(U)(Sup. Ct. NY; 5/2/23)].

      Takeaway: You have every right to establish income criteria and screen prospects to ensure they meet them. If they’re not financially qualified, you may reject them. What you may not do is reject those who do meet your income criteria because of the kind of income they have. More specifically, you can’t exclude qualified prospects simply because they’re unemployed, hold housing vouchers, or receive other forms of financial assistance other than wages. Avoiding source of income discrimination means being prepared to accept not just wages but any and all forms of legal income.

      The Elliman case also exposed potential blind spots in fair housing compliance training. There was evidence that real estate brokers turned away callers who indicated that they would be using vouchers to pay rent because they were seeking units in luxury buildings. You can’t afford to live in this property and should seek an apartment in a building where vouchers are accepted, the brokers allegedly said. These remarks violated fair housing laws banning statements indicating a preference or exclusion of persons from housing based on a protected class. You need to ensure that your own leasing agents don’t say or believe such things. 


      States that Have Banned Source of Income Discrimination

      States that have adopted laws banning source of income discrimination in housing include:

      • California
      • Connecticut
      • Colorado
      • Delaware
      • District of Columbia
      • Hawaii
      • Maryland
      • Massachusetts
      • Minnesota
      • New Jersey
      • New York
      • North Dakota
      • Oklahoma
      • Oregon
      • Rhode Island
      • Texas (covers homeowners associations only)
      • Utah
      • Vermont
      • Virginia
      • Washington
      • Wisconsin (doesn’t cover housing vouchers)