Top Five Things You Need To Know About Single-Family Rentals and Fair Housing

Does the Fair Housing Act apply to single-family rentals? Are there exemptions? Two very common questions, especially as the single-family rental industry is experiencing unprecedented growth.

Estimated reading time: 8 minutes

Top Five Things You Need To Know About Single-Family Rentals and Fair Housing

Table of contents

The single-family rental industry presents challenges regarding when and if the Fair Housing Act applies to their specific operation. In this article, we will discuss common questions and scenarios we find in the single-family rental industry and the need for targeted fair housing training.

What are we talking about when we use the term “single-family” housing?

Specifically, we are focusing on homes that are owned and rented out by either an individual personally or through the use of a property management company or a realtor on a long-term basis. There is a common misconception that a stand-alone or single-family home does not fall under the purview of the Fair Housing Act like multifamily or apartment homes. This is not the case and every person and company should be aware of their responsibilities and potential liabilities under fair housing laws.

If I own the home where I live and a couple of duplexes I keep for investment, surely the same fair housing laws don’t apply to me as to a huge apartment community?

All of the fair housing laws that apply to multifamily housing also apply to individuals who own or manage single-family homes. However, there are a few limited exceptions, some are as follows:

  • Owner owns three or fewer units
  • A small apartment building with four or less units, and the owner lives in one of the units

A point of caution is that these are federal exemptions, but other federal laws may come into play. For example, you cannot racially discriminate when you contract. Additionally, each individual state may also have additional laws concerning housing. If you are unsure what your local laws are, it is always a good best practice to consult an attorney to determine if you are exempt or if there are laws you are required to follow.

I own six single-family homes I’ve purchased during the past ten years as an investment. I’ve hired a real estate agent company to handle these by leasing them, collecting the rent, and keeping the houses and yards in good condition. In other words, I’m really not involved other than being the owner and collecting on my investment. Why should I know anything about fair housing? Isn’t that the responsibility of the real estate company I’ve hired to manage the properties?

The law states that if your real estate agent discriminates in the way they are managing your properties, you are liable as the owner. You cannot walk away from liability under the Fair Housing Act if you are the owner. This is why it’s so important to at least have a basic understanding of fair housing laws so that when you hire a property management or real estate company to manage your properties, you can determine if they are handling your affairs legally and properly.

I manage many condominiums in a lovely community on behalf of the individual owners who have decided to rent their units. Many of the owners feel a special attachment to the units because they may have purchased it to live in it and later have moved to a different home while deciding to keep the condo as a rental investment. They often have strong feelings that they do not want a renter to have an animal or modify a bathtub into a shower. It’s my job to keep the owners happy, not the renter, so if the owner objects to these requests, I feel I must deny the renter’s request.

In this case, you cannot follow the direction of the owner; you need to follow the direction of the law or be prepared to assume liability. The law takes precedence. For example, perhaps the animal in question is an assistance animal. You cannot stick to your “no pets” policy in this situation, as the law clearly protects the right of an individual to have an assistance animal.

I plan to move from my home, which is in a very nice neighborhood but maintain ownership of the home and rent it as an investment. I am not moving very far away and will remain friends with many of my current neighbors. I feel I have a responsibility to make sure the purchaser is qualified to live in such a beautiful community. Can I describe the qualifications of a renter in social media advertisements as: persons who are Christian, established in the community, and middle aged or older should apply?

In this scenario, you are possibly exempt from the Fair Housing Act. That being said, this type of advertising could be viewed as discriminatory, and no one is exempt from that. An ad like this would be discriminating against religion, national origin, and age based on the criteria listed.

If you are unsure of what buzzwords to avoid, we suggest you check out this article or seek the guidance of a lawyer specializing in housing. The main point is that everyone needs to avoid advertising that discourages anyone based on a protected category.

I manage a number of single-family homes in my duties as a real estate agent. Since the owners trust me to maintain their houses, I have adopted a policy of limiting the number of children in the homes, since we all know that children do a lot of damage to both the houses and the yards where they live. My rule is that including the parents, no more than two children can live in the houses. With larger families, there is just too much work to do when they move out. I believe my rule is reasonable since it’s my job to maintain these houses.

Generally, the rule is that you cannot limit the number of children that can live in the home. Familial status guidelines take precedence here. You can only limit the number of occupants based on the number of rooms that can be used as a sleeping area. Remember that this includes more than just standard bedrooms; it can also include rooms like libraries, dens, or finished basements with windows.

These are just a few of the many questions or scenarios that an individual or a company that manages the rental of single-family homes might face. Again this is why targeted training is critical. In line with that, we are excited to announce our new course, Fair Housing for Single Family Rentals. This course will help both owners and operators of single-family rentals understand their responsibilities under the law to help keep everyone fair housing compliant.

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[jonathan]: hello everyone and welcome to the fair

housing insiders i'm your host jonathan saar and today we have with us kathy williams

and we are going to be talking about single family housing happy to announce that

we now have a new course specifically for single family housing and more information will

be available in the show notes just a couple of housekeeping items please remember to

sign up for a news letter so that you can be up to date with

all the fair housing complimentary education that we provide and please also follow us if

you are on social media on instagram at fair housing institute if you're seeing this

for the first time on youtube we welcome you to subscribe to our channel and

give us the thumbs up for this program so really important topic a huge huge

sector within property management so we're glad that you're available kath really help us dive

into some different situations that are in a single family housing and getting your feedback

to help that that sector within property management so let's start it off cathy with

what are we talking about when we use that term single family housing

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[Kathi]: hello everyone it's great to be back to talk about

this topic and i think why it's important is that sometimes people that own or

manage single family houses think that they do not have the fair housing obligations that

multi family housing owners and managers have so for instance we're talking about someone who

owns a home and decides they want to rent it out and there are all

kinds of companies real state agents who will manage that the rental of that house

or the owner and that happens to be a fairly large and i think growing

industry in this country so the idea and why we wanted to do this training

video was to remind both the owners and the companies or individuals who manage those

single family homes what their responsibility and their potential liability is under the fair housing

laws and by the way one more clarification point we are talking in this video

about long term rentals not short term rentals and if i was going to make

a difference between those i would say the short term rentals are the air b

and bes and vr bos whereas long term rentals are maybe six months to

a year leases when we get into that that's what we are talking about in

in this training video

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[jonathan]: all right very good thank you for making that clarification perhaps in the future we

will have another video about those particular types of

management we know that's a another growing sector in our industry so focused on long

term single family housing so let's take a look at our first kind of scenario

cathy so if i own the home where i live and i have a couple

of duplexis as an example as investment properties do the fair housing laws apply the

same to me as it would for a multi family apartment community

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[Kathi]: and this is the most important message we need

to get out and the answer is yes all of the fair housing laws that

apply to an apartment complex a giant apartment complex apply to individuals who own or

manage single family homes unless in some small instances the owner never the manager but

the owner might be exempt and let me list when that occurs and it's in

really a very very limited number of situations so if the owner excuse me owns

three or fewer units so a duplex would be two units may be the home

they live in is the third unit so if that's all they own then the

owner is exempt if the owner owns a single family home where where the owner

lives and two duplexes that's five units the owner is not exempt and all the

requirements a fair housing apply to that owner and they're always going to apply to

the management agent that they might hire to operate those rentals on their behalf the

only other exemption i just want to quickly mention this this doesn't apply very often

is if it's a small apartment building andthere are four or fewer units and

the owner lives in one of those units in that instance the owner is exempt

when they rent the other three units in that small apartment building that's about it

for exemptions and one reason i i hate to talk about exemptions and if you'll

if you've seen my training before you'll see i never talk about exemptions because it's

easy to think you're exempt under the fair housing act but in the federal fair

housing act but maybe the state's fair housing act is much tighter it has

for instance fewer units that you can own before you lose your exemption so that's

one concern the other is there are other federal law is um like the law

that says you can't discriminate racially when you contract and that law might catch you

if you think you're exempt in our going about doing something that is discriminatory so

just be very careful and i would get direct legal advice before you think you're

exempt otherwise i would learn this material and operate and assume that you are not

exempt just to be extra careful not going to get caught in some kind of liability

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[jonathan]: okay very good that was a lot

to chew on so my take away recap five um and be very very

careful in making sure you get legal council

so that you clearly understand what you're exempt from what you're not exempt from so

that that's good there's a lot there so thank you kathi so let's look at

another scenario so this one so here i am investor jonathan i own six single

family homes i've purchased over the last ten years as an investment i've hired a

real state company to handle these by leasingthem collecting the rent keeping the houses

and yards in good condition in other words i'm not really involved other than just

being the owner collecting on my investment why should i know anything about fair housing

and shouldn't that just be the responsibility of the real estate company or property management company that i've hired

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[Kathi]: you know i think a lot of

individuals who use single family reynolds as some type of investment might believe that however

that's not what the law says law says it's that let's say real estate agent

discriminates in the way they are managing your properties you are liable as the owner

as is that management agent you never can walk away from liability under the fair

housing act if you are the owner so that's why you're going to own housing

as an investment you need to have some basic understanding so that when you hire

management agent you can make sure they understand all the laws that are going to

be applicable to how they manage your property without discrimination

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[jonathan]: very good thank you for that Kathi appreciate that explanation so another one so

i manage my cot excuse me manage many condominiums in a lovely community on behalf

of individual owners who have decided to rent their units

many of the owners feel a special attachment to the units because they have purchase

the condo to live in it and later have moved to a different home while

deciding to keep the condo as a rental investment they often have strong feelings that

they don't want to render to have an animal or modify a bathtub into a

shower it's my job to keep the owner happy not the renter so if the

owner objects to these requests i feel i must deny the renters request so interesting

scenario quandary what would be your comments to this situation kathi

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[Kathi]: oh when when i was practicing law

this was one of the most common questions i would get from folks who were

either on the board of ah management company on the board of the owners of

condominiums or on management agents who operated a lot of condo on behalf of the

owners and then the owner doesn't want me to do this um m can i

not do it so i can please the owner answer is if the fair housing

act says you have to do it then you either have to do it or

assume the liability that might happen if that renter launches a housing complaint the most common

is about assistance animals lot of folks don't want animals in their condo um and

therefore someone comes forward a renter and saysi need emotional sport animal the owner

says no if the agent or the management agent says no that might be a

violation of the law and that would put both the owner and the agent in

for potential ability so that's when sometimes you can't follow the directions of the owner

you have to follow the directions of the law that's it probably needs to take

precedent

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[jonathan]: okay thank you for that kathi

00:00:04,418 --> 00:00:10,107

[jonathan]: okay so let's take a look at

our our fourth scenario so the fourth one you know again jonathan investor here i

plan to move from my home which is in a very nice neighborhood but maintain

the ownership of my home i want to rent it out as an investment i'm

not moving very far away and plan on remaining friends with many of my neighbors

i feel i have a responsibility to make sure the purchaser is qualified to live

in such a beautiful community can i describe the qualifications of a renter in social

media advertisements as persons who are christian established in the community and middle age or

older people should apply do you think kathie okay so you know we started out

this episode by talking about exemptions and from

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[Kathi]okay so you know we started out this episode by talking about exemptions and from: this description we don't know whether this

owner is exempt from the fair housing act requirements or not however it doesn't matter

when it comes to advertising no one is ever exempt i'm advertising in a discriminatory

way so this owner cannot go on social media or any other platform and advertise

his house in a way that suggests a religious discrimination a discrimination against families with

children discrimination against national origin which this idea established might suggest so again if you're

not sure about what those buzz words are to avoid we have a wonderful video

about discriminatory advertising and you can look at that but everybody has to avoid advertising

in any way that suggests a discouragement against any of the protected categories so just

remember that doesn't matter whether you're exempt or not you cannot discriminatorialy advertise

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[jonathan]: okay good to know thank you all

right in our last scenario as the jonathan property management investment guy i manage a

number of single family homes in my duties as a real estate agent since the

owner trust me to maintain their houses i decided to adopt a policy of limiting

the number of children who can live in the homes since you know we know

that children can do a lot of damageto both the houses and yards where

they live my rule is that including the parents no matter than excuse me no

more than two children can live in the house with larger families there's just too

much work to do when they move out i think my rule is reasonable since

it's my job to maintain these houses what do you think kathi am I in

trouble

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[Kathi]: this is one of the more complicated

for housing issues the questionof occupancy standards how many people can

live in a rental unit those concerns those fair housing concerns apply to single family

rentals and generally the rule is you cannot limit the number of children you can

limit the number of occupants and usually how you go about doing that is looking

at the number of bedrooms and you also need to add other rooms that may

not be classified as a bedroom but could technically be used as a sleeping area

most of those rooms are reasonable we're not talking about kitchens and living rooms and

bathrooms walking closets we're talking about dens or libraries sometimes finish basements if they had

windows could reasonably be used as a sleeping area and so even if it's a

two bedroom let's say town house with a basement that's fully

developed then you would increase the number of occupants per unit by two more there

are other considerations in the area of occupancy restrictions and again we have some educational

videos on that and i encourage you to look at that but don't think because

you are managing or owning a single family rental that rules under familiar status do

not apply to your unit because they do

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[jonathan]: very good to know thank you kathi

lots of good scenarios and we as always appreciate your explanation and clarification i think

everyone listening to this episode who is either in single family or thinking of adding

single family properties to their portfolio have greatly benefited from your insight

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[jonathan]: okay so now we are on to

our another exciting component of our fair housing insider show which is our fast five

where you could in one quintillian fake monopoly dollars if you get all of these questions

answered in less than ninety seconds so are you ready kathi

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[Kathi]: jonathan you know i'm all of our trainers i am the worst on this one

but i keep trying so let's do it again and see if i can't get

my answers under the time limit this time

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[jonathan]: all right well here we go if

i am renting a home i used to live in can i manage it however

i want

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[Kathi]: and that is a complicated answer which

basically i would say no you better be careful find out whether

you're exempt or not and even then you have fair housing requirements because of advertising

so the short safe answer is no

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[jonathan]: if a resident makes a reasonable modification

because of a disability such as changing a shower into a bathtub can i require

the resident to change it back when they move out

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[Kathi]: the answer to that is generally yes the renter would pay for the modification and

is also supposed to pay to have the modification reverted back to whatever it was

originally if that modification is going to interfere with the next renters use of that property

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[jonathan]: are there any fair housing rules that

apply to apartments that do not apply to

single family rentals

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[Kathi]: and this is the most important point

we're trying to make all fair housing rules apply to single family owners management agents

that apply to multi family housing unless the owner is examped and then it really

the exemption only plays to the owner it never applies to the management agent

if i hire a management company to operate

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[jonathan]: my single family homes why should i

worry about fair housing

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[Kathi]: you should worry about fair housing as

an owner because liability always imputes to both the owner and the person or company

that made the elation so if your agent violates fair housing you're going to be

held liable so you should be concerned about that

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[jonathan]: ah if i own the small apartment

building in which my family lives i'm exempt from fair

housing can i advertise that families with children should not apply

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[Kathi]: as we explain in the video even

if you are exempt no one can discriminatorily advertise even if they're exempt so the

answer is no you cannot discriminate orly advertise

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[jonathan]: okay thank you very good main points

and unfortunately my dear friend no one quintilian quigilian fake monopoly fair housing dollars but

but i will say for those complicated questions those fast five you know you were at about two

minutes and thirty seconds so that's that's still that's really really really really good you know

you know considering the depth of those questions and i

know our audience is very very grateful to you kathi as always when you're available

to be on the show we appreciate your insights in helping us take a deep

dive into single family rentals so we appreciate you being on the show today yeah so our audience

just keep in mind that this we now have a new course for single family rentals and this applies to to owners

to property managers to relater landlords more details will be in the show notes for

you to take a look at this course and it will really help you understand

the fair housing and how it applies to this genre of property management so were

so happy to announce that we've added this to our course catalogue so thank you

again for being here on the show again be sure to sign up for our

youtube channel sent up for our news letter and we thank you for being here

until next time this concludes this epic out of the fair housing insiders take care

everyone

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