So you’re thinking about renting your home.
It’s a fine idea, especially in a city like Austin, where 55 percent of the population rents. And if history is any guide, holding on to your property for a longer-term period while someone else pays the mortgage can pay dividends when you are finally ready to sell.
But there is a lot of confusion and misunderstanding about how fair housing laws apply to landlords renting out homes. I’m going to break it down for you.
First, a disclaimer: I’m not an attorney.
If you have specific questions about fair housing and rentals, consider calling an attorney OR try the totally free legal hotline at the Austin Tenants Council. Yes, they mainly help tenants but landlords and real estate agents can call for free legal advice as well.
Most first-time landlords I speak with tend to have a pretty specific fantasy of who their future tenant will be, especially if they are renting out a home they used to live in.
I’ve heard about buying duplexes and visions of becoming BFFs with your next-door tenant and barbecuing together. Some specifically want to rent to a family, or a young couple. Most newbie landlords want to rent to someone a lot like them, or someone they feel can be trusted not to damage their property, aka not four guys in college.
They may not realize it, but that’s considered discrimination.
If you’re working with a real estate agent to rent your home, it is totally illegal to pick your tenant based on factors such as gender or family size.
It’s considered discrimination and there are some pretty big fines associated with violating it. You can’t reject or accept a renter based on any of these factors:
- Familial Status
- National Origin
Sexual orientation is not a protected class under federal law, but it in the city of Austin it is considered a protected class, along with “gender identity.” Realtors have been lobbying Congress for awhile to add sexual orientation to federal fair housing laws.
Landlords and their real estate agents ARE allowed to consider a host of other factors when deciding which tenants to approve or reject, most of which to do with a tenant’s financial status and criminal background, as well as the number and type of pets they have. Although if it’s a disabled person’s service animal, that’s a different story because you can’t discriminate against someone who is handicapped.
However! There are some exceptions when it comes to who has to adhere to fair housing laws. And there’s one really important exception that landlords should be aware of.
If you are only renting one house, or renting a room or garage apartment, and decide to go it alone and try to find a renter yourself without the help of a real estate agent you are allowed to completely ignore federal fair housing laws.
If you are thinking “Huh?,” I get it. I was surprised when I first learned this too.
You can rent to whomever you want, using whatever criteria you want, so long as you do not own or have any interest in more than three single-family houses at one time.
If you own multi-family, such as a fourplex, you DO have to adhere to fair housing laws, even if you are not working with a real estate agent.
(By the way this doesn’t apply to Realtors renting out homes. We have to always abide by fair housing, regardless of whether it’s our own home or a client’s house.)
If you are someone who wants to be very selective about who lives in your home, you will have to go it alone and find that renter yourself.
Note to renters: this is something to keep in mind when applying to live somewhere from an individual landlord versus someone represented by an agent or management company. Typically one has to adhere to federal fair housing laws and the other doesn’t.
I may be biased, but I think there’s a lot of value that comes with working with a Realtor to rent your home. We help you find and screen tenants. We do criminal background and credit checks. We show the properties and take photos and help market it. We use our connections among our clients and the real estate community to find a renter. We determine lease terms and write the lease. And some agents even offer property management services to help manage the day-to-day tenant issues.
And I believe fair housing laws are an important tool to ensure housing is made available to everyone.
Want help leasing your home or questions about the rental market? Call or text me at 512.413.1975.
Lilly Rockwell is a licensed real estate agent and a former journalist in Austin, TX.