San Diego County boasts some of the best weather in the world. Over three million people call San Diego County home. It is one of the most diverse counties in the country and the second most populous in California. It's a dynamic and exciting place to live, which is why so many people call San Diego County home.
The San Diego housing market is exploding. The average home price is $430,000. The average rental costs in San Diego were:
- $812 for a studio apartment;
- $1,685 for a one-bedroom;
- $2,086 for a two-bedroom;
These prices were from January 2016 and they are definitely still increasing today.
San Diego is attracting developers, investors – large and small. But, before you make the plunge into being a rental owner, it is critical that you understand the basics of anti-discrimination laws for housing.
Risk to Rental Property Owners
A report released by the City of San Diego found that 72 percent of housing discrimination cases name the owner as the perpetrator. Both the Federal government and California impose anti-discrimination laws, the Fair Housing Act (FHA), and the Fair Employment and Housing Act (FEHA), the California supplemental to the FHA.
The FHA and FEHA both impose obligations on property owners to advertise, manage, and lease their properties in a certain way. Violation of either law could land you in a serious lawsuit that could cost you thousands of dollars (and may even subject you to an investigation by the Department of Housing and Urban Development (HUD) or the State Department of Fair Employment and Housing (DFEH). Essentially, you want to avoid any violations that involve one of the “alphabet soup” government agencies.
Fair Housing Act of 1968 and Fair Housing Amendments Act of 1988
The Fair Housing Act and Amendments Act are the two federal laws that prohibit housing discrimination. The FHA prohibits discrimination at all stages of the housing “exchange” including advertisement, solicitation, sale, rental, lease, negotiation, and property management. However, the FHA does not prohibit all forms of discrimination (which is a very broad topic), it only prohibits specific classes of people. For instance, the following classifications of people are protected:
- Familial Status (i.e. whether you are married or have children);
- Race or color;
- National origin; and
- Disability (mental and physical).
Thus, rental property owners are free to discriminate based on personal preference (assuming it isn’t based on one of these factors), job, piercings, tattoos, shoe size, pets, and any other factor that isn’t one of the protected classes.
The FHA specifically prohibits any of the following actions, if it is predicated on one of the protected classes:
- Refusing to rent or sell to a person;
- Setting different lease or sale terms; and
- Advertising a preference.
Finally, the FHA requires property owners to make “reasonable accommodations” in their properties, policies, lease terms, and operations to allow people with disabilities equal housing opportunities. For example, a property owner may be required to modify a rental agreement to allow a prospective blind tenant’s seeing-eye dog into the unit without imposing an additional “pet surcharge.” Property owners must make reasonable accommodations in the private residences and common areas.
The Fair Employment and Housing Act and Other State Laws
The FEHA is a supplemental law to the FHA. It is possible for a property owner to get sued based on FHA and the FEHA. The FEHA prohibits housing discrimination and harassment practices including:
- Rental or lease terms and conditions;
- Land use; and
- Restrictive covenants.
The FEHA also protects many more classifications of people than the FHA, including:
- Race or color;
- Ancestry or national origin;
- Marital status;
- Sexual orientation;
- Familial status;
- Medical condition;
- Age (except for retirement communities);
- Gender identity;
- Gender information;
- Gender expression; and
- Source of income.
Thus, it is far easier to get into trouble with the FEHA, than FHA. Additionally, California Civil Code Section 1940.3 prohibits property owners from inquiring lease applications about their immigration or citizenship status. As you can probably imagine, many property owners are caught within these anti-discrimination provisions. The best way to avoid legal trouble is through the application of a consistent, standard policy.
A San Diego property management company can help most property owners avoid running afoul of these various rules by relying on time-tested procedures and provisions. Most of these rules are easily obeyed if they are understood and you develop a standard procedure for renting to prospective residents. But, you don’t need to reinvent the wheel, a property management company has already developed those policies. If you are planning to break into the San Diego rental market, you may want to consider retaining the assistance of a property management company to protect you from potential FHA and FEHA lawsuits.