Q: I am representing a Buyer in the purchase of a 4-unit apartment building. The Seller has disclosed that one of the Tenants is participating in the Section 8 rent voucher program. The Buyer wants to evict that Tenant after the close of escrow. Buyer further states that he does not accept Section 8 Tenants and will not rent to them. He believes that he is within his rights to refuse to rent to Section 8 Tenants.
What should I tell him?
A: This Buyer is operating on outdated information. There is a new California law making it a Fair Housing violation to discriminate against Tenants based on their participation in the Section 8 voucher program.
ADVISE THE CLIENT TO CONSULT WITH THEIR OWN QUALIFIED LOCAL LANDLORD-TENANT ATTORNEY PRIOR TO TAKING ANY ACTION.
If a Buyer indicates that they do not want to accept an existing Section 8 Tenant, or rent to new Section 8 Tenants once they purchase the property, they should be referred to their qualified local Landlord/Tenant attorney for advice. Licensees cannot give any legal advice regarding declining to accept, or eviction of, any Tenants, including Section 8 Tenants.
This is a complicated area of the law and buyers/landlords would be wise to seek competent legal advice prior to proceeding with evicting or denying Section 8 Tenants.
BACKGROUND
A California Court had previously held that there is no obligation for a Landlord to rent to a Section 8 Tenant. Although it is, and has been, a fair housing violation to discriminate against a Tenant based on their “source of income,” that one Court held that the Section 8 voucher program is not a “source of income” but a rental assistance program, and therefore it is not illegal to refuse to rent to a Section 8 Tenant in California. THAT CASE CAN NO LONGER BE RELIED UPON BECAUSE OF THE NEW LAW – SEE BELOW.
NOTE: Contrary to the decision reached by the California Court, at least two Federal Courts (outside of California) have held that refusal to accept a Section 8 Tenant could be a violation of the federal fair housing laws either based on “source of income” discrimination, or on having a disparate impact on those Tenants.
To further complicate things, some California cities have enacted ordinances making it a violation to refuse to accept a Section 8 Tenant applicant. Clarification of this issue was greatly needed.
NEW LAW
Effective January 1, 2020, a new California law goes into effect which includes changes to the definition of discrimination based on the Tenant’s “source of income” to specifically include discrimination based on participation in the Section 8 program, or similar rental assistance programs.
As of January 1, 2020, the revised “source of income” definition of a Fair Housing violation reads as follows:
“Source of income” means lawful, verifiable income paid directly to a Tenant or to a representative of a Tenant, or paid to a housing owner or landlord on behalf of a Tenant, including federal, state, or local public assistance, and federal, state, or local housing subsidies, including, but not limited to, federal housing assistance vouchers issued under Section 8 of the United States Housing Act of 1937 (42 U.S.C. Sec. 1437f).” (And other related laws identified in the law.)
BEST PRACTICE TIPS
- DO NOT give Landlords or Buyers of rental property any advice as to whether they can reject any Tenant, or evict an existing Tenant, based upon “source of income,” in particular because of this new law based on participation in the Section 8 voucher program.
- DO advise all Landlords and Buyers of rental property that they should direct all questions about accepting a Tenant, or evicting an existing Tenant, to their own qualified local landlord-tenant attorney.
- Even if a Landlord or Buyer of rental property is considering rejecting a Tenant, or evicting an existing Tenant, prior to the effective date of this new law, Agents should nonetheless follow the same advice in Tips 1 and 2 above.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2019 10/18/19