We recently covered the monumental Supreme Court of the United States’ ruling which serves as an update to the Fair Housing Act, a ruling that all real estate practitioners must truly understand. Despite headlines on the topic, we have found in discussion across the nation, that many remain unaware of the change, or simply confused.<\/p>\n
To cure that ill, we have tapped the wisdom of real estate attorney, Richard D. Vetstein, Esq.<\/a>, Founding Partner at the Vetstein Law Group, P.C. to dive deeper into “disparate impact” and why it’s not just a ruling for landlords. In his own words below, he explains:<\/p>\n While everyone in America was focused on the U.S. Supreme Court\u2019s historic marriage equality ruling, at the end of its Term, the Court also issued an important opinion under federal Fair Housing law. In a 5-4 margin, the Court upheld the application of \u201cdisparate impact\u201d theory of liability under the Fair Housing Act (\u201cFHA\u201d) in Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc.<\/a><\/em><\/p>\n What is disparate impact theory you ask? Good question. In a disparate-impact claim, someone who alleges housing discrimination may establish liability, without proof of intentional discrimination, if an identified rental practice has a disproportionate effect on certain groups of individuals (i.e, minorities) and if the practice is not grounded in sound business considerations. Ok, now what does that mean in plain English?<\/p>\n Here\u2019s an example. Let\u2019s say you own several apartment buildings, and an upset tenant says that based on statistics for the last 5 years, you have evicted 75% more black tenants than white tenants, while the rate of nonpayment between racial classes have remain about the same. That\u2019s a disparate impact claim. Surprising to most folks is that under a disparate impact theory, the claimant need not show some type of \u201csmoking gun\u201d evidence of direct racial discrimination, like something Donald Sterling would say, such as \u201cwe don\u2019t like to rent to black folks.\u201d If the claimant can back up his theory with statistical evidence, then he or she will have their day in court.<\/p>\n While accepting disparate impact as a viable Fair Housing claim, the Supreme Court imposed important limitations on the application of the theory \u201cto protect potential defendants against abusive disparate-impact claims.\u201d In particular, the Court held that a racial imbalance, without more, cannot sustain a claim, and directed lower courts to \u201cexamine with care\u201d the claims at the pleadings stage. The Court emphasized the plaintiff\u2019s burden to establish a \u201crobust\u201d causal connection between the challenged practice and the alleged disparities. Further, a defendant\u2019s justification is \u201cnot contrary to the disparate-impact requirement, unless \u2026 artificial, arbitrary, and unnecessary.\u201d Finally, \u201cremedial orders\u201d must \u201cconcentrate on the elimination of the offending practice\u201d through \u201crace-neutral means.\u201d<\/p>\n Despite the limitation, this is a big win for fair housing advocates. Sec. 8 tenants, the MCAD and EEOC will have another powerful legal theory to use to crack down on discrimiminatory rental practices. Moreover, in the wake of the ruling, HUD just announced its the long-awaited Affirmatively Furthering Fair Housing (AFFH) rule<\/a>, which will provide maps and data on historic segregation that cities will need to use to assess their progress in reducing segregation, increasing housing choice and promoting inclusivity.<\/p>\n The lesson to take back from this ruling is to ensure you have policies in place to treat every applicant and tenant the same way across the board. The existence of written procedures, policies and manuals are helpful in defense of these types of claims. Saying you follow \u201cEqual Housing Opportunity\u201d is one thing; you have do actually do it.<\/p><\/blockquote>\nWhat is disparate impact theory?<\/h2>\n
How about a real life example?<\/h2>\n
Huge win for fair housing advocates – why?<\/h2>\n