Potential Ruling By Supreme Court May Cause Significant Change With “Disparate Impact” and Housing; States TenantScreeningUSA.com

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In January 2015 the Supreme Court heard arguments in regards to “Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, in which Texas challenged the disparate impact theory of discrimination under the Fair Housing Act (FHA).” (1) Adam Almeida, President and CEO of TenantScreeningUSA.com states: “A ruling by the Supreme Court could significantly change the use of disparate impact not only within the housing market but the rental market as well, and incite further lawsuits.”

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Actions such as the one by the Supreme Court point to the continued focus on housing and, subsequently, renting policies.

Disparate Impact is a complicated issue and with the recent involvement by the Supreme Court will continue to be a challenge within the housing market. The issue at hand involves Texas Department and Community Affairs v. The Inclusive Communities Project (Docket No. 13-1371) (2), which involves the language and manner in which disparate impact is used in protecting the rights of minorities as related to housing.

From TheWashingtonPost.com (Jan. 21, 15):

“The case … poses a fundamental question about the power of the 1968 Fair Housing Act, which outlawed discrimination on the basis of race in housing decisions: Does the law prohibit only intentional discrimination, or does it also apply to seemingly race-neutral policies that still have the effect of harming minorities? (3)

Regardless of the outcome, change will occur. The elimination of the disparate impact theory will allow low-income housing without concern of location. That is, low-cost housing could, potentially, continue to be built in low-income neighborhoods. If the theory of disparate impact is upheld lawsuits pressing for low-cost housing to be built in a broader array of neighborhoods including high-dollar ones will continue.

Adam Almeida, President and CEO of TenantScreeningUSA.com states: “Actions such as the one by the Supreme Court point to the continued focus on housing and, subsequently, renting policies. Without the skill and legal expertise of third-party tenant screening companies, landlords and property managers may not have the information they need to conduct business in a legal and lawful manner.”

Legal experts across the country have weighed in on the potential outcome of the Supreme Court’s action. HousingWire.com asked Mike Skojec, partner at BallardSpahr his opinion. One noted area concerned screening of tenants.

From HousingWire.com (Jan. 20, 15):

“However, the substantial increase in the use of the theory by advocacy groups and HUD for many kinds of claims for which it should not be used, such as how risk is evaluated in selling property insurance or how management companies screen the risk of criminal conduct and other bad acts by possible tenants, has caused the theory to be attacked and probably struck down.” (4)

Almeida states: “Disparate impact is at the core of recent challenges to the legitimate and legal use of criminal histories. The use of criminal histories as part of the tenant background checks process has not yet been significantly challenged but based on Supreme Court actions over disparate impact and recent ban-the-box legislation, it is only a matter of time.”

For landlords and property managers the question of disparate impact will continue. Further, the legal challenge over the lawful use of criminal histories will linger. TenantScreeningUSA.com strongly urges all landlords and property managers to work with third-party tenant screening companies to remain fully compliant and knowledgeable of legal proceedings affecting the rental industry.

TenantScreeningUSA.com is a third-party tenant screening company that provides clients with the most current and accurate legal information regarding the fair and lawful use of public records, such as criminal history. Highly trained representatives can assist landlords and property managers with setting up a legally compliant tenant screening program.

(1)    lexology.com/library/detail.aspx?g=3449161a-acd8-4952-bb86-4b77a5eb5bc0
(2)    supremecourt.gov/Search.aspx?FileName=/docketfiles/13-1371.htm
(3)    washingtonpost.com/blogs/wonkblog/wp/2015/01/21/the-supreme-court-may-soon-disarm-the-single-best-weapon-for-desegregating-u-s-housing/
(4)    housingwire.com/articles/32656-scotus-hearing-case-on-disparate-impact-that-could-rock-the-housing-industry

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