Recent Action by Congress Limiting Use of Disparate Impact May Affect Landlords and Rentals, States TenantScreeningUSA.com

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A recent amendment limiting the use of "disparate impact" as a legal theory passed the House in Congress and will change housing policy, subsequently highlighting an urgent need for landlords and property managers to work with third-party tenant screening companies in order to remain fully complaint, states TenantScreeningUSA.com. Adam Almeida, President and CEO of TenantScreeningUSA.com adds: "This amendment directly affects mortgage lending and yet there will be broader affect felt across the housing spectrum, including rental properties."

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At the core of the ruling is the use of disparate impact within a legal context. The House action combined with the potential Supreme Court ruling could greatly change the legal environment not only with lending but with renting also.

Disparate impact is a complicated legal issue, one not easily explained.

From the National Fair Housing website, disparate impact, as related to housing, is defined as such (Jan. 15, 15):

"Disparate Impact is a legal doctrine under the Fair Housing Act which means that a policy or practice may be considered discriminatory if it has a disproportionate "adverse impact" against any group based on race, national origin, color, religion, sex, familial status, or disability." (1)

In Washington DC the House of Congress recently passed an amendment limiting the use of "disparate impact" as used in housing litigation by the Department of Justice. This action is in advance to an upcoming Supreme Court ruling regarding a similar issue, due at the end of June 2015.

From housingwire.com (Jun 03, 15):

"The House passed his amendment to H.R. 2578, the Fiscal Year 2016 Commerce, Justice, and Science Appropriations Act. The amendment would bar the Department of Justice from using funds for litigation in which they seek to apply disparate impact theory." (2)

While the full effect of this new amendment is yet to be fully felt it is a clear indication of the potential legal morass within the housing and rental market.

Adam Almeida, President and CEO of TenantScreeningUSA.com states: "Just as the disparate impact theory affects pre-employment background screening, disparate impact can affect the rental market. Clearly the action by the House could affect how landlords and property managers conduct screening. Combined with the upcoming SCOTUS opinion, greater scrutiny will certainly be placed on how vetting rental applications with tenant background checks is conducted with various protected classes."

From bankingjournal.aba.com (Jun 04, 15):

"...Under HUD's rule, a lender, apartment owner, apartment manager or housing cooperative could be challenged if these practices yield different results for a protected class, and also face severe reputational harm and significant costs of defense." (3)

By the end of June 2015 the Supreme Court will have ruled on the issue of disparate impact and, perhaps, provide further guidance as to the use of this legal tool. While the outcome is still in question undoubtedly the results will cause a great deal of change within the housing market and, subsequently, the rental market.

Almeida states: "At the core of the ruling is the use of disparate impact within a legal context. The House action combined with the potential Supreme Court ruling could greatly change the legal environment not only with lending but with renting also. Landlords will have to remain very clear and practiced in their rental policies and use of tenant screening, and it is critical they work with third-party tenant screening companies to remain compliant."

TenantScreeningUSA.com is a third-party tenant screening company that can provide screening packages for landlords and property managers with property holdings large and small. Specializing in local, state, and Federal compliance, TenantScreeningUSA.com can assist landlords and property managers in avoiding missteps with tenant screening policies.

Notes:

(1)    nationalfairhousing.org/publicpolicy/disparateimpact/tabid/4264/default.aspx
(2)    housingwire.com/articles/34087-house-passes-amendment-to-limit-disparate-impact-far-beyond-housing-policy
(3)    bankingjournal.aba.com/2015/06/aba-groups-welcome-amendment-to-limit-disparate-impact/

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