As we have discussed in several of our business briefs, tenant protection laws have changed drastically in California over the years. Along with the changes brought on by the Tenant Protection Act of 2019, California also altered fair housing laws that went into effect beginning January 1, 2020. Specifically, Senate Bill 329 changed the definition of “source of income” under the Fair Employment and Housing Act (“FEHA”). Beginning January 1, 2020, Section 8 voucher holders are explicitly included within the definition of “source of income” and owners cannot discriminate against voucher holders. This change has brought on a slew of discrimination claims from prospective tenants, amongst other things.
As it relates to rentals, owners or managers of residential property are prohibited from discriminating against renters based on the protected characteristics when they apply and/or while they’re renting their unit. This includes refusal to rent based on source of income, familial status, etc., as well as unnecessarily penalizing or providing alternate terms based on the tenants’ protected characteristic(s). This can include higher rent rates, more restrictive terms, and stricter background checks based on the tenants’ particular status.
Monetary damages: emotional distress, diverted resources, higher rent, etc.
Education is crucial when managing rental properties in California. Make sure that anyone managing the property is informed of not only fair housing laws, but all tenant protection laws to help avoid costly lawsuits. Lack of intent is typically not relevant in these cases. The CRD offers free educational courses for this purpose. Further, have universal and systematic processes that you can fall back on when a claim arises. Showing that you do the same thing for every tenant will be helpful in managing damage/liability.
There is a common misconception we see with owners/managers in this situation. While owners/managers must accept Section 8 applicants, there is no obligation or requirement to select that tenant. However, any denial of that tenant cannot be arbitrary and would need to be based on characteristics not protected by Unruh and FEHA. In other words, if you have some other cause to reject them, you are permitted to do so. This can include a negative background check, previous eviction, etc.
We highly recommend speaking with counsel if a situation arises due to all the pitfalls associated with these potential claims.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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