In a last-minute addition to its state budget legislation, New York State joined the ranks last month of many state and local governments that have adopted so-called “source of income” fair housing protections. Although there is a lot of variation around the country, these laws generally make it unlawful for a housing provider to refuse to rent an apartment to a tenant because of that tenant’s lawful source of income (“SOI”) – for example, a Section 8 voucher, alimony, or Social Security or veterans benefits. In some cases, owners have rejected applicants on the basis of source of income because they feel that the income (such as alimony payments) may be unreliable, or because of administrative concerns associated with participating with some housing programs (such as Section 8 vouchers), or because of regrettable stereotypes associated with persons who receive income from non-payroll sources. Whatever the reason, SOI discrimination can have a harsh impact on many disadvantaged classes, such as women, minorities, veterans, the elderly and persons with disabilities. Especially in an era of tight housing supply, states and local governments have adopted SOI protections as one means to make housing more available to these disadvantaged classes.
In some respects, New York State was late in adopting these protections. Many states and local governments – including New Jersey, Massachusetts, California, Connecticut, New York City, Los Angeles, San Francisco, Chicago and many other jurisdictions – preceded it. Generally, these laws identify protected income sources, and then prohibit owners from refusing to rent or sell to, or to impose different terms and conditions on, persons who receive income from these sources. In addition, more aggressive agencies have expanded protections beyond the four corners of the statute, contending that owners may not conduct credit checks of persons whose rents are fully subsidized (because the owner is not relying on the tenant’s ability to pay) and for partially-subsidized persons, limiting the scope of credit scrutiny to the tenant’s portion of the rent.
As the federal role in fair housing has retrenched in recent years, states and local governments have picked up the slack and extended protections to new classes, including the SOI protections adopted by New York State. These protections can vary from state to state and even town to town. Managing rental housing has never been easy, but housing providers need to be alert to state and local laws that extend SOI protections to renters and applicants, especially in jurisdictions that apply those protections broadly.