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Posted at 05:30 AM ET, 06/26/2012

For rent by owner: Legal landmines for landlords

After listing my apartment, I hope to have several potential tenants to select from. When it comes to choosing from among them, however, I’ve learned the hard way that there are many laws and regulations bounding a landlord’s discretion. They are landmines for the unwary. 

Let me be clear, I don’t take issue with following the law. I won’t use race, sex and disability in the selection or rejection of my potential tenants. This bias is prohibited by federal housing laws; and society is far beyond debating the wisdom of these civil rights.  

The District expands upon these laws with its own Human Rights Law and this is where things sometimes can get hazardous for landlords.  However well-intentioned the law was in its design, it leads to some rather bizarre and unexpected real world results.   

Over the years, I have learned through my mistakes what some of the provisions of the law mean to landlords.  For starters, it is illegal to discriminate against families and children in renting out your house.  As a father of two, I support the District’s desire to protect families. But as it applies to my rental, it seems a bit irrelevant.  In the 18 years I have rented it out, I have never had a family even ask about living in my apartment.  
The kitchen at Douglas Hsiao's condo (Photo by Douglas Hsiao)

 But that doesn’t mean that the law doesn’t have any impact on me. It imposes a “rebuttable presumption” — essentially an extra weight pushing down on the scale — in favor of finding illegal discrimination. Basically what the statute says is that if a landlord puts a ceiling on the number of tenants, there is a presumption that he or she illegally discriminates against families.

The formula for figuring out how many tenants a landlord legally should allow is the number of bedrooms multiplied by two plus one. In other words, my two-bedroom apartment should be available to as many as five tenants.  But who is that law protecting, a young family or a gang of college students who are willing to jam together for cheaper housing? We can all come up with perfectly rational non-discriminatory reasons why a landlord might not want to have five people living in an apartment.  But the D.C. law is like a blunt instrument that hammers down everything that may stick out. 

So when I had a group of three young professional women who wanted to rent the apartment a few years ago, I was surprised to learn from my property manager that I couldn’t turn them away. In fact, I was told that I should score them as stronger candidates because they had three incomes to cover the rent. The only thing that prevented them from becoming tenants was that, as a condition of their offer to take the apartment, they wanted to put up a wall to convert the living room into another sleeping area. I could legally say no to that structural change, and to my relief they decided that they didn’t want the apartment after all. 

Another tenant who once applied for the apartment was unemployed.  Easy case:  no job, no apartment.  Not so fast.  The potential tenant’s father was willing to co-sign the lease, and he had a large and enviable income.  Even so, I still think that a landlord has a good reason to turn the renter away, since the actual resident of the apartment doesn’t have sufficient income of her own to afford the rent.  All things being equal, I would prefer a person with a job over one who does not. 

I got my hand slapped for that one by my property manager. 

Under D.C. law, you are not allowed to discriminate based on the renter’s “source of income.”   Who knew?  It’s to protect the Section 8 program, which provides housing vouchers to low income residents. Because I worked for a Legal Services housing clinic in Boston during college, I know something about Section 8 and how valuable it is to tenants and landlords alike.  (Federal guaranty? Yes, please!)  But the wording of this D.C. law protects not only those low income families from discrimination but also the trust fund baby with unlimited parental backing or the bookmaker who doesn’t want to say where he got the money for his Porsche.

And finally, this:  I asked my property manager whether we could meet with potential tenants and interview them. She told me that, as a general rule, she does not like to meet any potential tenants.  Why? Because if you never meet them, you cannot be accused of discriminating against them.  It would be funny if it were not so Kafkaesque.   

Between a dues-paying member of the D.C. bar and a property manager with decades of experience managing properties, we cannot agree on what the housing discrimination law means.  While I fully appreciate the rules my property manager maintains to protect me from illegal conduct, this protection comes at a price, by shutting down the normal ways that people engage with one another. And there’s no reward for testing the law, no matter how much it may defy common sense.

Read more For rent by owner

A Colorado-based lawyer, Douglas Hsiao has rented out his Dupont Circle condo for 18 years. In his occasional column, he details his search for a new tenant.

By Douglas Hsiao  |  05:30 AM ET, 06/26/2012

Tags:  landlord

 
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