Source of Income Discrimination Explained:

Are You Discriminating Against Tenants And Rental Applicants Without Knowing It?

Are You Discriminating Against Tenants and Rental Applicants Without Knowing It?

New York City’s Human Rights Law (“NYC HRL”) was amended in 2008 to prohibit discrimination against rental applicants or prospective tenants due to their actual or perceived lawful source of income.  However, as is apparent from NYCCHR’s recent enforcement against landlords in January 2017, the City recently began examining allegations of source of income discrimination more closely, and creating a new unit dedicated solely to source of income discrimination issues.

What is Lawful Source of Income?

The NYC HRL defines “lawful source of income” as “income derived from social security, or any form of federal, state or local public assistance or housing assistance including section 8 vouchers.”[2]  In relevant part, New York City’s Human Rights Laws further provides that, “It shall be an unlawful discriminatory practice . . . because of the actual or perceived lawful source of income . . . to refuse to sell, rent, lease, approve the sale, rental or lease or otherwise deny to or withhold from any such person or group of persons such a housing accommodation or an interest therein[.]”  Examples of “lawful source of income” include NYCHA or HPD Section 8 vouchers, and payments from LINC, FEPS, or public assistance payments.

What Does This Mean for Landlords, Property Management Companies, Brokers, and Other Agents in New York City? 

The NYC HRL specifically prohibits people from: (1) refusing to sell, rent, lease, or otherwise deny an apartment; (2) discriminating in the terms, conditions, or privileges of sale, rental, or lease, or in the furnishing of facilities or services; (3) representing that an apartment is not available when in fact it is available; or (4) printing or circulating or using any form of application or making any record or inquiry expressing any limitation, specification, or discrimination.

On What Authority?

In Florentino v. Nokit Realty Corp.,[5] the Supreme Court in New York County reviewed a case where a landlord refused to accept a tenant’s Section 8 voucher for a studio apartment because the apartment that the tenant resided in was a two-bedroom apartment.  Moreover, the Section 8 voucher required occupancy by the tenant and her immediate family only but the tenant allegedly subleased one of the bedrooms to an unrelated individual.[6]  The defendants argued that accepting the tenant’s Section 8 voucher would cause them to commit fraud against the New York City Housing Authority (“NYCHA”) and the U.S. Department of Housing and Urban Development (“HUD”) and expose them to liability because they would have to misrepresent the number of bedrooms in the tenant’s apartment as well as concealing the tenant’s unrelated roommates.[7]  Defendants further argued that they already offered the tenant a studio apartment in the same building and that the tenant should move into the studio apartment.[8]

The court ultimately ruled in the tenant’s favor, holding that the tenant established a prima facie claim of source of income discrimination.[9]  The court found the defendants’ claim that they would commit fraud against NYCHA and HUD by accepting the tenant’s Section 8 voucher unavailing because the landlord was only required to sign a Housing Assistance Payments Contract (“HAP”) which did not require the landlord to verify the number of bedrooms in the unit.[10]  The court ordered the defendants to accept the tenant’s Section 8 voucher and also awarded the tenant monetary damages.[11]

In addition to facing liability for violating New York City laws, landlords may also be subject to suit based on alleged violations of the New York State Human Rights Law and the federal Fair Housing Act (“FHA”).  The New York State Human Rights Law and the FHA do not specifically contain provisions prohibiting discrimination based on lawful source of income.  However, a tenant or a prospective tenant may bring suit in federal court by alleging discrimination based on the individual belonging to a federally protected class (such as race or color, religion, sex, national origin, familial status, or disability[12]) and discrimination based on the individual’s actual or perceived lawful source of income pursuant to New York City laws.

This exact scenario was aptly illustrated in Short v. Manhattan Apartments, Inc.,[13] a discrimination case brought in the Southern District of New York.  In Short, the plaintiff, a disabled man with AIDS, attempted to rent an apartment with the defendants.[14]  The plaintiff alleged that defendants discriminated against him when they learned that he intended to pay his rent using rental subsidies received from the New York City HIV/AIDS Services Administration (“HASA”).[15]  In his federal lawsuit, the plaintiff alleged that defendants discriminated against him on the basis of disability under federal and New York City laws, and asserted separated claims of source of income discrimination pursuant to New York City Human Rights Laws.[16]

The federal court ultimately dismissed the plaintiff’s disability claims under federal and New York State law, but did rule on the New York City source of income discrimination issue.[17]  The court found that the defendants did engage in source of income discrimination because there was direct evidence of discrimination, such as statements made to people claiming that certain apartments were not for “programs.”[18]

What Can You Do to Avoid Source of Income Discrimination?

As a landlord, property management company, broker, or agent in New York City, it is critical to understand the source of income discrimination laws to minimize the risk of inadvertent discrimination.  Rental applications, advertisements for available apartments, and even internal discrimination policies and guides can be subpoenaed or presented as evidence to establish that discrimination has occurred.  As such, given the City’s renewed scrutiny on source of income discrimination, it is highly advisable to contact an experienced attorney who can help you understand how to comply fully with the anti-discrimination laws.

 

[1] Press Release, NYC Commission on Human Rights, dated Jan. 10, 2017, available athttp://www1.nyc.gov/assets/cchr/downloads/pdf/press-releases/PressRelease_NYCCHR_SourceofIncomeCases.pdf. [2] N.Y.C. Admin. Code § 8-102(25). [3] N.Y.C. Admin. Code § 8-107(5).  [4]See N.Y.C. Admin. Code S 8-107(5). [5] 29 Misc. 3d 190, 906 N.Y.S.2d 689 (Sup. Ct. N.Y. Cnty. May 27, 2010). [6]Id. at 192. [7]Id. at 193. [8]Id. [9]Id. at 196. [10]Id. at 197. [11]Id. [12] 42 U.S.C. § 3604(a).  [13] 916 F. Supp. 2d 375 (S.D.N.Y. 2012).  [14]Id. at 379. [15]Id. [16]Id. [17]Id. at 394. [18]Id.

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