Avoiding the pitfalls of tenant discrimination amid squatter scrutiny

Avoiding the pitfalls of tenant discrimination amid squatter scrutiny | Insurance Business America

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Avoiding the pitfalls of tenant discrimination amid squatter scrutiny

Expert warns of “significant legal and ethical implications”

Insurance News

By
Kenneth Araullo

As squatter laws come under scrutiny for potential abuse, residents and lawmakers across the United States are pushing for amendments to safeguard both property rights and the welfare of vulnerable populations. This legislative shift coincides with an uptick in tenant discrimination complaints, highlighting the complexities of housing rights and the need for equitable solutions in real estate practices.

Amidst these evolving legal landscapes, the rise in tenant discrimination cases signals a pivotal moment for the industry, demanding increased vigilance and revised policies from all stakeholders.

Lisa Rodriguez (pictured above), principal and senior vice president at Brown & Riding, emphasizes the importance of proactively managing these risks through adequate insurance coverage and a deep understanding of legal responsibilities.

“Consulting with experts is essential to identify potential issues or exposures within your business. Talk to your insurance advocate about your current coverage. Ask if the coverage is comprehensive and adequately protects against discrimination claims,” Rodriguez said.

In the realms of residential and commercial real estate, tenant discrimination remains a critical concern, characterized by the unfair treatment of individuals based on protected characteristics such as race, color, religion, national origin, gender, age, disability, and others.

“In both spheres, tenant discrimination not only undermines the principles of equal opportunity but also has significant legal and ethical implications for landlords, property managers, and businesses,” she said.

Complaints reach unprecedented highs

According to Rodriguez, recent data from the National Fair Housing Alliance (NFHA) indicates a troubling trend, with 33,007 fair housing complaints filed in 2022 alone — the highest in a single year, marking a 5.74% increase from the previous year and a 14.9% rise over the last two years.

“In 2022, disability discrimination claims accounted for 53.68% of complaints filed and racial discrimination accounted for 18.97% of complaints filed. Eighty-two percent of all complaints filed were rental-related housing,” she said. “It’s essential to note that local state laws may introduce additional protected categories, reflecting the dynamic nature of anti-discrimination regulations across jurisdictions.”

The legal landscape governing this area includes several federal laws designed to protect tenants and ensure equal housing opportunities. The Fair Housing Act prohibits discrimination in the sale, rental, and financing of dwellings on various grounds, including race, color, religion, sex, familial status, national origin, and disability.

Title VI of the Civil Rights Act of 1964, meanwhile, prevents discrimination in programs receiving federal aid based on race, color, and national origin. The Americans with Disabilities Act of 1990 and the Rehabilitation Act of 1973 both prohibit discrimination against individuals with disabilities. The Architectural Barriers Act of 1968 and Title IX of the Education Amendments Act of 1972 further emphasize accessibility and prohibit sex-based discrimination in federally assisted programs.

“Various laws at the federal level work in concert to protect tenants against discrimination, ensuring that housing opportunities remain equitable and free from bias,” Rodriguez said.

Shielding from discrimination liabilities

Recent legal proceedings highlight the persistent challenges and consequences of discrimination in real estate. Notably, the case involving Trident Mortgage Company, settled with a substantial financial commitment to address the inequalities in lending practices.

Trident agreed to establish a loan subsidy fund worth at least $18.4 million and pay a civil penalty of $4,000,000, following allegations of racial and color discrimination in Philadelphia between 2015 and 2019.

“Real-world cases and legal claims surrounding tenant discrimination provide a stark view of the challenges in upholding fair housing practices,” Rodriguez said. “These cases, often brought to light by organizations such as the National Fair Housing Alliance (NFHA), shed light on discriminatory practices and underscore the importance of understanding the legal implications of these violations.”

To mitigate the risks associated with tenant discrimination claims, Rodriguez urged real estate entities to adopt thorough and effective policies and practices. Tenant discrimination liability insurance plays a crucial role in this context, offering protection against claims related to discrimination, harassment, or wrongful eviction. This coverage is vital for managing legal expenses and financial losses stemming from such lawsuits.

“Discrimination claims made by a tenant and/or their guests against landlords and property managers may not be covered in an insured’s EPL or GL policy, and if coverage exists, the policy form may not be all encompassing,” she said.

“Tenant discrimination liability insurance is specifically crafted to shield landlords and property managers in situations involving discrimination, harassment, or wrongful eviction. This coverage extends to legal expenses and financial losses resulting from discrimination lawsuits made by a tenant and their guests, offering essential protection for housing providers against such claims,” Rodriguez said.

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