Tenant Discrimination Liability Insurance

Tenant discrimination, a pervasive issue in both residential and commercial real estate, refers to the unjust and prejudicial treatment of tenants based on certain protected characteristics. This discriminatory behavior can manifest in various forms, impacting individuals seeking housing or commercial space based on factors such as race, color, religion, national origin, age, gender, disability, or other protected categories. 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.

Understanding the gravity of this issue is imperative, as recent statistics from the National Fair Housing Alliance (NFHA) reveal 33,007 fair housing complaints reported in 2022. This figure represents the highest number of complaints reported in a single year, with a 5.74% increase from the previous year and a substantial 14.9% increase over just two years.

Types of Discrimination

Discrimination in housing can take various forms, each rooted in the unfair treatment of individuals based on specific protected characteristics. These protected characteristics include:

Race discrimination involves treating individuals differently based on their race or ethnicity, a violation of the fundamental principle of equal housing opportunity.
Color discrimination extends this bias to the shade or complexion of an individual.
National origin discrimination occurs when housing decisions are influenced by a person’s place of origin or ancestry.
Religious discrimination involves unfair treatment based on one’s religious beliefs or practices.
Sex discrimination, which includes both gender identity and sexual orientation, pertains to differential treatment based on gender-related factors.
Familial status discrimination occurs when individuals with children under the age of 18 face unequal treatment.
Disability discrimination involves unfavorable actions against individuals with disabilities, denying them equal access to housing.

In 2022, disability discrimination claims accounted for 53.68% of complaints filed and racial discrimination accounted for 18.97% of complaints filed. 82% of all complaints filed were rental-related housing. *

It’s essential to note that local state laws may introduce additional protected categories, reflecting the dynamic nature of anti-discrimination regulations across jurisdictions.

*Source: NFHA, 2023 Fair Housing Trends Report

Legal Framework & Regulations

Various laws at the federal level work in concert to protect tenants against discrimination, ensuring that housing opportunities remain equitable and free from bias. While this list* is not exhaustive, it provides a glimpse into the comprehensive legal framework designed to safeguard tenants’ rights:

Fair Housing Act: Prohibits discrimination in the sale, rental, and financing of dwellings based on race, color, religion, sex (including gender identity and sexual orientation), familial status, national origin, and disability.
Title VI of the Civil Rights Act of 1964: Prohibits discrimination based on race, color, and national origin in programs and activities receiving federal financial assistance.
Section 504 of the Rehabilitation Act of 1973: Prohibits disability-based discrimination in any program or activity receiving federal financial assistance.
Architectural Barriers Act of 1968: Requires accessibility for persons with disabilities in buildings and facilities designed or altered with federal funds.
Title II of the Americans with Disabilities Act of 1990: Prohibits disability-based discrimination in housing-related programs and activities of public entities.
Title IX of the Education Amendments Act of 1972: Prohibits sex-based discrimination in education programs and activities receiving federal financial assistance, including housing affiliated with educational institutions.

These laws collectively address discrimination based on race, color, religion, sex, familial status, national origin, and disability, providing a robust legal framework for tenant protection.

*Source: U.S. Department of Housing and Urban Development, Fair Housing and Related Laws

Tenant Discrimination Claims

Real-world cases and legal claims surrounding tenant discrimination provide a stark view of the challenges in upholding fair housing practices. 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. Here are some notable examples:

Consumer Financial Protection Bureau v. Trident Mortgage Company LP*: In response to a lending discrimination lawsuit filed by the Consumer Financial Protection Bureau (CFPB) and the Justice Department, Trident Mortgage Company agreed to invest a minimum of $18.4 million in a loan subsidy fund. The fund aims to increase credit availability in minority neighborhoods in Philadelphia, addressing allegations of unlawful discrimination based on race, color, or national origin between 2015 and 2019. Trident, without admitting liability, will also pay a $4,000,000 civil penalty and enlist independent credit needs assessment consultants to evaluate the needs of majority-minority areas in the Philadelphia region.
*Source: NFHA, 2023 Fair Housing Trends Report

Baltimore Neighborhoods, Inc. v. Rommel Builders, Inc. (D. Md.): Private plaintiffs brought forth this case, claiming a condominium complex violated the Fair Housing Act by not being accessible to persons with disabilities. The court granted both monetary damages and equitable relief, ordering the establishment of a fund of approximately $333,000 for retrofitting and appointing a supervisor to oversee the project.

Consumer Financial Protection Bureau & United States v. Hudson City Savings Bank, F.S.B. (D.N.J.): This case involved allegations of “redlining” by Hudson City Savings Bank, where it allegedly failed to provide mortgage lending services to majority-Black-and-Hispanic neighborhoods on an equal basis. The consent order required Hudson City to provide a $25 million loan subsidy fund, invest $2.25 million for outreach and community development, open branches in affected neighborhoods, and pay a $5.5 million civil monetary penalty.

These tenant discrimination liability cases serve as poignant reminders of the legal exposures faced by organizations in the real estate sector. The intricacies and outcomes of such cases may leave individuals and organizations wondering about their own potential exposures to discrimination claims. Navigating these legal implications requires a proactive approach, involving comprehensive awareness, adherence to fair housing laws, and the implementation of robust policies and practices to safeguard against discrimination and mitigate the risk of legal consequences.

Protecting your Organization

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. 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.

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.

About the Author

Lisa Rodriguez, Principal, Senior Vice President, has been working in the insurance industry for over 25 years. Lisa serves as Brown & Riding’s Non-Profits: Human Services Practice Leader, a specialty team designed to address the specific needs of the human/social services sector. She is also an expert in private company EPLI and sexual abuse and molestation (SAM) coverage.