⚠️ A Quick Disclaimer: We are property managers, not attorneys. This article represents our own thoughts and outlines what we are currently doing here at BTS Properties to navigate these changes. Please consult your own legal counsel for advice on your specific operations and screening policies.
If you want a surefire way to put your kids to sleep tonight, pull up the recent Notice of Withdrawal (FR 6571-N-01) from the Department of Housing and Urban Development (HUD).
Jokes aside, this is a massive update for anyone self-managing a rental property. HUD recently audited their files and officially withdrew eight major Fair Housing guidance documents—some dating back to 2007. They wiped out years of memos detailing exactly how landlords should handle criminal background checks, digital advertising, and assistance animals.
When news of this hit, many independent landlords celebrated the "deregulation," thinking they could finally go back to blanket bans on criminal records or automatically rejecting emotional support animals.
Do not fall for this trap. Just because HUD withdrew their guidance memos does not mean the actual Fair Housing Act went away. The law is still the law, and private fair housing attorneys and advocacy groups can still sue you. In fact, without those clear HUD guidelines telling you exactly how to comply, the liability risk for independent landlords just increased because the rules of the game are now entirely up to court interpretation.
At BTS Properties, we are approaching this carefully. Here are the 3 things we are absolutely not changing in our operations right now:
1. We Are NOT Changing Our Criminal Screening
We are not going back to "blanket denials" just because someone has a criminal record pop up on their report. We are continuing to evaluate applications on a case-by-case basis. We look at the specific crime, the severity, and how much of a risk it poses to the owner's property and the surrounding residents. We have this written out specifically in our screening criteria so our decisions are consistent.
2. We Are Documenting Every Single Denial
If you take nothing else away from this update: document everything. Especially around applications and leasing decisions. If you get sued two years down the line, you need to be able to pull up an application and say, "I denied John Smith because his specific record went against this exact point of my written screening criteria." Document, document, document.
3. We Are NOT Changing Our Approach to ESAs
We are not changing the way we approach accommodation requests for emotional support and service animals. We still require them to go through our screening process to provide the proper proof that it is a reasonable request. However, as long as they provide that proof, we are absolutely not charging any pet fees or pet rent for those animals.
Navigating the Compliance Minefield
Federal housing compliance is a spicy topic right now, and the rules are constantly shifting. As an investor, your goal should be passive income, not keeping track of HUD withdrawals and disparate impact liability.
If managing these legal liabilities is a headache you'd rather not deal with, reach out to us at BTS Properties (btspeoria.com). We handle the strict compliance heavy-lifting so our owners can rest easy.
