Weekly Magazine:  June 6, 2008

Tenant Discrimination Liability Insurance

Tenant Discrimination Insurance (TDI) is a relatively new insurance product that protects rental property owners and managers against the rising number of tenant discrimination lawsuits.

Property owners and managers can be sued for discrimination even when they have done nothing wrong. The rising number of housing discrimination complaints and a more aggressive pursuit of violations of the Fair Housing Act by HUD and The Department of Justice means greater liability exposure for income property owners and managers.

TDI is a claims-made policy that provides first dollar defense against lawsuits alleging discrimination of fair housing on the basis of protected classes, non-compliance with occupancy standards, harassment or wrongful eviction.

A TDI policy also protects the property owner and manager from legal action initiated through regulatory agencies charged with the administration of fair housing laws.

Tenant Discrimination insurance can provide coverage against claims based on the Fair Housing Act, Fair Credit Reporting Act, ADA, class action lawsuits, and claims brought by HUD or other regulatory agencies, Additional coverages may be available through additional endorsements.

Paid-on-behalf coverage for commercial and residential property owners includes full prior acts for most risks and punitive damages where insurable by law. Costs of attorney fees, associated expenses, losses and settlements in defense of lawsuits or administrative claims by prospective, current, and past tenants, applicants or other non-employee claimants are paid according to policy limits.

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Weekly Magazine:  May 29, 2008

Adverse Action Notice Required

Section 615(a) of the FCRA requires landlords, when they take an "adverse action" against a rental applicant based in any way on a "consumer report" from a "consumer reporting agency," to provide an adverse action notice to that consumer.

A "consumer report" from a "consumer reporting agency" is not only a credit report provided by a credit bureau but also any report of the applicant's rental history procured from prior landlords or housing court records as provided by a tenant screening service.

In particular, the law requires landlords to provide rental  applicants with a notice that (1) informs them about the adverse action, (2) identifies the consumer reporting agency (CRA) that provided the report that contributed to the landlord's action, (3) states that the CRA did not make the rejecting decision and cannot explain the reason for rejection, and (4) specifies the consumer’s rights under the FCRA.

Adverse action includes not only a landlord's denial of a rental application, but also any action by the  landlord that imposes a burden not required of all tenants -- such as requiring a co-signer on the lease, requiring a larger deposit, or increasing the tenant's rent or deposit to a higher amount.

The adverse action notice is required even if the information in the consumer report was not the primary reason for the adverse action.

There can be situations where the landlord is not required to send an adverse action notice. When verifying personal, employment, or previous housing references, if the landlord or the landlord’s employee directly performs the verifications, the verification is not covered by the Act. If the landlord employs a tenant screening service to provide such verifications, the Act would apply. Landlords should also check to make sure of their state’s requirements.

No adverse action occurs in a transaction when the landlord makes a counteroffer that is accepted by the applicant. As an example, the landlord offers to rent the unit to the applicant if the applicant will provide a co-signor and the applicant agrees to do so.

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Weekly Magazine:  May 21, 2008

Crime Free Housing Programs

The Crime Free Multi-Housing Program and Crime Free Residential Housing Program are crime prevention programs designed to reduce crime, drugs, and gangs on apartment properties and small rental properties.

The Crime Free Multi-Housing Program was successfully developed at the Mesa Arizona Police Department in 1992 and has since been implemented in approximately 2000 cities in the United States.

The three phases in the program, Management Training, Property Inspection and Compliance, and Community Awareness Training, must be completed under the supervision of the local police department. Property managers can become individually certified after completing training in each phase and the property becomes certified upon successful completion of all three phases.

Fully certified properties have reported reductions in police calls for service as much as 70% over previous years. The critical element of the program is the correct implementation and use of the Crime Free Lease Addendum.

Benefits of the program include a more stable and satisfied tenant base, reduced police service calls, lower maintenance and repair costs, reduced exposure to civil liabilities, and improved personal safety for all tenants, landlords, and property managers.

Crime problems often migrate from apartment communities to condominium and single family home rentals. For organized crime, marijuana growers, methamphetamine labs, and gang activity, migration to private rental housing provides criminals with privacy, extra storage, and the absence of daily on-site property management.

The Crime Free Rental Housing Program was established for homeowners and property managers to work with law enforcement to combat criminal activities in small property rentals.

Homeowner training and property certification is similar to the Multi-Housing program requirements.

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