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HUD Issues Final Revised Disparate Impact Rule

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On September 24, the U.S. Department of Housing and Urban Development (HUD) published its final rule, HUD’s Implementation of the Fair Housing Act's Disparate Impact Standard, effective October 26. It amends the agency’s 2013 rule and refines its interpretation of the Fair Housing Act’s (FHA) disparate impact standard to better reflect the U.S. Supreme Court’s (SCOTUS) 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. (also known as “Inclusive Communities”). Thank you to the thousands of National Apartment Association (NAA) members who participated in the association’s calls to action and made the industry’s voice heard. The revised rule is a direct result of this advocacy.

For years, NAA, the National Multifamily Housing Council (NMHC) and their members have urged HUD to amend the Obama-era rule to bring it more in line with SCOTUS’ landmark decision in Inclusive Communities and to provide guidance that ensures housing providers may continue to execute necessary business practices without running afoul of fair housing requirements. Under disparate impact theory, a rental housing provider can be sued if the owner or operator implements a policy that is neutral on its face but nonetheless has an unintended, discriminatory effect on members of a protected class under the FHA.

While the rental housing industry remains committed to providing equal opportunity for all renters, housing providers voiced concern about their broad liability for disparate impact claims in light of HUD’s 2013 rule and subsequent guidance. Seemingly neutral and common business policies, such as occupancy limitations, criminal screening criteria and eviction screening policies could trigger discrimination claims under the disparate impact standard. Denial of Section 8 voucher holders also have been scrutinized under disparate impact theory as plaintiffs argue this practice disproportionately affects people of color, persons with disabilities, and families with children.

NAA is working on updated industry guidance and will update its affiliates and members shortly with its plans.

To learn more about disparate impact, contact Nicole Upano, NAA’s Director of Public Policy or visit the Disparate Impact page on the NAA website.