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Supreme Court Rules That Disparate-Impact Claims Are Allowed

Digested from “Ruling on Disparate Impact Opens the Door for More Claims and Cases”
Property Management Insider (7/20/15) Blackwell, Tim

The Supreme Court, in its interpretation of the Fair Housing Act, ruled last month that it is unlawful not only to intentionally segregate neighborhoods but also to engage in activities that could unknowingly have a segregation effect. In the case presented to the court, Texas Department of Housing and Community Development v. The Inclusive Communities Project, Inc., the Texas Department of Housing and Community Development unintentionally segregated neighborhoods by determining which landlords it provided with tax credits for low-income families. 

In other words, tax credits — which require landlords to accept low-income housing vouchers — were being distributed in low-income, high-minority areas more than in affluent neighborhoods.

The majority opinion by Justice Kennedy attempted to prevent abuse of such disparate-impact claims — “an allegation that a law or practice has a discriminatory effect, even if it wasn’t based on a discriminatory purpose,” as explained by the SCOTUS blog — by placing a stronger burden of proof on the plaintiff. Instead of insinuating that the activities of the defendant could have a negative impact, the plaintiff will need to point to the exact policy causing the issue and have statistical proof of the negative impact that activity has.     

Critics, however, state that the majority opinion leaves open the opportunity for abuse that could severely hurt the apartment industry. It may take years to see how the interpretation plays out in the courts and the impact that it has on the industry. In the meantime, apartment-community owners and managers should make sure to document all decisions, and the reasons for them, as a backup in case a claim is brought against the apartment community, the owner or the manager.  

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