Much of the country’s attention has been on the United States Supreme Court’s rulings on marriage equality and the Affordable Care Act last week, but the nation’s highest court also handed down an important housing decision that looks at whether a public or private entity can get hit with a federal Fair Housing lawsuit even if it had no intent to discriminate. The legal concept is called disparate impact and, ever since the federal Fair Housing Act was enacted in 1968, all federal courts of appeal have interpreted the law to mean an entity can get sued for housing discrimination if its actions have a disparate impact on a protected class, regardless of intent.
In its decision last week, the Supreme Court affirmed a circuit court’s judgement, holding that disparate impact claims are cognizable under the Fair Housing Act, and are an important component to the Fair Housing Act’s role in moving the country toward a more integrated society. “Residents and policymakers have come to rely on the availability of disparate-impact claims,” the court says in its decision to the case, Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc.
Importantly, the court made clear that just because an action has a disparate impact, that doesn’t mean it’s necessarily discriminatory. All the facts in the case have to be looked at, and a plaintiff must be able to point to a specific policy (or policies) of the defendant that is causing the disparity, and even then the defendant can demonstrate that the challenged policy is necessary to achieve a legitimate business interest. Only where the plaintiff can demonstrate that there is an alternative practice that would serve the defendant’s legitimate interest with a less discriminatory effect will a disparate impact claim be established.
For NAR members, since the decision upholds what’s been a longstanding legal concept, there should be little change seen on the ground. What’s more, since the decision includes extensive discussion about the many factors that should be considered when looking at a disparate impact claim, the court appears sensitive to the kinds of concerns that were identified by real estate professionals in a working group NAR created several years ago to look at the disparate impact issue.
In that group, two main concerns were identified: that real estate professionals and others not be held liable for actions if they had no reasonable way of knowing that a disparate impact would be the outcome, and that real estate professionals not be expected to do extensive research into the possible disparate impact of their actions.
“I believe there is much in the decision that reflects an understanding of the type of concerns that NAR members shared in the disparate impact working group and reflected in NAR policy,” says Fred Underwood, NAR’s director of diversity and community outreach programs.
For real estate professionals, the decision means ending housing discrimination remains a national goal and it also affirms that one doesn’t have to intend to discriminate to be the subject of a lawsuit. But it also means disparate impact claims must pass a reasonable hurdle, because the court recognized many factors go into the decisions that shape our housing markets.