VREB Issues Guidance Document on Source of Funds
April 21, 2021
On July 1, 2020, a prohibition on discrimination for source of funds was added to the Virginia Fair Housing Law (VFHL). The Virginia REALTORS® Government Relations team voiced concerns about the law’s implementation to the Virginia Real Estate Board (VREB), and now, the VREB has issued a clarifying guidance document, effective as of April 16, 2021.
Here are some highlights from the document that YOU need to know:
- The 1-4 exemption included in the original law is still in effect.
- The 15-day time period for approval begins on the date a complete package requesting the tenancy approval is submitted to the voucher administrator.
- It is NOT unlawful under the VFHL for a seller to consider the financial terms and conditions, including the loan amount, loan program or type of loan, of a real estate purchase contract from prospective purchasers.
- A housing provider is still able to determine the ability of any potential buyer or renter to pay a purchase price or pay rent by verifying the source and amount of income. Any policies must be consistently applied for all tenant applicants.
- Landlords may not refuse sources of funds based on the duration of such funds without potentially violating the VFHL. Any screening policies should be consistent, including for applicants with income that specifies a defined end date. Screening policies that consider past income of all applicants as a predictor of stability are not unreasonable.
- To determine if a tenant can afford the rent, the relevant factor for a landlord’s risk assessment is the tenant’s portion of rent, not the total rent. To avoid discrimination liability, housing providers should subtract any source of funds from a rental assistance program from the total of the monthly rent prior to calculating whether the tenant satisfies the income criteria. For example, if a housing provider requires all tenant applicants to demonstrate they have income that is two times the amount of the monthly rent. The monthly rent is $1000. The prospective tenant earns $800/month and has a housing voucher for $760. To properly calculate whether this prospective tenant meets the income qualification criteria, the housing provider must subtract the voucher amount from the monthly rent to get the tenant’s portion of the rent: $1000 – $760 = $240. Because the tenant’s monthly income of $800 is more than two times the tenant portion of the rent ($240 x 2 = $480), this tenant meets the income qualification criteria.
If you have additional questions regarding source of funds discrimination or the clarifying guidance, please reach out to the Virginia REALTORS® Legal Hotline.
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