Recently there have been a few questions relating to source of funds and Fair Housing. The relevant question is whether it is a violation of Fair Housing to deny someone because of their source of funds if they use a real estate licensee. 

As a brief reminder, § 36-96.1 paragraph B. Declaration of policy, states: 

It is the policy of the Commonwealth of Virginia to provide for fair housing throughout the Commonwealth, to all its citizens, regardless of race, color, religion, national origin, sex, elderliness, familial status, source of funds, sexual orientation, gender identity, military status, or disability, and to that end to prohibit discriminatory practices with respect to residential housing by any person or group of persons, in order that the peace, health, safety, prosperity, and general welfare of all the inhabitants of the Commonwealth may be protected and ensured. This law shall be deemed an exercise of the police power of the Commonwealth of Virginia for the protection of the people of the Commonwealth.

36-96.1:1, defines source of funds as:

“Source of funds” means any source that lawfully provides funds to or on behalf of a renter or buyer of housing, including any assistance, benefit, or subsidy program, whether such program is administered by a governmental or nongovernmental entity. 

The relevant portion which creates the question is under § 36-96.2 Paragraph A, it reads in part: 

[…] The sale or rental of any such single-family house shall be exempt from the application of this chapter only if the house is sold or rented (i) without the use in any manner of the sales or rental facilities or the sales or rental services of any real estate broker, agent, salesperson, or of the facilities or the services of any person in the business of selling or renting dwellings, or of any employee, independent contractor, or agent of any broker, agent, salesperson, or person and (ii) without the publication, posting, or mailing, after notice, of any advertisement or written notice in violation of this chapter. […] 

This ‘exemption’ makes it clear that the sales or rental of property cannot violate Fair Housing if a real estate licensee, et al. are retained. This is a fact as stated in the law, an owner cannot hire a real estate licensee and then use them to violate Fair Housing. Which then leads to the question of source of funds and Fair Housing. 

Still under § 36-96.2 Paragraph I, states: 

Nothing in this chapter shall prohibit an owner or an owner’s managing agent from denying or limiting the rental or occupancy of a rental dwelling unit to a person because of such person’s source of funds, provided that such owner does not own more than four rental dwelling units in the Commonwealth at the time of the alleged discriminatory housing practice. However, if an owner, whether individually or through a business entity, owns more than a 10 percent interest in more than four rental dwelling units in the Commonwealth at the time of the alleged discriminatory housing practice, the exemption provided in this subsection shall not apply. 

The mandate that real estate licensees cannot violate Fair Housing and the source of funds exemption under I, are not in discord. If an owner retains a real estate license to manage their properties but they have 4 or less rental properties (or 10 percent interest in 4 or less) then it is not a violation of Fair Housing for the owner/licensee to deny or limit the rental or occupancy of a rental unit due to source of funds.  

Can an owner who has 4 or less properties voluntarily accept whatever source of funds? Absolutely. There is nothing stopping anyone from voluntarily accepting any legal source of funds.  

Now what if the owner has 5 rental properties in the commonwealth?  Then the owner cannot deny a person’s application due to their source of funds.  

What if you meet a new owner/client and they would like you to rent their properties and you want to make sure you are not unwittingly violating Fair Housing? Virginia REALTORS® provides a form for that. Form 930 – Ownership Declaration Form. It has three options: owner is not exempt, owner is exempt and wishes to not participate, and owner is exempt but does wish to participate.  

If you have any further questions about this, please remember to reach out to us through the Virginia REALTORS® Legal Hotline.