Disparate Impact Updates

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The apartment industry is committed to equal housing opportunity for all without regard to race, religion, color, sex, national origin, handicap or familial status. However, more clarity is needed on the applicability of disparate impact liability, as it could be used to undermine apartment providers' otherwise valid policies to ensure safe and decent housing for residents.

Read on for the latest legislative actions related to this topic.

March 20, 2023

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HUD Restores 2013 Disparate Impact Rule

HUD has reinstated its 2013 Disparate Impact Rule, which focuses on unintentional discrimination in housing. Disparate impact theory creates liability for seemingly neutral policies that nonetheless have discriminatory effects on a protected class.

Industry Impact: The Rule’s reinstatement creates unnecessary uncertainty, undermines the use of necessary business practices, and imposes new obstacles to reducing housing costs and addressing the country’s housing supply shortage.

NMHC's Viewpoint: NMHC strongly supports fair housing laws, but we have long-raised concerns that an overly expansive view of disparate impact theory could create liability for basic business practices ranging from housing development to operations. This Rule fails to acknowledge the limitations of disparate impact liability imposed by courts subsequent to the development of the 2013 Rule – namely the Supreme Court’s Inclusive Communities case, which established important guardrails around disparate impact theory.

What’s Next: NMHC will continue to urge HUD to align its rule with Supreme Court and other legal action and implement a rule that aids housing providers in executing long-held business practices without running afoul of fair housing requirements.

Learn More >>>

Oct. 2, 2019

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HUD Releases New Disparate Impact Rule, Industry to Weigh In

The U.S. Department of Housing and Urban Development (HUD) released a proposed disparate impact rule that seeks to address a number of issues the industry has raised.

Why This Matters: If finalized, this would be an important step in addressing barriers to new apartment development and housing affordability. NMHC has long-raised concerns that HUD’s existing disparate impact doctrine created uncertainty for housing providers and undermined the use of necessary business practices and have argued for the agency to better align its’ regulations and policies with recent court decisions.

Diving Deeper: Disparate impact theory creates liability for seemingly neutral policies that nonetheless have a discriminatory effect on a protected class. In 2013, HUD issued a final rule formalizing the agency’s position on disparate impact liability and establishing uniform standards for determining when a real estate practice or policy violates the FHA. Subsequently, the U.S. Supreme Court issued the milestone Inclusive Communities decision on disparate impact liability, which created new limitations on the use of the theory.

NMHC Viewpoint: NMHC and NAA will soon file comments with the U.S. Department of Housing and Urban Development (HUD) voicing strong support for the agency’s newly released Proposed Rule on Disparate Impact under the Fair Housing Act (FHA). We are encouraging HUD to expeditiously finalize the final rule to ensure that housing providers can execute necessary business practices without running afoul of fair housing requirements.

Next Steps: NMHC members are encouraged to submit individualized comments including information about their company and the impact of uncertain fair housing conditions. The deadline for filing comments with HUD is October 18, 2019.

Learn more about the unintentional consequences of disparate impact by accessing an NMHC and NAA white paper that reviews a range of disparate impact court cases involving. The paper also provides greater clarity on disparate impact implications for the apartment industry and shows a need to update HUD policies with new legal precedent.

Paula Cino pcino@nmhc.org