In a recent decision, as reported by JD Supra, a federal judge in the U.S. District Court for the District of Massachusetts ruled that a tenant screening algorithm is subject to the regulations of the Fair Housing Act (FHA), including the statute’s prohibition on racial discrimination in housing.
The judge deduced that despite the company not being a landlord itself, property owners purportedly relied exclusively on the company’s determinations to reject potential renters’ applications. This reliance effectively endowed the company with the capacity to make housing verdicts.
For legal professionals operating in the rental industry, this case presents several considerations to reflect on:
- The boundaries between being a service provider and the effective decision maker may be more blurred than previously assumed.
- Technology and algorithms are not beyond the reach of traditional housing regulations, such as the FHA.
- Reliance on third-party screening services may create unexpected legal implications for landlords and real estate management companies.
It remains to be seen how this ruling will impact the broader tenant screening industry and its intersection with property management businesses. As the use of technology becomes more prevalent in these industries, the implications of this decision could be far-reaching and may necessitate a reevaluation of current practices among companies and landlords alike.