What background knowledge is needed for this Practice Of Real Estate question?

The disparate impact theory in fair housing law was developed through decades of federal case law following the Fair Housing Act of 1968, culminating in the U.S. Supreme Court's 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, which confirmed that disparate impact claims are cognizable under the federal Fair Housing Act. Maryland's Fair Housing Act, which independently protects source of income as a class, provides even stronger grounds for such claims at the state level because voucher holders and disability income recipients are explicitly named protected classes under Maryland law — a protection that does not exist in the federal statute. The MCCR has applied disparate impact analysis in enforcement actions against landlords and property managers whose income verification policies disproportionately screen out Section 8 voucher holders and recipients of public assistance.

What is a good way to remember the answer to this Practice Of Real Estate question?

Remember the three-step disparate impact burden-shifting test with the acronym 'IAA' — Impact (complainant shows disproportionate adverse impact), Answer (respondent must justify with business necessity), Alternative (complainant can defeat justification by showing a less discriminatory alternative exists). Visualize a courtroom scale: the complainant loads the scale with impact data, the respondent tries to balance it with a business necessity weight, and the complainant can tip it back by placing a 'less discriminatory alternative' weight on their side.

What exam tip applies to this Practice Of Real Estate question?

When a Maryland fair housing question presents a facially neutral policy — such as an income ratio, a credit score cutoff, or a criminal history screen — and a protected class member is harmed by it, immediately think 'disparate impact' rather than 'disparate treatment,' because the question is testing whether you recognize that neutral-sounding policies can still be unlawful. The correct answer on these questions will almost always involve the three-part burden-shifting analysis rather than an absolute rule that the policy is either always lawful or automatically unlawful.

How does this Practice Of Real Estate concept apply in real world practice?

A property management company overseeing 500 apartment units in Anne Arundel County adopts a written policy requiring all applicants to show gross monthly income of at least three times the rent from W-2 employment sources only. A veteran with a service-connected disability who receives VA disability compensation and holds a Housing Choice Voucher applies for a two-bedroom unit and is denied because his income does not come from employment. He files a complaint with the MCCR citing disability and source of income discrimination, and the MCCR investigates whether the policy disproportionately screens out voucher holders and disability income recipients — and whether the company can justify the policy as a business necessity that cannot be achieved through a less discriminatory alternative, such as counting all verifiable income sources toward the income threshold.

Practice Of Real EstateFair HousingHARD

A Maryland property management company implements a policy of requiring all prospective tenants to earn at least three times the monthly rent in verifiable employment income. A prospective tenant who relies entirely on Social Security disability income and a housing voucher is denied tenancy under this policy. The tenant files a complaint with the Maryland Commission on Civil Rights citing both disability and source of income discrimination. The property management company argues the policy is a neutral, business-justified income verification standard. Which of the following best evaluates the enforceability of this policy under the Maryland Fair Housing Act?

Correct Answer

C) The policy may constitute disparate impact discrimination against disability and source of income protected classes, requiring the company to demonstrate business necessity and explore less discriminatory alternatives.

Under the Maryland Fair Housing Act, Md. Code Ann., State Gov't §§ 20-701 et seq., both disability and source of income are protected classes. A facially neutral policy — such as requiring three times the monthly rent in employment income — can constitute disparate impact discrimination if it disproportionately excludes members of a protected class and cannot be justified by business necessity. The policy's requirement for 'verifiable employment income' specifically excludes disability-based income sources and housing vouchers, which disproportionately affects persons with disabilities and voucher holders (a source of income protected class). The company must demonstrate that the policy is necessary for a legitimate business reason and that no less discriminatory alternative exists. This is a disparate impact analysis under Maryland fair housing law.

Answer Options

The policy is fully enforceable because income verification requirements are explicitly exempt from Maryland fair housing scrutiny.

The policy is fully enforceable because requiring three times the rent in income is a universally accepted and neutral lending standard.

The policy may constitute disparate impact discrimination against disability and source of income protected classes, requiring the company to demonstrate business necessity and explore less discriminatory alternatives.

The policy is automatically unlawful because any income threshold requirement violates Maryland's source of income protections.

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