BARRISTER'S BRIEFING: New York State Establishes Source of Income as Protected Class

Brian Levine | May 2019

On April 12, 2019, the “Lawful Source of Income Non-Discrimination Act of 2019” was signed into law by Gov. Andrew Cuomo. Most of you in Westchester Count might be saying to yourself, “Wait, wasn’t source of income already a protected class?” The answer to that is, “yes.” Back in 2013, the Westchester County’s Board of Legislators established source of income protections for consumers looking to purchase, rent or lease real estate. That law was made permanent in October 2018. For the other Realtors in the remaining counties, you may be asking yourselves, “What is source of income discrimination?”

With the new statewide law now in effect, Realtors should be asking, “Under this new law, what do I need to know and do to comply with the law and, more importantly, what do I need to do to protect and best represent my clients?” The quick and fast answer to that question is, “It depends.” If you already had a source of income law on the books (for example, Westchester), provisions can still be enforced if they are more restrictive than the New York State law. However, if those provisions are less restrictive than the New York State law, they will no longer be enforceable.

Westchester’s Old Law

Under Westchester’s law, “source of income” protection applied to persons who obtained lawful income through:

• Social Security;

• Any form of federal, state or local public assistance or housing assistance;

• Grant or loan programs, including federal housing subsidy know as “Section 8;”

• Any disability payment; and

• Any assistance, grant or loan program from a private housing assistance organization.

Under the Westchester law, there were several exceptions where the law did not apply. These were: condominiums and co-ops; and any landlord with a building with six units or less, if the owner has only one such building.

Further, under the Westchester law, it was not discriminatory for a landlord to make inquiries into a prospective tenant’s total income level (as opposed to source), their credit history and their previous landlord references.

The New York State Law

The New York State’s law’s most important change is that there are no exceptions to this law. It applies to everyone including buildings with six or fewer units, condominiums and co-ops.

The law states that lawful source of income shall include, but not be limited to:

• Child support, alimony, foster care subsidies;

• Income derived from Social Security;

• Any federal, state, or local public assistance or housing assistance (including Section 8);

• Any other form of housing assistance payment or credit whether or not such income or credit is paid or attributed directly to a landlord; and

• Any other form of lawful income.

The New York law also permits the use of: criteria or qualifications of eligibility for the sale, rental, leasing or occupancy of publicly-assisted housing accommodations where such criteria or qualifications are required to comply with federal or state law, or are necessary to obtain the benefits of a federal or state program. A publicly assisted housing accommodation may include eligibility criteria in statements, advertisements, publications or applications, and may make an inquiry or request information to the extent necessary to determine eligibility.

What Does It All Mean

There are pros and cons to this new law, but first and foremost is knowing that the old Westchester law is unenforceable, as it was less restrictive than the New York State law.

On the positive side of the new law, for the Realtor whose business takes them to numerous counties, the state law creates one uniform rule, aiding compliance. Also, because it’s a state law, aggrieved parties can now seek recourse in the state courts or at the New York State Division of Human Rights, in addition to the Westchester County Human Rights Commission (for those in Westchester County). Owners, landlords, property managers and rental agents are no longer permitted to refuse potential tenants who receive any type of lawful housing assistance. Any advertisement, publication or application can no longer limit or discriminate as to lawful source of income (for example, “No Section 8” or “No Programs”).

It is clear that any Realtor that receives a directive from an individual (owner, landlord, property manager, rental agent, broker, or other licensee) to discriminate based upon lawful source of income should advise that individual that doing so is unlawful and you cannot follow that instruction. Also, if a Realtor knows that a client will accept an application from a prospective tenant, but will never approve the applicant because they are a lawful source of income recipient (for example, they receive Section 8 vouchers), that Realtor should terminate their involvement with that client and fully document that action.

On the negative side, as with most new laws, there are several unanswered questions. For starters, can the owner of a non-publicly assisted housing accommodation use any criteria or qualifications for those individuals protected under lawful source of income? Can a landlord request a credit report (especially if the entire rent is paid for by a program, making creditworthiness irrelevant)? What if the program only pays a portion of the rent? What about tenant screenings? Additionally, clarification is needed where a property has to pass inspection in order to qualify for a particular program. Some program requirements are more stringent than state and local laws require for legal rentals. What happens to a property that is in full compliance with state and local laws, but an inspection requires an issue or item be remedied in order for the tenant to receive the program benefit? Does a landlord or owner have to remedy this issue if it does not violate any state or local law? Can the landlord or owner deny the tenant instead of remedying the item?

The New York State Association of Realtors is reaching out to state agencies and departments to obtain answers and get clarity on the law. They are also aware that there will be many questions from Realtors as to what is/is not permitted, what questions can/cannot be asked, and many other issues that arise as the law is implemented. Realtors are encouraged to reach out to the NYSAR Legal Hotline (free to members) Monday-Friday, 9:00 am – 3:00 pm at (518) 436-9727 or (518) 43-NYSAR.

Editor’s Note: The foregoing s for informational purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.

Brian Levine
Brian S. Levine, Esq. is In-House Counsel/Director of Legal Services & Professional Standards Administrator for the Hudson Gateway Association of Realtors.