Owning rental property or selling a home can be lucrative endeavors, with the former promising a steady cash flow and the latter allowing the seller to realize gains from their earlier investment. But those upsides are not without potential risks. If a property owner discriminates against a prospective renter, tenant, or buyer on bases prohibited by federal and state law, the claims, consequences, and costs that follow can easily eclipse any anticipated benefits.
These risks are especially acute in New Jersey, where the state’s Law Against Discrimination (LAD) provides some of the nation’s strongest protections against housing discrimination. Accordingly, New Jersey landlords, property managers, co-op boards, sellers, and other real estate professionals should be acutely aware of how and why these claims arise, the potential legal and financial fallout, the need for experienced counsel, and practical steps that can reduce risk while still allowing for a profitable rental business.
Federal and State Housing Discrimination Laws
Two overlapping legal regimes govern housing discrimination claims in New Jersey. The federal Fair Housing Act (FHA) prohibits landlords, lenders, and other housing providers from discriminating against individuals based on their membership in a protected class when selling, renting, or financing a home. Under the FHA, those classes include race, color, national origin, religion, sex, familial status, and disability. New Jersey’s LAD reaches at least as far, and in many cases farther, by prohibiting discrimination on those bases plus additional protected characteristics (for example, sexual orientation, gender identity or expression, and others recognized under state law). The state’s Division on Civil Rights (DCR) enforces LAD claims and provides guidance specific to housing providers.
Housing discrimination claims can arise from many alleged transgressions, not just refusing to rent or sell based on protected characteristics. This includes:
- Advertising that implies a preference for (or against) certain groups.
- Refusing to rent to families with children or to applicants who receive housing vouchers.
- Applying different screening standards to tenants of a certain race or national origin.
- Denying a reasonable accommodation to a tenant with a disability (for example, refusing a request for a live-in aide or an assistance animal).
- Retaliating against a tenant who complains about discriminatory conduct.
- Differences in how rules are enforced between tenants if they fall along protected characteristics.
The Lifecycle of a NJ Housing Discrimination Claim
Aggrieved persons can bring complaints against property owners and other parties at both the state and federal levels. When pursuing allegations arising from alleged violations of LAD, they can file a claim through either the New Jersey DCR or in state court.
The process typically begins with filing a verified complaint with the DCR, which must occur within 180 days of the alleged discriminatory act. The complaint outlines the facts of the case and identifies the parties involved. Once filed, the DCR reviews the submission to determine whether it falls within its jurisdiction. If accepted, the complaint is formally served on the respondent, who must then file a written answer. During this initial stage, the DCR may offer the parties an opportunity to resolve the dispute through mediation, which can result in a voluntary settlement.
If mediation is unsuccessful or declined, the DCR investigates the complaint. Investigators gather evidence, interview witnesses, and review documents to determine whether there is probable cause to believe that discrimination occurred. This process can take several months, depending on the case’s complexity and the availability of evidence. If the DCR finds probable cause, the case moves forward to a hearing before an administrative law judge in the New Jersey Office of Administrative Law (OAL). Both sides can present evidence, call witnesses, and make legal arguments.
Following the hearing, the administrative law judge issues a recommended decision to the Director of the DCR, who then makes the final determination. If the judge concludes discrimination occurred, remedies may include monetary damages for emotional distress, reimbursement of out-of-pocket losses, civil penalties, and orders requiring the respondent to cease discriminatory practices or provide housing. Either party may appeal the decision to the Superior Court of New Jersey, Appellate Division.
Alternatively, complainants may bypass the DCR process and file a lawsuit directly in state court within two years of the alleged violation.
Potential Consequences of Housing Discrimination Claims
A successful housing discrimination claim can result in significant exposure for defendants, including:
- Compensatory and punitive damages, including actual damages for losses (moving costs, higher rent elsewhere, emotional distress) and, in some circumstances, punitive damages. New Jersey’s LAD has historically allowed for robust remedies.
- Civil penalties, orders to cease and desist from discriminatory conduct, and orders to adopt corrective policies.
- Attorney’s fees and costs.
- Injunctive and compliance obligations, such as orders to provide reasonable accommodations, revise advertising or screening practices, or submit to monitoring and training.
- Reputational harm and business loss from public complaints, settled claims, or press coverage that can reduce demand for units, complicate financing and insurance renewals, and make future transactions more costly or conditional.
Practical Steps To Minimize the Risk of Housing Discrimination Claims
Given these consequences, proactive and holistic compliance strategies designed to minimize the risk of housing discrimination claims should be part of every rental property owner’s repertoire. In consultation with experienced counsel, consider the following steps or actions:
- Develop and implement clear, consistent written rental policies for advertising, screening, rent collection, maintenance responses, guest rules, and accommodations for pets and assistance animals. Apply them uniformly and ensure those interacting with tenants know when discretion is allowed and when they must escalate issues to management.
- Use neutral language in advertising, listings, and communications. Avoid wording that suggests preferences (e.g., “perfect for young couples,” or “no kids”) and stick to objective descriptions of the unit and building amenities. Keep templates for emails and text messages to reduce off-the-cuff statements that could be read as discriminatory.
- Standardize and document screening criteria that use objective, measurable requirements such as credit score thresholds, income-to-rent ratios, and verifiable rental histories. Apply those criteria consistently to every applicant. Keep records of how each applicant met or failed to meet criteria and the documents used to evaluate them.
- Understand and honor requests for reasonable accommodations by persons with disabilities (including assistance animals or modified payment schedules). Under the FHA and NJ law, providers must grant reasonable accommodations unless doing so would impose an undue financial or administrative burden or fundamentally alter the nature of the housing service.
- Train staff and vendors regularly on fair-housing basics, accommodation protocols, harassment, and retaliation to help prevent mistakes.
- Keep meticulous records and be prepared to present them, including application packages, emails, text messages, maintenance logs, and written explanations for adverse decisions.
- Provide tenants with clear instructions for how to request accommodations, report harassment, or raise concerns — and respond promptly. A fair, diligent internal process can prevent escalation to regulators or courts.
Consult With Counsel Immediately After a Claim Arises
Given the scope of state and federal protections and the remedies available, property owners should make prevention an operational priority. If a claim arises or even if a tenant informally alleges discriminatory treatment, contacting experienced housing discrimination counsel as soon as possible is the most important step that the target of such claims or complaints can take. Your attorney can help assess risk, preserve privilege, prepare records, and mount the strongest possible defense.
If you have questions or concerns about housing discrimination claims, please contact Ansell.Law Partner Seth M. Rosenstein.