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Supreme Court Recognizes Disparate Impact Under the Fair Housing Act

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In one of its most recent decisions, the Supreme Court held that housing practices can be unlawful based on their discriminatory effect, even if there is no discriminatory purpose. The Fair Housing Act (FHA) makes it unlawful to “refuse to sell or rent…or otherwise make unavailable or deny” housing to a person based on race or any other protected characteristic. The lawsuit alleged that a Texas state agency had caused segregated housing patterns because the agency gave too many tax credits to developers in mostly minority inner-city neighborhoods and too few credits in the mostly white suburbs.

The Supreme Court found that unlawful practices under the FHA include housing restrictions that function unfairly to exclude minorities from certain neighborhoods and communities without sufficient justification. The Court did, however, hold that if the plaintiff relies on a statistical disparity without being able show that the policy caused the disparity, the claim would fail. The Court additionally limited the decision so that housing authorities and private developers can make practical business choices and profit-related decisions without being drawn into litigation.

So while the Supreme Court held that housing practices can be unlawful when they have a discriminatory effect, housing authorities and developers may continue the practice if they can prove it is necessary to achieve a valid interest and that there is not a less discriminatory alternative. Additionally, any plaintiff must be able to show that the housing practice caused the disparity, so housing authorities and developers won’t be held liable for racial disparities they didn’t create.

Joe Burke is a law clerk at Lardiere McNair, LLC. To read more about Joe and our firm, please visit www.lmcounsel.com.

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