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Supreme Court Recognizes Disparate Impact Housing Claims

In a 5 to 4 decision, the U.S. Supreme Court today ruled that Fair Housing Act liability can be proven without the need to show intentional discrimination.

The narrow issue in the case of Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. was whether a person can bring a lawsuit under the Fair Housing Act based on a “disparate impact.”

The court said “yes.”

Disparate impact is a legal doctrine under the nation’s anti-discrimination laws that allows a court to consider a policy or practice discriminatory if it has a disproportionate “adverse impact” against any group based on race, national origin, color, religion, sex, familial status, or disability. Today’s ruling means that housing discrimination need not be intentional in order to be illegal.

However, the court also clearly recognized the problems disparate impact claims could have with respect to where builders locate their projects.

In this case, the Inclusive Communities Project (ICP) claimed that the Texas Department of Housing and Community Affairs was discriminating because it had allowed more tax credits in lower income neighborhoods than in higher income neighborhoods. This, according to ICP, furthers segregation.

The court, however, explained, “it seems difficult to say . . . that a decision to build low-income housing in a blighted inner-city neighborhood instead of a suburb is discriminatory.” Similarly, it noted that “[i]t would be paradoxical to construe the FHA to impose onerous costs on actors who encourage revitalizing dilapidated housing in our Nation’s cities merely because some other priority might seem preferable.”

Therefore, the Supreme Court provided that it would not be easy to prove discrimination based on where a builder locates his or her project.

Commenting on the ruling, NAHB Chairman Tom Woods said:

“NAHB is a strong supporter of the Fair Housing Act’s goals to allow all people to obtain housing free from discrimination. The nation’s home builders stand ready to develop and build safe and decent housing in all communities across the country. However, as the court stated, the Fair Housing Act cannot put ‘private developers in a double bind of liability, subject to suit whether they choose to rejuvenate a city core or to promote new low-income housing in suburban communities.’ While today’s U.S. Supreme Court decision has far-reaching consequences for home builders and home buyers alike, we look forward to working with HUD and Congress to create clear rules that ensure builders can readily comply with the Fair Housing Act while assisting localities that need affordable housing.”

During its June meeting, the NAHB Board of Directors adopted policy on this issue, calling on the association to “work with the Department of Housing and Urban Development and the Department of the Treasury to help them clarify rules for preventing any form of discrimination in accordance with the Fair Housing Act.” Such rules will likely be necessary to ensure that the Supreme Court’s limitations on disparate impact claims are observed.

View further analysis on the Supreme Court ruling.

For more information, contact Tom Ward at 800-368-5242 x8230.


About HBA of Delaware

HBA/DE has been an integral part of the growth and economic development of the State of Delaware since 1947. HBA/DE was founded as a non-profit state affiliate of the National Association of Home Builders (NAHB) representing home builders and other businesses directly related to Delaware's Home Building Industry. Consisting of Builders, Remodelers and a group of diversified associate members, the Home Builders Association of Delaware strives to protect and preserve housing as a symbol of America.


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