Both New York State and New York City, as well as other municipalities within New York State, have laws on the books that prohibit discrimination by owners and managers of housing accommodations against prospective tenants based on the source of the tenants’ income.

The New York State and New York City versions of these laws comprise part of the civil rights statutes of New York State and New York City. New York State’s general anti-discrimination statute appears at Sections 290-301 of the New York Executive Law (the “New York State Human Rights Law,” or “NYSHRL”), with the provisions barring discrimination in housing accommodations appearing in Section 296, Paragraph 5(a) of that statute. New York City’s general civil rights statute appears in Title 8 of the New York City Administrative Code of the New York City Administrative Code (the “Code”) (the “New York City Human Rights Law,” or “NYCHRL”), with the provisions barring discrimination in housing accommodations appearing in Code §8-107(5)(a).

Both the NYSHRL and NYCHRL prohibit multiple forms of discrimination on the basis of numerous characteristics, and each of them includes “lawful source of income” as one such characteristic. At the outset, both statutes define “lawful source of income” as including federal, state, or local governmental housing subsidies, and expressly including “section 8 vouchers,” N.Y. Executive Law §292(36); Code §8-102, i.e., vouchers issued under Section 8 of the United States Housing Act of 1937, otherwise known as the Housing Choice Voucher Program, see People by James v. Commons West, LLC, 80 Misc. 3d 447, 448 (Sup. Ct. Cortland County 2023), adhered to on renewal, _____ Misc. 3d _____, 224 N.Y.S.3d 364 (Sup. Ct. Cortland County 2024); Housing Rights Initiative v. Corcoran Group LLC, No. 154010/2022, 2024 N.Y. Slip Op. 30596(U), 2024 WL 776827, at *1 (Sup. Ct. N.Y. County Feb. 26, 2024) (“Corcoran Group”).

Other types of housing subsidies falling within “lawful sources of income” include, among others, CityFHEPs (City Fighting Homelessness and Eviction Prevention Supplement) vouchers issued by the City of New York, see Olivierre v. Parkchester Preservation Co., No. 452058/2022, 2022 N.Y. Slip Op. 34471(U), 2022 WL 18456529, at *1-3 (Sup. Ct. N.Y. County July 29, 2022); Fair Housing Justice Center, Inc. v. Beach Haven Apartments Associates LLC, No. 525173/22, 2024 N.Y. Slip Op. 30790(U), 2024 WL 1076110, at *2 (Sup. Ct. Kings County Feb. 29, 2024); and the Olmstead Housing Subsidy (“OHS”) and the New York City HIV/AIDS Services Administration (“HASA”) rental subsidy, see Fair Housing Justice Center, Inc. v. Pelican Management, Inc., 18-cv-1564 (ER) (OTW), 2023 WL 6390159, at *1 (S.D.N.Y. Sept. 29, 2023) (“Pelican Management”), aff’d, 23-7348-cv, 2025 WL 251723 (2d Cir. Jan. 21, 2025).

The NYSHRL and NYCHRL each prohibit four types of acts, although the precise wording varies between the two:

1. Outright refusal to sell, rent, or lease the housing accommodation, or otherwise deny or withhold the housing accommodation, based on a person’s lawful source of income. N.Y. Executive Law §296(5)(a)(1); Code §8-107(5)(1)(a). This would include, for example, a landlord’s outright refusal to accept a legitimate Section 8 voucher. See Florentino v. Nokit Realty Corp., 29 Misc. 3d 190, 196 (Sup. Ct. N.Y. County 2010).

2. Representation to any person that any housing accommodation is not available for inspection, sale, rental, or lease when in fact it is available. See N.Y. Executive Law §296(5)(a)(1); Code §8-107(5)(1)(c). This would include, for example, an assertion, by a landlord, to a Section 8 voucher holder, that there are no available units to rent, when in fact there are available units.

4. Printing or circulating any statement, advertisement, or publication, or using any form of application for the purchase, rental, or lease of such housing accommodation, or making any record or inquiry in connection with the prospective purchase, rental or lease of such housing accommodation which expresses, directly or directly, any limitation, specification, or discrimination as to lawful source of income, or any intent to make such limitation, specification, or discrimination. N.Y. Executive Law §296(5)(a)(3); Code §8-107(5)(2). This would include, for example, a landlord’s real estate broker or agent informing a prospective applicant who asks whether the landlord accepts vouchers, that the landlord does not accept vouchers. See Newson v. Vivaldi Real Estate Ltd., ___ A.D.3d ___, 226 N.Y.S. 3d 6, 8, 14 (1st Dep’t 2025) (holding such allegations, as against landlord’s real estate agent, stated a claim against landlord under NYCHRL).

Application of this statute can be problematic in the case of applicants for apartment rentals who receive housing assistance, including but not limited to section 8 vouchers. It is standard procedure for landlords to require that applicants be generating an income that is a certain multiple of the monthly rent; often, this minimum-income requirement is set as forty (40) times the monthly rent. Such a minimum-income requirement is imposed in order to confirm that the applicant is receiving sufficient income that s/he will be able to afford to pay rent throughout the rental term, were the applicant to be accepted as a tenant.

However, a tenant may not be qualified to receive a housing subsidy in the first place if s/he receives an income in excess of a certain amount. See Corcoran Group, 2024 WL 776827, at *3 (reciting that complaint of lawful-source-of-income discrimination alleged that to be eligible for Housing Choice Vouchers, a one-person household’s annual income could not exceed $41,800, a two-person household’s annual income could not exceed $47,750, and a three-person household’s annual income could not exceed $53,700, each of which amounts was less than $72,000 minimum income necessary to rent $1,800-per-month apartment under requirement that income be 40 times the monthly rent); Olivierre, 2022 WL 18456529, at *1-2 (recounting plaintiff’s allegations that she had a CityFHEPs voucher, eligibility for which required a gross annual household income no greater than $46,060, whereas owner of property where she wished to reside required her to show a minimum annual income of $62,000).

Ordinarily, one might expect that circumstance to be the end of the matter: the limited income of the applicant that renders him/her eligible for the voucher, also disqualifies the applicant from residence at the desired property. However, some trial-level courts in New York State, both in state and federal courts, have held that imposition of a minimum-income requirement upon voucher recipients is a violation of the NYSHRL and NYCHRL. This is true even if the landlord applies the same minimum-income requirement to both voucher recipients and non-voucher recipients alike.

Partly this is due to the existence of two alternate theories of proving liability under civil rights laws. One of these is disparate treatment, wherein the plaintiff must show intentional discrimination, in which, under the NYSHRL and NYCHRL, “the plaintiff need only show differential treatment—that [a class] is treated ‘less well’ –because of a discriminatory intent.” See Corcoran Group, 2024 WL 776827, at *2 (quoting Mihalik v. Credit Agricole Chevreux N. Am., Inc., 715 F.3d 102, 110 (2d Cir. 2013)) (alterations in Corcoran Group).

The other theory is disparate impact, wherein, even if there is no intent to discriminate, a practice that is facially neutral with regard to the protected characteristic—here, the applicant’s receiving a voucher—nevertheless has a disproportionate impact on persons. “To establish a disparate impact claim ‘a plaintiff must first establish a prima facie case by showing, (1) the occurrence of certain outwardly neutral practices, and (2) a significantly adverse or disproportionate impact on persons of a particular type produced by the defendant’s facially neutral acts or practices.’” See Corcoran Group, 2024 WL 776826, at *3 (quoting Mhany Mgmt., Inc. v. County of Nassau, 819 F.3d 581, 617 (2d Cir. 2016)). If the plaintiff can establish those two elements, then the burden shifts to the defendant to “prove that its actions furthered, in theory and in practice, a legitimate, bona fide [ ] interest.” Pelican Management, 2023 WL 6390159, at *14 (quoting Mhany Mgmt., 819 F.3d at 617) (internal quotation marks omitted).

If the defendant can do so, then the burden shifts back to the plaintiff, who must show that the “interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.” Id. (quoting Mhany Mgmt., 819 F.3d at 617) (internal quotation marks omitted).

Because of the existence of disparate impact liability, which has been applied to cases alleging discrimination based on lawful source of income, see, e.g., Corcoran Group, 2024 WL 776827, at *3; Pelican Management, 2023 WL 6390159, at *14-15, even a landlord’s imposition of the same income requirement across all applicants, regardless of whether the applicant is a voucher holder, has been found to be discriminatory, in instances in which voucher recipients have been able to show that such a requirement disproportionately impacts them.

For example, in a case in which the defendant imposed a requirement that applicants have an annual income of at least 43 times the monthly rent, the plaintiff was able to show that this minimum-income policy would have excluded 100% of applicants receiving the OHS subsidy, 100% of applicants receiving the HASA subsidy, and 97% of applicants receiving Section 8 vouchers, the United States District Court for the Southern District of New York found that the plaintiff had shown the minimum-income policy had a disparate impact on voucher recipients in violation of the NYCHRL. Pelican Management, 2023 WL 6390159, at *14-15.

In another case, in which, to be eligible for the voucher, the applicant needed to have a household income that was below the minimum-income requirement imposed by the landlord, Supreme Court, New York County found, for the purposes of a motion to dismiss, that the minimum-income requirement had a disparate impact. Corcoran Group, 2024 WL 776827, at *3.

As noted above, a landlord can overcome a finding of disparate impact by proving that its conduct furthered a legitimate interest. However, a landlord must be ready to provide evidence that its policy furthered such an interest.

Even a seemingly obvious explanation will not carry the day, unless there is proof to back it up. For example, in Pelican Management, the landlord’s rationales for its minimum income policy were that the landlord had been “experiencing…unusually high rates of tenant rent arrears,” Pelican Management, 2023 WL 6390159, at *4, and the landlord had a “crucial interest in renting only to tenants who can afford to pay the rent,” id. at *13. However, the court rejected these assertions, reasoning that the landlord “did not evaluate, let alone determine, that subsidy tenants contributed to those high arrears, and did not analyze the frequency with which subsidy holders did or did not pay their portion of the rent, despite having the data within the company’s business records to conduct such an analysis.” Id.

One particular trap into which landlords have fallen—and one which courts have found gives rise not just to liability under a theory of disparate impact, but also one of disparate treatment—is comparing the applicant’s income to an incorrect measurement of the rent to be paid.

In at least two cases, the courts found that the landlords treated applicants with subsidies less favorably on their face, and therefore with disparate treatment, by comparing voucher applicants’ income with the full amount of the rent, rather than the portion of the rent for which the applicants would be personally responsible after a portion of the rent had been paid for by the relevant subsidy. Pelican Management, 2023 WL 6390159, at *16; Corcoran Group, 2024 WL 776827, at *2.

Although, at first glance, it would appear to be equal treatment to compare both subsidy recipients and non-subsidy recipients’ incomes to the full rent on the unit in question, if landlords are to impose minimum incomes at all on subsidy recipients, that income must be a product of the multiplier that they use for non-subsidized tenants, multiplied by only that portion of the rent for which they must pay after the subsidy is received, and not the full amount of the rent.

Thus, for example, if a landlord imposes, upon non-subsidized applicants, a minimum income requirement of 40 times the full rent, it may only impose, upon subsidy recipients, a minimum income requirement of 40 times the portion of the rent for which the applicant is personally responsible after the subsidy is accounted for.

Even these precautions, however, may not be sufficient. The New York City Commission on Human Rights, in its Best Practices for Housing Providers to Avoid Source of Income Discrimination from March 2023 (“Best Practices”), available at https://www.nyc.gov/assets/cchr/downloads/pdf/materials/FiarHouse_FAQs-Landlord-English.pdf, contains a list of frequently asked questions and answers thereto.

In response to the question, “May I require all applicants to make a minimum income such as $68,000 annually or 43x the monthly rent? May I require voucher holders to find a ‘guarantor’ or co-signer?”— the Best Practices state,

When a voucher program calculates a tenants’ [sic] rent based on their income, the government has already determined that they can afford to pay their required portion. In some instances, tenants will pay no portion of the rent out of pocket. Where a tenants’ [sic] portion is calculated based on a tenants’ income, it is a violation of the Law to impose any additional income requirements on applicants for housing. You may not require guarantors or co-signers.

Id. p. 1.

The New York Attorney General’s Office is aggressively investigating many landlords for alleged violations of the NYSHRL and/or NYCHRL, contending that the landlords’ imposition of minimum-income requirements violates those statutes’ prohibitions on lawful-source-of-income requirements.

One means of challenging lawful-source-of-income anti-discrimination statutes that has thus far been successful, albeit also only at the trial level, has been that the statutes are unconstitutional in that, through the means of operation of the section 8 program, landlords accepting section 8 vouchers as partial or total payment of rent are required to enter into Housing Assistance Program (HAP) contracts provided by the federal government that, as presently formulated, require the landlords to waive their Fourth Amendment protections against warrantless searches of their properties and of their records.

In People by James v. Commons West, LLC, 80 Misc. 3d 447 (Sup. Ct. Cortland County 2023) (“Commons West I”), the Attorney General of the State of New York sought, inter alia, to enjoin numerous respondent landlords in the City of Ithaca, who had refused to participate in Section 8, from refusing to rent or lease apartments to Section 8 recipients, and sought restitution for consumers injured by the respondents’ conduct, id. at 448.

The Attorney General argued that landlords’ refusal to accept Section 8 was a violation of the NYSHRL. The respondents argued that compelling participation in Section 8 impermissibly required landlords to waive their rights under the Fourth Amendment to the United States Constitution.

A landlord could accept a Section 8 voucher as payments only by entering into a Housing Assistance Payment contract (“HAP contract”) with a Public Housing Agency (“PHA”), id. at 449, and the HAP contract, which by federal regulation was required to be in the form required by the United States Department of Housing and Urban Development (“HUD”), id. (citing 24 C.F.R. §982.451(a)(1)), required the landlord “to consent to inspection of ‘the contract unit and premises at such times as the PHA determines necessary,’” id. (quoting HAP contract), and to provide the PHA, HUD, and the Comptroller General of the United States “full and free access to the contract unit and the premises, and to all accounts and other records of the owner that are relevant to the HAP contract,” id. (quoting HAP contract) (internal quotation marks omitted), including “any computers, equipment or facilities containing such records.,” id. (quoting HAP contract) (internal quotation marks omitted) The HAP contract does not require that any searches provided for therein to be conducted pursuant to a search warrant. See id.

In Commons West I, Supreme Court, Cortland County agreed with the respondent landlords, holding that the NYSHRL’s prohibition on lawful-source-of-income discrimination was unconstitutional, in that it compelled landlords to waive their Fourth Amendment right against warrantless searches. Id. at 450-51.

The Fourth Amendment provides, “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” U.S. Const. Amend. IV.

After noting that the case presented an issue of first impression, Commons West I, 80 Misc. 3d at 450, Commons West I found that New York Court of Appeals precedent had “specifically held that laws which authorize inspections of residential rental properties without either the consent of the owner or a valid search warrant violate the Fourth Amendment, and specifically noted that a property cannot be indirectly compelled to consent to a search.” Id. at 451 (citing Sokolov v. Village of Freeport, 52 N.Y.2d 431, 435-37 (1981)).

Furthermore, the court found that the lawful-source-of-income provision of the NYSHRL also violated the Fourth Amendment “by compelling landlords to consent to warrantless searches of their records.” Id.

The Attorney General’s office then moved to renew, arguing that there had been a change in the law since the Commons West I decision that remedied the constitutional defect. The same court, in People by James v. Commons West, LLC, __Misc. 3d ___, 224 N.Y.S.3d 364 (Sup. Ct. Cortland County 2024) (“Commons West II,” _____ Misc. 3d _____, 224 N.Y.S.3d 364 (Sup. Ct. Cortland County 2024), found that there had been no valid change in the law, and, even if there had been, landlords would have remained required to consent in advance to warrantless inspections of their real property and records, so that the Fourth Amendment would have still been violated. Id. at 369-72.

The court noted that the Attorney General’s office’s counsel had characterized the landlords’ objections as nitpicking, and the court forcefully held, “The US Constitution may not so easily be disregarded,” and “[t]he means of achieving any policy goal through law, no matter laudable, must comply with the Constitution.” Id. at 372.

The court commented that the constitutional violation could be avoided in the event that federal regulations were amended such as to replace, in the HAP contract, “the requirement that landlords provide advance consent for all such searches with a requirement that all searches or inspections occur only with the consent of the landlord or pursuant to a valid search warrant.” Id.

The New York Attorney General’s office has filed a notice of appeal from the order in Commons West I. Such appeal is to the Appellate Division, Third Department. However, the Attorney General’s office has not yet perfected the appeal. Most recently, it obtained, from the Third Department, a final adjournment, setting a deadline of May 8, 2025 to perfect its appeal. Thus, the issue has not yet been briefed before the Appellate Division, let alone been decided.

However, there are two principal limitations on the continued vitality of a Fourth Amendment constitutional challenge to lawful-source-of-income anti-discrimination laws. The first is that, because it is based on requirements imposed for participation in the Section 8 program, it does not preclude a finding of discrimination in the event that the applicant is receiving a government subsidy from a source other than section 8, such as, for example, a state or city voucher program. To these authors’ knowledge, a landlord is not required to submit to warrantless searches in order to accept benefits from such programs.

The second is that, while the present version of the HAP contract requires landlords to consent to warrantless searches, as Commons West II itself noted, HUD can modify the regulation regarding the HAP contract to permit inspections only upon the landlord’s consent or the issuance of a valid warrant. This would obviate a Fourth Amendment challenge.

Given the pendency of the Commons West I appeal before the Appellate Division, it is apparent that the State of New York would be best served by the Attorney General’s not pursuing violations of the lawful-source-of-income provisions of the NYSHRL and NYCHRL, as they pertain to Section 8 voucher holders, until the Appellate Division has decided the issue. Otherwise, the Attorney General will expend resources on litigation that may ultimately be obviated by an Appellate Division decision that upholds Commons West I and II.

Adam Leitman Bailey is the founding partner of Adam Leitman Bailey, P.C. Brandon M. Zlotnick is a partner in the firm’s real estate litigation practice group.

Read the full article on the New York Law Journal