Housing Choice Vouchers (Section 8 Rent Assistance) Are Not A "Lawful Source of Income" In Wisconsin

I am often asked whether or not a landlord is able to legally decline to rent to a tenant that is receiving "rent assistance." I believe that the primary reason that landlords are unsure of the answer to this question is because Wisconsin's Open Housing Act (Sec. 106.50, Wis. Stats.) prohibits a landlord from discriminating against a tenant or a prospective tennat based on their "lawful source of income." For more information on Wisconsin's protected classes you should read my prior post entitled "FAIR HOUSING - Part 1: What Are The Protected Classes?"

The Housing Choice Vouchers Program (previously referred to as Section 8 Rent Assistance) is a voluntary federal program that assists very low-income families, the elderly, and the disabled to locate housing in the private market. Housing Choice Vouchers are administered locally by public housing agencies (PHA's). The PHA's receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program. If a landlord accepts a tenant who is enrolled in the Housing Choice Voucher Program then the local PHA will pay a housing subsidy (to cover a portion of the tenant's rent) directly to the landlord. The tenant then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. For more information on the program please go to the Housing Choice Vouchers Fact Sheet which is located on HUD's website. The federal regulations that cover this program can be found at 24 CFR Part 982.

An earlier version of the Wisconsin Administrative Code defined "lawful source of income" as including "lawful compensation or lawful remuneration in exchange for goods or services provided, profit from financial investments, any negotiable draft, coupon, or voucher representing monetary value such as food stamps, social security, public assistance or unemployment compensation benefits. Sec. IND 89.01(8), Wisc. Admin. Code. (Please Note that this section of the Code is no longer available). Lawful source of income would also include child support payments, family support payments (i.e. alimony).

Under the above definition it would seem that "rent assistance" would be considered to be a lawful source of income, however the Seventh Circuit Court of Appeals -- which includes Wisconsin -- held otherwise in the 1995 case of Knapp v. Eagle Property Management Corp., 54 F.3d 1272, 63 USLW 2750 (1995).

The court in Knapp specifically held that rent assistance vouchers are NOT considered to be a lawful source of income under Wisconsin's Open Housing Act. The court reasoned that the Section 8 voucher "does not equate" to the other forms of aid mentioned above. The Court explained that of the types of income enumerated in the regulation, that rent assistance vouchers would be the most like food stamps -- but yet they are still very different. Unlike food stamps, rent assistance vouchers do not have a montary value independant of the voucher holder and the apartment sought. Additionally, unlike other forms of support, the local housing authority that administers the federal program makes the rent assistance payments directly to the landlord, rather than to the voucher holder.

The Knapp Court did acknowledge that while rent assistance vouchers could arguably be included within the definition of "lawful source of income" under the Wisconsin Statutes, that they would "decline to ascribe such an intent to the state legislature because of the potential problems in doing so."

The primary problem that the Court was referring to is that if section 8 vouchers were to be considered a "lawful source of income" then Wisconsin would in essence be making the Section 8 program mandatory for all Wisconsin landlords. As mentioned above the federal program is voluntary. The court felt that it would be wrong to allow a state to make a voluntary federal program mandatory without the legislature clearly stating that that was its intent.

Thus, it is because of the Seventh Circuit Court of Appeal's holding in Knapp that landlords in Wisconsin are legally allowed to refuse to rent to a prospective tenant that is on "rent assistance."

ADDED after reviewing comment: PLEASE NOTE THAT SOME MUNICIPALITIES HAVE DECIDED TO MAKE RECIPIENTS OF HOUSING CHOICE VOUCHERS PROTECTED --- So it is always important to check the local ordinances in which you hold property as local municipalities are allowed to create additional protected classes. Dane County and the City of Madison are notable for doing this.