The following article is provided by Loophole Lawyer, PC for general informational purposes only. This article does not constitute legal advice nor does it create an attorney-client relationship. Each circumstance and case is fact dependent—if you have questions about your case, call our office for a free consultation.

Source-of-Income Discrimination: What LA Landlords Need to Know

Los Angeles landlords are facing a new wave of litigation—and it’s not about late rent. Increasingly, legal action is being taken against property owners who fail to treat tenants with lawful rental subsidies, such as Section 8 vouchers, fairly. Understanding the law and implementing clear policies is now more important than ever to avoid costly litigation.

The Laws Behind Source-of-Income Protection

Several laws protect tenants in Los Angeles from discrimination based on how they pay their rent:

• Los Angeles Municipal Code (LAMC) § 45.96 – prohibits landlords from denying housing based on a tenant’s source of income.

• Unruh Civil Rights Act – ensures all Californians have equal access to housing, regardless of protected characteristics, including lawful subsidies.

• Fair Employment & Housing Act (FEHA) – extends anti-discrimination protections to tenants using rental assistance programs.

Under these laws, landlords cannot deny housing or treat tenants differently simply because they use Section 8 or other government housing vouchers.

Why Landlords Are Being Targeted

Law firms are actively pursuing cases against landlords who:

• Explicitly list “No Section 8” or other subsidy restrictions in rental ads

• Fail to respond to inquiries from voucher holders

• Apply inconsistent screening standards or deny applications without a lawful basis

Even unintentional violations can lead to serious consequences.

Potential Consequences for Violations

Landlords who run afoul of source-of-income laws may face:

• Statutory penalties – typically starting at $4,000 per violation

• Compensatory damages for affected tenants

• Plaintiff attorney’s fees, which can add significantly to costs

This legal trend is a reminder that treating rental subsidies as legitimate income isn’t optional—it’s the law.

How Landlords Can Protect Themselves

To minimize the risk of lawsuits, landlords should adopt proactive compliance strategies:

1. Train Staff on Source-of-Income Laws
   Make sure leasing agents, property managers, and front-line employees understand their legal obligations.

2. Standardize Tenant Screening
   Create consistent financial and eligibility criteria for all applicants.

3. Treat Rental Vouchers Like Income
   Section 8 and other lawful subsidies are equivalent to income under California law. Evaluate applicants fairly and transparently.

4. Document Your Process
   Keep clear records of applications, communications, and decisions to demonstrate compliance if ever challenged.

5. Obtain Insurance Coverages
   Landlord liability, errors & omissions, employment practices, and umbrella insurance policies can help protect property owners and management teams from costly lawsuits.

Insurance Options to Protect Landlords and Property Management Teams

In addition to following the law, having the right insurance coverage can help mitigate financial risk for landlords and property management companies. Several types of policies can provide protection against lawsuits and related claims:

1. Landlord Liability Insurance
   Covers legal costs, damages, and settlements if a tenant sues over property-related issues, including alleged discrimination or accessibility violations.

2. Errors & Omissions (E&O) Insurance
   Also called professional liability insurance, this protects property managers and staff against claims arising from mistakes, omissions, or failure to follow proper procedures in tenant screening or leasing.

3. Employment Practices Liability Insurance (EPLI)
   Protects against claims related to employment discrimination, wrongful termination, or harassment involving on-site staff, which can sometimes intersect with tenant complaints or lawsuits.

4. Umbrella Insurance
   Provides additional coverage beyond standard liability limits, giving extra protection if legal costs or settlements exceed primary policy limits.

Key Takeaways for LA Landlords

The legal landscape in Los Angeles is shifting. Source-of-income discrimination lawsuits are on the rise, and even minor oversights can lead to costly legal exposure. By training staff, standardizing screening procedures, and treating all lawful income sources fairly, landlords can protect their properties, their finances, and their reputation.