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Housing Discrimination Laws and the Continuing Erosion of Property Rights

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Not so long ago in this country, you could stay out of legal trouble by refraining from aggression against other people. The law of torts, crimes, and property was well established and under those bodies of law, you committed no offense unless you acted so as to hurt another by taking or damaging something that was rightfully his. If you declined an offer to deal with someone else, you were perfectly within your rights because you had committed no aggression. Just saying “No” would cause you no legal difficulty.

That is no longer the case. With the passage of a host of federal and state anti-discrimination laws, individuals can now find themselves subject to suit and compelled to pay staggering legal fees and damage awards because they had the temerity to say “No” to someone in a “protected class.” Some of the most egregious instances of the use of the law to punish people for making peaceful decisions regarding their own property have occurred in the rental-housing market. A recent decision by the Michigan Supreme Court highlights the continuing attack on the rights of property owners.

John and Terry Hoffius own an apartment building in Jackson, Michigan. In the summer of 1993, they had a vacancy and advertised it. They were contacted by a couple, Kristal McCready and Keith Kerr, who expressed interest in renting it. When asked if they were married, McCready and Kerr replied in the negative. Mr. Hoffius informed them that according to his religious beliefs it was sinful to cohabit out of wedlock and that he would not countenance it by renting to them.

McCready and Kerr soon found another apartment in the area but would not just let the matter drop. They contacted the Jackson County Fair Housing Center for assistance and then filed suit in state court against the Hoffiuses.

The case ran into a snag in the trial court, however. The judge was persuaded that in passing the Civil Rights Act (CRA), the state legislature did not mean to include unmarried couples in the class of people “protected” by the law. The reason was that an old Michigan statute made unmarried cohabitation a misdemeanor. Reasoning that the legislature would have repealed that statute if it had meant to “protect” unmarried couples against housing discrimination, the trial court dismissed the complaint. The plaintiffs appealed, but the state court of appeals affirmed the decision of the trial court.

But the plaintiffs had one more chance, the Michigan Supreme Court. They hit the jackpot. In a 4-2 decision, the Supreme Court reversed the decision of the court of appeals and held that it was a violation of the plaintiffs’ “rights” under the CRA to refuse them an apartment because they were unmarried. The majority’s arguments and rhetoric bear close scrutiny.

First, the court brushed off the argument that had persuaded the lower courts, namely the evident conflict between the anti-cohabitation statute and the CRA. Why, that statute hadn’t been enforced in decades, said the court, and therefore it was going to presume that the legislature did mean to include unmarried couples under the CRA.

Second, and getting to the heart of the matter, the court declared that the Hoffiuses’ property rights and religious convictions were of much less importance in its political-judicial view of the world than the “need” to provide “equal access” to housing and to “eradicate” discrimination. Enter one of the most pernicious phrases ever to find its way into the language: “compelling state interest.”

According to the court, housing is a “fundamental need” and therefore the state has a “compelling interest” in ensuring that “no one be denied equal access to housing.” And having uttered the magic phrase “compelling state interest,” the court then was able to conclude that whatever rights the Hoffiuses might have are “outweighed” by the great need for government intervention in their decision-making.

It is hard to see how an abstraction, the state, can have any interests at all, but let’s play along with the word game and assume that it does. Why is there a “compelling” interest in making sure that everyone has “equal access” to housing? In one sense, people have always had equal access so long as the law did not keep anyone from trying to contract with another for housing. McCready and Kerr were free to ask to rent an apartment from the Hoffiuses, and when they were turned down, they were free to go to other landlords with vacant apartments, which they did; and they quickly found comparable quarters. (If the Michigan law against cohabitation interfered with “equal access” to housing, then the solution would be to repeal it rather than to interfere with the liberty and property rights of the Hoffiuses.)

In a free market, everyone with the means to purchase housing (or food, cars, clothing, and everything else) is able to get the goods and services he needs. The great majority of landlords are interested only in the ability of the prospective tenant to pay the rent and take reasonably good care of the property. Most care no more about the marital status of their tenants than they care about their ice-cream preferences. A small number, however, do care about what the law has deemed to be “forbidden grounds” (to borrow the title of Professor Richard Epstein’s book), but their preferences their “discrimination” is easily bypassed. Long before there were any anti-discrimination statutes, people who were generally unpopular learned to go where they were welcome and avoid places where they were not.

The market provides housing for all, and the fact that a few landlords have what politicians and judges call irrational preferences is no justification for the use of coercion against them. Since everyone can obtain housing through the peaceful processes of the free market, there is no “state interest” at all in trying to force open every housing door to every person.

One of the arguments raised by counsel for the Hoffiuses was that there was no need to trample upon his clients’ freedom because there are less obtrusive means of ensuring that people can find housing than to force landlords to rent to people whose conduct they find offensive. But the court also brushed that aside, saying, “We have not identified a less obtrusive alternative to eradicate discrimination in real estate transactions.”

Most revealing. Obviously aware that there are noncoercive means of helping people find housing if they can’t find it on their own, the court says that there is no other way of “eradicating discrimination” than by lawsuits and mandates. The real reason for housing discrimination laws is thus revealed molding landlords into a politically correct image of perfect indifference to the habits and characteristics of the people who live in their buildings. At one point, the court suggests that if the Hoffiuses don’t like the restrictions on their freedom, they can just get out of the rental-housing business. That, I suggest, is the real agenda of the “housing activists.” They want to make life so miserable for people of conviction that eventually all landlords will be meek, compliant order-takers.

This case is far from unique. There have been suits over this precise issue in several other states, notably California and Massachusetts, with the plaintiffs winning. Mr. Hoffius may appeal to the United States Supreme Court, arguing that the First Amendment should shield him from the state’s interference with his right to select his own tenants. While I would hope he would win on that ground, in truth this case is not about religious freedom. It is about property rights. Because he owns the building, he should be free to say yes or no to prospective tenants for any reason whatsoever. The Constitution was meant to protect the rights of property owners to manage their affairs free from governmental confiscation or interference just as much as it was meant to protect the First Amendment freedoms. Landlords who do not want to rent to unmarried couples for religious reasons should not be treated any differently than, say, landlords who do not want to rent to families with children for noise reasons.

If the housing activists are really concerned about the prospect of individuals’ not being able to find housing because of discrimination, they can solve the supposed problem by purchasing or constructing rental-housing units and offering them on a pristinely nondiscriminatory basis. They could even eliminate the most pervasive kind of discrimination of all discrimination against people who want to live in a certain place but can’t afford the rent by charging little or no rent at all. No law prevents housing activists from using their own resources to solve the “problem” of discrimination.

But of course, we will never see that. It is easier and far less costly for the activists to enter the political arena and work for coercive statutes that make other people bear the costs for what they want than to try to solve the problem themselves. What we really need to eradicate in America is not “discrimination” but rather the notion that it is all right to use coercion against others to get what you want.

The Hoffius case will now go back to trial on the issue of damages. The plaintiffs are claiming that they suffered “emotional distress” as a result of being turned down. How much a jury might choose to award is anyone’s guess. A sensible jury would say that the plaintiffs haven’t really suffered any damage at all and award nothing, but it is more likely that it will be swayed by lawyerly “Send them a message!” rhetoric that has in other discrimination cases led to damage awards in the millions. Furthermore, Mr. Hoffius will almost certainly be ordered to pay the plaintiffs’ attorney fees, now in excess of $30,000. He may be financially ruined just because he said “No” to the wrong people.

Laws against housing discrimination have no place in a free society. They solve an imaginary problem with a vicious and wasteful means that hastens the erosion of freedom.

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    George C. Leef is the research director of the John W. Pope Center for Higher Education Policy in Raleigh, North Carolina. He was previously the president of Patrick Henry Associates, East Lansing, Michigan, an adjunct professor of law and economics, Northwood University, and a scholar with the Mackinac Center for Public Policy.