Residential landlords need to be familiar with any laws in their area which ban discrimination based on source of income. Currently, 12 states and several cities prohibit landlords from discriminating against tenants or prospective tenants based on their source of income.

In a nutshell, landlords who own rental property in states or cities with source of income laws may not treat tenants or prospective tenants differently depending on where they get their income.

For example, a landlord may not refuse to rent to a tenant whose source of income is unemployment benefits. Landlords should make sure all applicants are treated the same way, regardless of their source of income.

However, while source of income laws prohibit discriminating against applicants based on where they get their income, they do not prohibit "discrimination" based on the amount of the applicant's income. Landlords do not have to accept tenants who can't pay their rent, regardless of their source of income, and may refuse to rent to tenants who receive financial assistance if they have a non-discriminatory reason for rejecting them, such as a criminal record.

The wording of the state or local source of income law is also important. For example, some laws prohibit discrimination based on source of income, but do not include Section 8 Housing vouchers.

Violating state or local source of income laws can lead to costly investigations and lawsuits. Landlords should talk to their attorneys about laws in their area which prohibit discrimination based on source of income.