You own a rental property. A prospective tenant applies with a housing choice voucher, commonly called a Section 8 voucher. You turn them down because you don’t want to deal with government paperwork or the inspection requirements. That decision might land you in court for civil rights liability. In many states and cities, refusing a tenant solely because they use a housing voucher is illegal discrimination.

Housing discrimination laws exist to prevent landlords from denying people housing based on protected characteristics. Federal law under the Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, and disability. Source of income—meaning how a person pays rent—is not protected at the federal level. But that loophole is closing fast. Over a dozen states and dozens of local governments have passed laws making source of income a protected class. That means a landlord who rejects a qualified applicant because they use a Section 8 voucher, Social Security disability benefits, child support, or any other lawful income source is breaking the law.

The most common form of this discrimination happens with housing vouchers. Landlords often claim they have legitimate reasons: the inspection process is burdensome, the rent is below market, or they fear government interference. But courts and housing agencies have repeatedly ruled that those practical inconveniences do not justify discrimination. If you advertise a rental as “No Section 8” or tell an applicant you only accept tenants who earn three times the rent from a job, you are signaling that you exclude people based on their lawful source of income. That signal alone can trigger a discrimination lawsuit.

What does liability look like? A tenant who is turned down because of their voucher can file a complaint with the U.S. Department of Housing and Urban Development or a state fair housing agency. Those agencies investigate. If they find probable cause, they can take the case to an administrative law judge or refer it to the Department of Justice. Alternatively, the tenant can sue you directly in federal or state court. The damages can be severe. You might be ordered to pay the tenant’s actual losses, such as moving costs, higher rent elsewhere, and emotional distress. You can also face punitive damages designed to punish you for willful discrimination. And you will almost certainly have to pay the tenant’s attorney fees, which can easily run into the tens of thousands of dollars.

Beyond financial penalties, you could be ordered to change your rental policies, undergo fair housing training, and submit to monitoring for years. In some cases, you could lose your rental license or face fines from local housing authorities. Even if you win the case, the legal costs and time spent defending yourself can be crippling for a small landlord.

The key issue is intent. Many landlords do not realize they are discriminating. They think they are making a business decision. But discrimination law looks at effects, not just intentions. If your policy or practice has a disproportionate impact on voucher holders, and you cannot offer a legally valid, nondiscriminatory reason for it, you are liable. For example, setting a minimum income requirement at three times the rent may sound neutral, but voucher holders often have incomes below that threshold after the voucher covers part of the rent. If you apply that requirement uniformly without making an exception for the subsidy portion, you are effectively excluding voucher holders. That is a disparate impact claim.

What should you do as a landlord? First, know the law in your state and city. Even if your state does not protect source of income, your city might. Second, treat all lawful income the same. If you accept paychecks from a job, accept a voucher, disability check, or alimony. Verify the income as you would any other source. Third, avoid any language in ads or tenant policies that suggests you do not accept vouchers or other assistance programs. That includes not saying “No Section 8” and not refusing to fill out the voucher paperwork. The paperwork is part of your obligation under the law.

If you are a tenant facing this kind of rejection, document everything. Save the ad or listing that mentioned income restrictions. Keep a record of the conversation or email where the landlord said they do not accept vouchers. Then contact your local fair housing center or HUD. You may have a strong case.

Housing discrimination is not a victimless wrong. It blocks low-income families, people with disabilities, seniors, and single parents from safe, stable housing. And the legal system is increasingly closing the door on landlords who try to game the system by excluding voucher holders. Ignorance of the law is not a defense. If you own rental property, make sure your policies are based on valid, nondiscriminatory criteria—not on whether the rent check comes from a government program.