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Fair Housing Defense

Information on and Compliance with the FHA

Some Further Thoughts on HUD’s Criminal Screening Guidance For Management

Posted in FHA Basics

As noted in my post from last week, I want to provide the professional apartment management community with a couple of initial recommendations with respect to criminal screening criteria that may be in use at your properties in the wake of the HUD guidance published on April 4, 2016.

First, the use of criminal screening remains acceptable and appropriate. It goes without saying that if you run criminal background screens (and I believe management should do so), we must ensure that all applicants have their backgrounds checked.  The legitimate business reason for the screens, of course, is for the protection of other residents, property employees, and the community itself.  And as leasing offices attempt to apply our non-discriminatory resident selection criteria evenly across the board, HUD’s guidance will make it harder to do so as the federal government wants us to almost do an individualized, particularized analysis on each applicant with a criminal history.  It is just going to be more labor intensive to apply our criteria as HUD now suggests.  Nevertheless, here are some preliminary thoughts:

  1. Do not simply use an arrest record as an arrest which did not lead to a conviction cannot be used to prove unlawful activity.
  2. With respect to many prior convictions, HUD’s view is that to simply disqualify all applicants without regard to when the conviction took place (in other words, how long ago in time) or the nature of the conviction will violate the Fair Housing Act (FHA). As such, when viewing your criminal offense matrix, pay particular attention to the types of offenses and how long you believe it appropriate to look back in time.
  3. Additionally, review the “nature and severity” of an applicant’s offense. For example, will the specific conduct make the applicant a greater risk to other residents and property?
  4. While HUD clearly does not like blanket denials for any felony committed at any time in the past, the HUD guidance does not provide further analysis with respect to how long ago is too long. To be sure, the best advice will likely be that management should be prepared to defend whatever look back period we propose to use.
  5. If your criminal screening results in what would otherwise be a straight denial of an applicant, HUD’s position is clear that management should consider “relevant mitigating information” from the applicant concerning the offense. While that sounds fine in the abstract, in practice that type of individual assessment could well turn into an additional burden for leasing office employees. Nevertheless, this could well develop into the new normal for our industry.

This is the precise type of issue for which you may indeed want to spend a little time with a lawyer like me. HUD and various fair housing tester/legal aid entities will attempt to enforce the new criminal screening guidelines.  I guarantee it.  You don’t want to be the test case.  Or you will really need to visit with a lawyer like me.

Just A Thought.

HUD Publishes New Guidelines Impacting Apartment Criminal Screening Criteria

Posted in FHA Basics

Earlier this month, HUD’s General Counsel (legalese for head lawyer) issued guidance to all in the professional apartment management community concerning the use of criminal background checks in our housing operations. This guidance was issued in the wake of the U.S. Supreme Court recently concluding that “disparate impact” (more legalese, which means conduct that is neutral on its face but which has a discriminatory effect on one or more protected classes) is covered under our federal Fair Housing Act (FHA).

While not the force of law as it is not a judicial opinion or federal statute, HUD’s guidance (which is applicable to both conventional and affordable housing) strongly recommends that all leasing offices applying criminal background screening on housing applicants take a close look at those procedures. In sum, HUD takes the position that due to a higher than expected prison rate among certain protected classes (African Americans and Hispanics) when compared to their percentage of the total population in the United States, the use of certain criminal history to reject applicants out of hand may have a “disparate impact” on certain races, and as such, may violate the FHA.

While this guidance is not the end of the story, it is a part of the conversation and all professional apartment management companies need to pay attention. From my seat, I continue to see efforts like this as effectively turning criminals into a new protected class.  While leasing offices certainly need to and must be inclusive and non-discriminatory in our processing of applications, as we have a level of responsibility to all our residents and staff members – there are just certain individuals who cannot be permitted to reside in our rental properties for valid safety and security reasons.  HUD’s guidance will now cause us to reassess our criminal screens and take a close look at specific offenses and time bar limits.

I will address some specific recommendations in the Fair Housing Defense blog entry next week, but the point today is to put management on notice that most blanket criminal prohibitions will subject management to scrutiny.

Just A Thought.


DOJ Settles Familial Status Fair Housing Act Case for $130,000

Posted in FHA Basics

Last week, the Department of Justice (DOJ) announced yet another settlement in a Fair Housing Act (FHA) case, this time for $130,000 concerning a community in Indiana in which was alleged to have discriminated against families with children. Under the terms of the proposed settlement (which still must be approved by a federal judge), the defendants must pay $100,000 into a settlement fund to compensate victims and another $30,000 to the United States as a civil money penalty.  Furthermore, the defendants are required to implement a non-discrimination policy and participate in FHA training.

The case, filed in May 2015, asserted that the community and its owner violated the FHA by maintaining and enforcing a policy of refusing to permit families with children to live in a 173 lot mobile home park. The claims were based on evidence from DOJ’s fair housing tester program, in which individuals posed as applicants to collect information about potentially discriminatory housing practices.

With respect to specifics, the DOJ alleged that the first tester called and asked about the availability of a home for him alone. The tester was told a lot was available.  Five days later, according to the complaint, a female tester called, asking about a lot for herself, her husband, and their minor son.  DOJ claimed that the defendant stated no lots were available for the family as no one under the age of 40 was permitted to live at the park.  The second tester then called back later that same day to confirm that, in fact, residents had to be at least 40 years old to live in the park.

The takeaway: our leasing office staff members need to know that fair housing testers are out there.  The government and private agencies hire individuals to probe leasing office practices.  As professional apartment management, we really only have two choices:  (1) get trained and follow the law; or (2) play roulette and hope the wheel does not land on you and your property.  As a defense lawyer, my accounting department hopes management gets caught and then you will really need a lawyer like me.  My view remains we should do a little fair housing training and do our level best to get it right.

Just A Thought.


Colorado House Passes Bill To Criminalize False Service/Companion Animal Requests

Posted in Disability

Faithful readers of the Fair Housing Defense blog are aware of the explosion in the number of service and/or companion animal requests received by professional apartment management over the past couple of years. As I have written before, management understands our obligation under the law and we work with our disabled residents and applicants to approve their legitimate reasonable accommodation requests.

But, what I am seeing all too often these days, are highly questionable (if not outright false) medical verifications. Indeed, a quick click on your computer can provide a “certification” for Rover or Fluffy for the low, low price of $59.99 (or more).  These internet verifications can look official enough, but are typically sold to anyone with a credit card and with no medical diagnosis or treatment plan.

Is anybody listening? Well, yes.  The Colorado House just passed a bill under which fake service animal requests would be criminalized, in a similar manner in that taking a disabled parking space is punished – a $33 surcharge along with a fine of $350 to $1,000 for a first offense and higher fines for repeat offenders.

Again, these false certifications do a real disservice to those disabled Americans with legitimate service and companion animals. If your animal is a pet and you want to live in my apartment community, just pay the pet fee.  Don’t try to scam the system.  It is just not worth it.  And if this Colorado bill passes the state Senate, it will be against the law.

In the interim, leasing office team members, management company legal departments, and lawyers like me will continue reviewing and responding to these service/companion animal requests as best we can.

Just A Thought.

DOJ Files New Sexual Harassment and Retaliation FHA Complaint Against Apartment Owner in West Virginia

Posted in Discrimination

Last week the U.S. Department of Justice (DOJ) filed a complaint against a West Virginia apartment owner asserting that multiple female residents were subjected to egregious sexual harassment and retaliation in violation of the Fair Housing Act (FHA).

Filed in U.S. District Court in West Virginia, the DOJ claims that a residential apartment owner engaged in unwanted groping and unwelcome sexual acts with female residents, that he made inappropriate physical contact as well as various verbal advances. Furthermore, the complaint asserts that the owner offered tangible housing benefits to female residents in exchange for the performance of sex acts on the owner or his maintenance staff.  Next, the DOJ claims that the owner and maintenance personnel also entered the apartments of female residents without permission and with the intent to harass or annoy them sexually.  Finally, the DOJ claims the owner took adverse actions against female residents when they objected or refused his sexual advances and in that a now deceased co-owner failed to take appropriate corrective actions when residents complained of this behavior.

The lawsuit seeks monetary damages to compensate the victims, civil money penalties, and a court order barring future discrimination. Now, this is only a complaint and nothing has yet been proven.  Nevertheless, as apartment management professionals we need to do our best to train our employees to follow the FHA and other laws prohibiting sexual misconduct in our industry – and an important part of that is to follow up when issues such as these are raised by residents and/or employees.  While there are always two sides to every story, when allegations like these are raised (particularly if they look and sound egregious) it is certainly time to speak with a lawyer like me to review the facts and undertake a comprehensive investigation.

Just A Thought.

DOJ Settles Racial Discrimination Fair Housing Act Case for $40,000

Posted in FHA Basics

Late last month, the U.S. Department of Justice (DOJ) announced that the owner/operator of a mobile home park in Fort Myers, Florida had resolved a case alleging that the defendant had discriminated against African Americans in violation of the Fair Housing Act (FHA). In its complaint, the DOJ asserted that the defendant falsely told African Americans that no units or sites were available, but allegedly told similarly situated white individuals that units and/or sites were indeed available for rent.  Furthermore, DOJ’s complaint stated that the defendant encouraged prospective white renters that they should live at the park while at the same time discouraging African Americans and telling African Americans that they should look elsewhere.  The complaint also claims that the defendant made disparaging remarks and gave inaccurate information about units/lots.  The underlying data which made up the case came from, not surprisingly, DOJ’s Fair Housing Testing Program.

Pursuant to the terms of the agreement, the defendant agreed to establish a settlement fund of $30,000 to compensate alleged victims of the discriminatory practices and pay a $10,000 civil monetary penalty to the United States. As is common in these types of cases, the agreement also requires that the defendant implement non-discriminatory application and rental procedures, undergo fair housing training, and provide periodic updates to DOJ.

Without commenting on the merits, this case reflects another cautionary tale in which data from fair housing testers was used to form the basis of a FHA complaint. I know I have written in this space before, but fair housing testers are out there.  They operate in pairs in an effort to probe a leasing office to determine if, in their opinion, a housing provider is not giving the same information on availability or pricing to individuals in different protected classes.  The best way to protect against fair housing tester cases is to train your leasing office to respond appropriately and professionally to every prospect.  Document (time and date) when individuals visit and complete applications.  Our files (either paper or electronic) are often the best evidence to prove we have done it right.  And if testers ultimately arrive at your property (which, of course, you will not know at the time), you may need to speak with a lawyer like me to help explain what really happened and why.

Just A Thought.

Is Filing an Administrative Fair Housing Complaint With HUD Required Before Going to Court?

Posted in Discrimination, FHA Basics

A little fair housing inside baseball this week which was prompted by a question from a client. Our federal Fair Housing Act (FHA) is officially known as Title VIII of the Civil Rights Act.  Some parts of the FHA were taken from Title VII of the Civil Rights Act, which involves prohibitions against employment discrimination.  So, while many portions of the statutes are similar, there is a significant difference which can impact many cases.

Before someone can file an employment discrimination case in state or federal court, he or she must have filed an administrative complaint with the federal Equal Employment Opportunity Commission (EEOC) (or its state equivalent) and have received a Right to Sue Letter from the EEOC (or state agency). If a plaintiff does not go through the administrative hurdle, counsel for the employer will file a motion to dismiss and the judge will dismiss the civil complaint pursuant to what is known as failure to exhaust administrative remedies.

Our fair housing world, however, is different.  FHA practice does not require the intermediate step of filing a discrimination complaint with HUD (or a state, city, or county counterpart). So, while a plaintiff may file an administrative complaint with HUD, he or she is not required to go through that step.  Indeed, the law even provides that if, for example, a HUD administrative complaint is filed and then dismissed as there was No Probable Cause to believe any prohibited conduct took place, the plaintiff can then try again in state or federal court.  Yes, it is truly a second bite at the apple.

My client was disappointed in that even though we were successful in obtaining a complete dismissal on the merits from HUD, the resident could sue us again for the exact same conduct.  All is not lost, however.  If we get sued that second time, most likely: (1) we know all the evidence;  and (2) HUD is not going to intervene on behalf of the resident.  In other words, the plaintiff will need to hire private counsel or go it alone.

Just A Thought.

Automatic Rent Payments? Electronic Banking and Bill Pay? Yes, But Be Careful Out There.

Posted in FHA Basics

Automatic debit monthly rental payments. Electronic signatures.  On line forms.  Technology continues to change our lives, including for those in the professional apartment management business.  The old school style of dropping your monthly rent check off in the leasing office mail slot between the first and the fifth of the month are really a thing of the past.  Automatic debits and electronic bill paying are now the way of the world.  Which can be good and efficient.  Most of the time.

Leasing offices have always been on the lookout for scammers. People who promise to pay their application fees and rent – but for some reason it never quite works out and there is always an excuse.

One of my properties processed the electronic materials from an applicant. He purported to pay his application fees and deposit electronically.  Even showed us the debit notice from his bank.  The leasing consultant was pleased and thought she had turned a prospect into a resident.  All good.  We let him move in right away.  He took immediate possession of the unit as it was vacant.  He did not mention a dog.

And then a couple of days later we got a notice from our bank. Turns out the electronic debit notice was a fraud.  When we tried to access the funds, we got a “closed account” notice.  Our leasing consultant raised it with the resident, who immediately hired a lawyer, and now claimed  his dog was a service animal and that we were discriminating against him because we would not accept his electronic payments and assistance animal.  He then provided an internet service animal certification for the dog.  And the matter ended up on my desk.

The lawyer for the resident started with guns blazing. Demanding legal fees from this date forward and making various discrimination claims.  We could have rushed to court to evict, but held off for a month in order to ensure we could prove up the fact that the electronic “payments” were in fact a fraud.  In the end, we were able to prove that his application fee, his first month’s rent, and his second month’s rent were illusory.  And that the medical verification for his dog was purchased over the internet for the low, low price of $59.99. Indeed, had we immediately filed, he would have defended with a copy of the initial electronic bank notice and his claim would have looked plausible before a judge.  And he had the medical verification for the animal.  Which would have gummed up the works.

In the end, the lawyer withdrew (we paid him nothing) and the resident meekly left our property. I doubt we will see the two months of rent my client is owed, but we got rid of a real problem with a minimum of expense.

Moral of the story?  Make sure the electronic payment actually hits before you let someone take possession of your unit.  And look carefully at medical verifications for service or companion animals purchased over the internet.  Or you may need to speak with a lawyer like me.

Just A Thought.

DOJ Settles Another Familial Status Fair Housing Act Case — This Time for $100,000

Posted in Discrimination

We have seen this all too often recently. The Department of Justice (DOJ) announced another six figure settlement (this time for an even $100,000) resolving a familial status Fair Housing Act (FHA) complaint.  The lawsuit, filed back in 2014 in U.S. District Court for the Western District of Wisconsin alleged that the owners and operators of a mobile home park had excluded families with children from significant portions of the 230 lot mobile home park.

The investigation started when a single mother (of a two year old child) and former resident attempted to complete the sale of a mobile home in the park. It was asserted that the defendants refused to approve the application of the mother (and child) because the unit was in an area of the park in which children were not permitted.  After conducting an investigation, HUD found reason to believe the FHA had been violated and referred the case to the DOJ.

Under the terms of the settlement, the defendants agreed to pay $45,000 (cash and rent credits) to the individuals who filed the complaint, $45,000 to other persons who are later identified through a claims process as well as a $10,000 civil monetary penalty. The agreement also requires the park to change its policies such that families with children can live throughout the community.

This settlement reinforces what I have written in this space many times: professional apartment leasing office staff members must not direct or steer applicants to certain units in an apartment community.  Even if it is done with good intentions.  Even if you believe they would be better suited to a different unit.  As you go through the process of turning a prospect into a resident:  always remember to let the applicant pick any available unit in which he, she, or they qualify.  Or you may end up needing to speak with a lawyer like me.

Just A Thought.

Thank You to the 2016 IREM Conference For the Speaking Engagement

Posted in Articles

I want to give a tip of the cap to the 2016 IREM (Institute of Real Estate Management) Tri-State Conference and Expo held this week at the Borgata Hotel & Casino in Atlantic City, NJ. Your humble Fair Housing Defense blog editor was pleased to be a featured speaker discussing issues of interest to those in the professional housing management arena.

Our discussion concerned everything from the recent U.S. Supreme Court decision involving disparate impact and fair housing as well as service animals (and the rise in potentially false internet medical verifications), reasonable accommodations, reasonable modifications, medical marijuana, documentation of interactions with residents, and the change in the types of cases I have seen over the years.

In short, it is always useful for me to get out of the office and speak with property management professionals who are on the job each day providing housing so I can better learn the issues faced in leasing offices from around the country. Indeed, as my goal with this blog is to give a management perspective on the major fair housing issues of the day, meeting with regional property managers and community managers in sessions like this is just invaluable to that effort.  As long as the invitations keep coming, I will be pleased to continue to speak.  What lawyer turns down an opportunity like that?

Just A Thought.