The Fair Housing Act (as well as various state and local anti discrimination laws) sets some limits with respect to what management can and cannot do in the applicant selection process. As you evaluate applications, always be cognizant of what you can – and importantly what you cannot say. Prepare a resident selection criteria. And follow it. With every prospect and applicant.

It is absolutely appropriate to run a criminal background check and to set reasonable standards for what types of prior offense record will disqualify an applicant from your community. While HUD’s guidelines suggest management only look back five years for certain offenses, the regulations make clear that management has discretion to look farther back in time. Also, be aware that certain jurisdictions also limit how far back management can look. It is imperative, however, to run the same background check on each applicant and to score each applicant in the same manner. Many management companies contract with a third party vendor to perform this service. It is obviously never appropriate to only run background checks on applicants believed to be of certain races or national origins.

Similarly, you can and should check an applicant’s income, credit, and references. As with criminal background screenings, be consistent. Run the same check on every applicant. While it is not a protected class under the Fair Housing Act, an ever growing number of states and localities have included source of income as a protected class. That means you cannot discriminate against an applicant if he or she has a housing voucher. In such a jurisdiction, management should factor in the voucher and adjust the scoring criteria. Other protected classes in certain jurisdictions are marital status and sexual orientation. As such, knowing the laws in your jurisdiction can help reduce the chance of a housing discrimination complaint.

Rental decisions need to be made on legitimate, non-discriminatory criteria. The decision to rent an apartment, in part, reflects an assessment of risk. Management should engage in an “interactive process” with applicants in an effort to ensure everyone is treated appropriately.

All members of the leasing office staff must be trained in fair housing. Additionally, it is also important to ensure your maintenance staff is trained as well as service professionals regularly interact with residents. Importantly, the owner and/or management company can be held liable for discriminatory conduct done by employees.

It may seem self evident, but it is crucial to be consistent when dealing with applicants and residents. For example, if management arbitrarily sets higher standards when renting to members of a racial minority – the door is open for a lawsuit. Similarly, if you give one person a break (such as lowering the security deposit for a single mother but not other residents), you will unnecessarily risk a charge of discrimination from other applicants or residents.

Just A Thought.

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I have been defending housing discrimination cases for over ten years. I have a docket of cases stretching from Alaska to Florida and just about everywhere in between. My cases get investigated by the U.S. Department of Housing and Urban Development ("HUD") in addition to many state, city, and county agencies.

The goal of this blog is to provide a forum for issues of interest to apartment owners and management companies as well as professional management employees. I also hope we can share available resources.

If you are in the apartment ownership or management arena, you are committed to following the federal Fair Housing Act ("FHA") as well as the many state and local laws which prohibit discrimination in housing. Noting that you do not discriminate on the basis of race, color, sex, disability, national origin or familial status is only a good start.

On its face, the law seems simple enough: don’t discriminate. All applicants and residents should be treated equally and with respect. But, each situation is fact intensive and requires an individualized review of the circumstances. Plus, not every jurisdiction is the same:

• what about those which add source of income as a protected class?
• Should you accept vouchers?
• Do you know the difference between a reasonable accommodation and a reasonable modification?
• Who pays for a reasonable modification?
• Does a request for a reasonable accommodation have to be related to the claimed disability?
• What is Section 504 of the Rehabilitation Act of 1973 and why are two agencies investigating the same complaint?
• Can I have occupancy standards for my apartments?
• How can you confirm that a complaint has been filed by a disgruntled resident seeking to prevent an eviction?
• What do you do when the investigator asks you to halt eviction proceedings in an effort to settle the case?
• How do you handle an investigator who wants to interview all of your employees? Or review all your files?
• What about when the investigator who wants to knock on the doors of your residents?
• Should you still evict a resident even after he has filed a fair housing complaint?
• Should you place an advertisement in a church flyer?

Those are just some of the issues I hope to explore. I will do my best to give some insight based on my experience and offer solutions.

There will be no lectures here, but I will try to leave you with --

Just A Thought.

Welcome.

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Is it Housing Discrimination if the Buyer Does Not Meet All of the Seller’s Terms?

Not When There Was a Financing Change Which Made the Offer Not Consistent with the Listing Terms

Pamela McDonald, an African-American, wanted to buy a house in the Shasta-Redding, California area.  Her real estate agent, who was also African-American, telephoned First Shasta Real Estate, a Coldwell Banker franchisee, and spoke with a Caucasian representative, about houses for McDonald to view.  The agent prepared a pre-approval letter indicating that McDonald qualified for a loan of up to $180,000.

Coleman and her agent described the Coldwell Banker representative’s attitude after he saw them as unenthusiastic. He showed McDonald a number of listings her agent had selected, including 2075 Galaxy Way, but then suggested that McDonald look at homes “less upscale” that were more “suitable” for McDonald.

McDonald wanted to make an offer on 2075 Galaxy Way that was higher than the asking price, but included a seller carry-back.  The Coldwell Banker representative discouraged her from making the offer after consulting with the seller’s agent allegedly because of the unusual carry-back financing.  Nevertheless, Coleman faxed the offer herself to the seller’s agent, who did not respond. The seller (also Caucasian) thereafter sold the property to another buyer (another Caucasian) for a lesser amount but with no carry-back financing.

McDonald sued Coldwell Banker and various other parties in U.S. District Court (N.D. Calif.), asserting discrimination claims under California’s Fair Employment and Housing Act (FEHA) and the federal Fair Housing Act (FHA). The District Court granted summary judgment in favor of the defendants and McDonald appealed.

The Court of Appeals started its analysis by reviewing the requirements for a prima facie case under the FEHA, which, as the Court pointed noted, are identical to the requirements under the FHA. The plaintiff must show membership in a protect class, application and qualification for housing, denial of housing, and that non-protected similarly situated individuals did obtain housing.

The Court focused on the carry-back financing in McDonald’s offer. It explained that the provision did not meet the seller’s listed terms, and therefore McDonald did not demonstrate “qualification” within the meaning of the statute. It also said that the carry-back distinguished McDonald from the eventual purchaser such that they were not similarly situated.

The FEHA and FHA also allow a plaintiff to establish by circumstantial evidence discriminatory motive in refusing the housing accommodation. The Court found no evidence that the defendants took any action to secure the sale of the house to a person who was of a different race than McDonald. It found no evidence that the agents ever disparaged McDonald or treated her differently based on their race. Summary judgment for the defendants was affirmed.

Although the plaintiff was not successful here, this case provides an important reminder that every applicant should be treated the same and that management agents should refrain from commenting on specific choices made by applicants or buyers. Even if those comments may seem benign, an applicant may be offended by those remarks as was the situation in this matter.

Just A Thought.

Article by Karin Corbett

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Does the Statute of Limitations for FHA Claims Arising from Design and Construction Claims Expire Two Years After the Last Certificate of Occupancy is Filed?

Not Always.

A recent case from the U.S. District Court for the Western District of Washington serves as a healthy reminder to all involved in the design, construction, and operation of multifamily dwellings covered by the Fair Housing Act (“FHA”). The case explored how the statute of limitations for FHA claims arising from the design and construction of such buildings does not always expire when you think it should. 

Generally, civil court actions under the FHA are subject to a two year statute of limitations, which begins to run on the date of the last occurrence of discrimination. ¹ For claims arising from design and construction, courts have ruled that the “last occurrence of discrimination” is the date of the issuance of the last applicable certificate of occupancy. See e.g. Garcia v. Brockway, 526 F.3d 456, 460-461 (9th Cir. 2008). 

In Fair Housing Counsel of Oregon v. Cross Water Development, LLC, et al., 2009 U.S. Dist. LEXIS 24542, the plaintiff first filed a complaint with HUD on May 9, 2005, more than one year from the date of the issuance of the last applicable certificate of occupancy of September 23, 2003. HUD dismissed the complaint because the applicable statute of limitations had clearly passed. Subsequently, the plaintiff filed a complaint in U.S. District Court on December 17, 2008, asserting that the statue of limitations was tolled while the HUD proceedings were pending. The court found that there was no basis for application for the statutory tolling provision because the plaintiff failed to timely file its administrative complaint with HUD. Although this case correctly resulted in a favorable outcome for the developers, the court was quick to note that there are two circumstances where the two year statue of limitations may be tolled.

First, the statute of limitations may be tolled under a theory known as “equitable tolling,” which allows the court to determine if the plaintiff’s delay was excusable. This doctrine applies when “a plaintiff is unable to obtain vital information bearing on the existence of his claim.” Garciaat 465. The court in such a circumstance examines whether “a reasonable plaintiff would not have known of the existence of a possible claim within the limitations period.” Fair Housing Counsel of Or. at *8. If the court finds delay excusable, the statute is tolled until the plaintiff can gather what information he needs.

Second, the doctrine of “equitable estoppel” or “fraudulent concealment” will toll the statute of limitations when the defendant, in this case a party involved in the design, construction or operation of a multifamily structure covered by the FHA, takes action to prevent a plaintiff from filing suit by misleading the plaintiff in some way. 

So, what should we take from all of this? In most circumstances, a complainant will indeed either file soon after the alleged discriminatory incident took place. However, if a complainant misses the date, it can be a challenge to get the non-lawyer investigators at an agency to pay attention to a missed deadline. We always raise the issue and you should as well. 

Just A Thought.

Article by Christian Moffitt

[1] A collateral statute of limitations applies when an aggrieved party opts to file a complaint with the United States Department of Housing and Urban Development (“HUD”), rather than initially file suit in court. That rule provides that a person filing an administrative complaint with HUD must do so within one year after the alleged discriminatory housing practice occurred or terminated. 42 U.S.C. § 3610(a). While such a complaint is pending with HUD, the two year statute of limitations on FHA claims is tolled by statute. 42 U.S.C. § 3613(a)(1)(B).

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