Earlier this month, the Department of Justice (DOJ) announced that a property owner in Mississippi agreed to pay $27,000 to settle a lawsuit involving allegations of discrimination under the Fair Housing Act (FHA).  Specifically, DOJ’s lawsuit alleged that the defendants established and implemented an occupancy policy at ­­23 rental properties in Mississippi that differentiated between the maximum number of adults and children who could reside in each home.  As such, the DOJ claimed that the owners engaged in unlawful familial status discrimination.

Pursuant to the terms of the settlement agreement, which was approved by the U.S. District Court for the Southern District of Mississippi, the defendants must pay $20,000 to a family that was claimed to be harmed by defendants’ practices and $7,000 to the United States as a civil monetary penalty. Furthermore, the court order prohibits the defendants from discriminating against families with children in the future, mandates a non-discriminatory occupancy policy of two persons per bedroom, and requires the defendants to receive FHA training.

The November 2011 action began after a fair housing complaint was filed with the U.S. Department of Housing and Urban Development (HUD).  HUD investigated the allegations, issued a charge of discrimination, and sent to matter to DOJ.  The suit alleged that the defendants violated the FHA by refusing to rent a three-bedroom home to a woman with four children because she had “too many children” under the property’s occupancy policy. The complaint also claimed that by setting a lower maximum number of children than adults who could reside in each home, the defendants engaged in a pattern or practice of discrimination protected by the FHA.

This case is another timely reminder that while reasonable occupancy standards can be enforced, management cannot (in most circumstances) advertise properties as “No Children Allowed” and occupancy standards need to be designed in such a manner as to comply with federal, state, and local law.  While here the “two persons per bedroom” standard was noted in the order, depending on the size of the unit and/or living space, that guideline can change.

Just A Thought.

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The new proposed HUD regulations concerning “disparate impact” and the Fair Housing Act (FHA) have received much attention in the housing management and lending arenas – including an entry by your humble blog editor last week. A Fair Housing Defense Blog reader asked for my opinion about the impact of the proposed new rules. 

So, here goes. Professional apartment ownership, lenders, and management want to follow the FHA. We work every day to get it right. Discrimination has no part in our business. We want to fill all our units. We want our residents to renew their leases with us.  We want to provide loans to all qualified buyers. 

I am a defense lawyer. I defend those accused of discrimination. As such, I always would prefer clarity and certainty as to the circumstances under which my clients might be held liable (or the situations in which we would be shielded from liability).  Unfortunately, HUD’s preamble to the new rules really did not provide the type of detail I would have wanted to see.  Am I going to be forced into defending against practices that my clients developed without any discriminatory intent whatsoever? Could be. And that will be expensive and time consuming.

Indeed, HUD even declined to provide guidelines as to a defining percentage of what is an actionable different treatment between relevant protected classes. Also, just what HUD will consider to be a “substantial” business interest will need to be developed. In short, there are still many unanswered questions.

In sum, there will be more to come on this topic. Particularly if the Supreme Court decides to review the case in which the Department of Justice was asked to provide the views of the federal government. If the Court takes the case (and I think it well might), let’s hope we will get some needed guidance for the FHA regulated community.

Just A Thought.

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Last week, the Department of Justice (DOJ) announced that the owner and manager of an apartment company in Wisconsin agreed to pay $57,500 to resolve a Fair Housing Act (FHA) lawsuit filed by the government alleging race discrimination.

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Last week, the U.S. Department of Justice (DOJ) announced that the owner and manager of dozens of residential rental properties in California had agreed to pay more than $2 million to resolve a Fair Housing Act (FHA) lawsuit alleging that he sexually harassed women residents and prospective residents for quite some time. 

The DOJ’s allegations included that the defendant sexually harassed the women by making unwelcome sexual comments and advances, exposing his genitals to women residents, touching women without their consent, granting and denying housing benefits based on sex and taking adverse actions against women who refused his sexual advances. The damage award is believed to be the largest monetary settlement ever agreed to in a sexual harassment lawsuit brought by DOJ in a FHA case.  

The deal, which still must be approved by a federal judge, will require the defendant to pay just over $2 million to 25 women as well as a $55,000 civil penalty to the United States, the maximum penalty available under the FHA. In addition to the money, the settlement will require the defendant to hire an independent manager to run his rental properties and imposes severe restrictions on his ability to contact current and future residents. 

While typical FHA cases do not involve damages anywhere near this range, when DOJ sees egregious facts, we have all seen that the government can and will act. 

Just A Thought.

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I have written about the intersection between familial status and housing for older persons before. Added to the protected classes in the Fair Housing Act (FHA) in 1988, “familial status” means that families with children (or families in the process of adopting or women who are pregnant) cannot be discriminated against with respect to housing. There is, however, an exception in the law related to housing for older persons. A case settled just last week warns what can happen if a city and/or housing developer wants to build housing for older persons, but does not follow all of the appropriate steps in the law.

In an action filed in November 2011, the Department of Justice (DOJ) alleged that the city of Santa Rosa, California and a homeowners association unlawfully sought to restrict residency at a housing development to those age 55 and older which, as such, discriminates against families with children. As noted above, while the FHA allows an exemption for senior housing, the lawsuit alleged that neither the city nor the homeowners’ association took the steps, such as routine age-verification, necessary to qualify for the FHA exemption. 

This case started with a complaint before the Department of Housing and Urban Development (HUD) by the owner and representative of the development that was the subject of an enforcement action.  After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the DOJ.

Pursuant to the terms of the proposed deal (which still must be approved by a federal judge), the city will not force the housing development to exclude families with children, and will waive the estimated $12,500 in costs associated with any zoning changes that may be necessary to bring the city’s regulation of the property into compliance with federal law.   Additionally, when the city, permits a developer to operate senior housing, it will, among other things, designate the age restriction of the zoned property in its ordinances and zoning maps, and require that property owners for these developments submit biennial age verifications for the city’s review and certification.    

The development is also prohibited from excluding families with children from the community unless it affirmatively elects to become an age-restricted community for persons 55 years of age or older and conforms to the requirements of the FHA. Under the law, to qualify as housing for older persons, at least 80 percent of the occupied units must have at least one person who is 55 years old.  Management must also ensure there are proper age verification procedures in place.   As a part of the proposed settlement, the homeowners’ association will provide compensatory damages to certain aggrieved persons by providing set-offs to amounts claimed it was owed.

Finally, the settlement requires the defendants to take fair housing training and mandates the defendants pay $5,000 each to the United States as a civil penalty.

The message from this case is that there indeed is a way to provide housing for older persons – but you must comply with the steps as outlined in the FHA to confirm you are not discriminating against families with children.

Just A Thought.

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Does our federal Fair Housing Act (FHA) include disparate impact discrimination claims? Should it?  Disparate impact is not listed as one of our seven protected classes. The Supreme Court, however, had accepted a case and was likely going to decide whether these claims are actionable under the FHA. Interestingly, the disparate impact case was removed from the high court’s docket a few weeks before the February 2012 date it was scheduled for oral argument.

Think that might be the end of it? Think again. Another petition for certiorari (legalese for a request that the Supreme Court accept and decide a case) was filed which raises the same legal issue. 

The new case involves a New Jersey township’s plan to redevelop a distressed residential community in which a large percentage of low and moderate income minority households reside. Some of the current residents sued to stop the redevelopment. The lawsuit involves allegations that the redevelopment plan has a disparate impact on minorities and, as such, violates the FHA.

The federal district court dismissed the case and concluded the plaintiffs failed to establish a disparate impact claim. The U.S. Court of Appeals for the Third Circuit reversed and held the plaintiffs had indeed established a prima facie case under the FHA. 

While, as noted above, disparate impact is not in the plain language of the statute, the appellate court allowed the case to go forward. The federal government (including both the Department of Justice [DOJ] and the Department of Housing and Urban Development [HUD]) has taken the position that the FHA covers disparate impact claims. Indeed, some commentators suggest that HUD is attempting to draft regulations which would fold disparate impact claims into the FHA.

Many in the apartment management arena are following this issue closely and hope the Supreme Court will indeed step in and decide the issue.  Stay tuned.

Just A Thought.

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Many of you read the blog post about the Cincinnati, Ohio landlord who claimed an African American girl’s hair product “clouded” an apartment community swimming pool. And that the young lady’s parents filed a fair housing case claiming that the landlord discriminated against the child by posting a “White Only” sign poolside.

Today, the Ohio Civil Rights Commission voted 4-0 against reconsidering its finding from last fall. The Commission previously found probable cause to believe that the landlord, who is white, violated the Ohio Civil Rights Act by posting the sign at the pool where the girl was visiting her parents.

The parents, who have since moved to another home, filed the complaint and indicated that they wanted to “avoid subjecting their family to further humiliating treatment.” A state investigation concluded that the landlord posted the offending sign on the gated entrance to the pool in May 2011 that stated “Public Swimming Pool, White Only.”  It was reported that multiple witnesses confirmed that the sign was posted, and the landlord indicated that she posted it because the girl used chemicals in her hair that would make the pool “cloudy.”

News reports stated the landlord did not attend today’s hearing. What will likely happen next is that the case will be referred to the Ohio attorney general’s office, the office which would represent the state agency’s findings before an administrative law judge. It is also possible for the parties to reach a settlement before further legal proceedings.

Readers of this blog know I always am concerned when only one side of the story is told, and while we cannot and should not rush to judgment without hearing from the landlord – it is safe to say it would be unwise to post a racially offensive sign at a community pool.

Just A Thought.

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The Department of Justice (DOJ) last month filed a lawsuit against the owners and managers of 23 rental homes in Magee, Mississippi for violating the Fair Housing Act (FHA) by discriminating against families with children.

The lawsuit, filed in the U.S. District Court for the Southern District of Mississippi, charges that the defendants engaged in a pattern or practice of violating the FHA or denied rights protected by the FHA by establishing and implementing occupancy standards limiting the number of children in the rental homes owned and/or leased.  The complaint also charges that, by refusing to rent a three-bedroom home to a woman with four kids because she had too many children under their occupancy guidelines, the defendants violated the FHA. 

As do so many other cases, this action started as a result of a complaint filed with the Department of Housing and Urban Development (HUD) by a woman with four daughters who was searching for a three-bedroom rental home.  The woman’s search led her to the defendants, who lease a number of houses in the area.  However, when she contacted the owners, they told the applicant that she had too many children to rent a three-bedroom home.  While the defendants’ occupancy policy allowed five individuals to occupy the house, it permitted no more than three of the occupants to be children.  DOJ alleges that the defendants established similar limitations on the number of children that could live in their two and four bedroom rental homes.  After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to DOJ.

DOJ's complaint seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions, and a civil penalty.   As I always add when noting these types of cases, as a defense lawyer, I know there are two sides to the story and I will reserve judgment until I learn more.  However, this case gives all a moment to reflect on occupancy standards -- which are generally permitted, but which must not be unduly restrictive.  Or you might end up needing a lawyer like me.

Just a thought.  

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The Department of Justice recently filed suit against the owners of three apartment complexes in Massillon, Ohio. The government alleges that the owners of three communities engaged in systematic discrimination on the basis of race and familial status. Regular readers of this blog recognize, of course, that the Fair Housing Act (FHA) explicitly forbids such discrimination. 

In the Complaint, the government alleges that the defendants have (1) denied apartments to African-Americans; (2) misrepresented the availability of units to African-Americans; and (3) treated similarly situated African-American tenants and Caucasian tenants differently. In addition, the owner of the apartment complex has allegedly discriminated against families with children by refusing to rent them upper level apartments and by restricting them to basement-level apartments. The government’s investigation began as a result of numerous complaints from not only residents, but also the owner’s own property managers.

More than 40 years after the enactment of the FHA, it should go without saying that apartment owners cannot discriminate against anyone on the basis of the color or national origin. Owners and management representatives I know work to fight against such unlawful discrimination. While I always want to hear the other side of the story, even the filing of a lawsuit can have a severe negative impact on an apartment owner’s reputation, not only within his or her local community, but also on a national level. As a result, it’s imperative that all property owners and management take affirmative steps to ensure that discrimination is not occurring on their properties and to implement policies and procedures to comply with the FHA.

This case also poses an interesting question – Can property owners discriminate against prospective tenants with small children by restricting them to lower level apartments? It’s easy to see the lure here. Many property managers have been confronted, oftentimes repeatedly, by the resident of a lower level unit who complains about the noise caused by running and jumping children who live in the apartment above them. And what looks like an easy fix is to simply put children on the lowest floor. While you may sympathize with solution, however, you must remember the obligations imposed on you by the FHA – you cannot treat a tenant with children differently than a tenant without children. That means that you cannot do what the defendant in this case has allegedly done by sequestering families to lower level units. If the downstairs tenant has a problem with noise, you can address problems as they arise and determine the best way to deal with noise issues on a case-by-case, day-by-day basis. 

Because if you restrict families with children to first floor units, you might need to speak with a lawyer like me.

Just a thought.

Article by Christian Moffitt.

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HUD and the Department of Justice continue to monitor compliance with and enforce the Fair Housing Act (FHA).  As I have written many times before, management needs to train our employees to follow the law.  Examples of misconduct can be found from Alaska to Florida -- and just about everywhere in between.  For example, earlier this month the DOJ announced a $95,000 settlement to resolve a lawsuit filed last year alleging that the former community manager of Park Towers Apartments in Waterloo, Iowa, sexually harassed female tenants at the complex.   

This type of case and settlement also serves as a warning to all of us in the professional apartment management field that we can be held accountable if our employees engage in or enable others to engage in acts of sexual harassment against residents.

Just a Thought.

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In our fair housing world, retailiation is against the law.  Management cannot retaliate against a resident because he or she filed a fair housing complaint.   If someone believes his or her fair housing rights have been violated, the federal Fair Housing Act (and state law) permits them to seek redress.  As a part of the case, I make clear to each of my employees that they cannot do anything to punish or strike out against someone who has filed a housing discrimination case.

Indeed, I have seen cases in which management was successful in defending against various allegations raised by a resident, but then gets into trouble with HUD or a state agency because a leasing office staff member did some action which could be construed as retaliating against the resident.

So the record is clear:  do not retaliate against anyone for filing a fair housing complaint.  Similarly, do not retaliate against someone for assisting a resident or applicant file a fair housing complaint.  Now, does retaliation work both ways?  What about the resident who keeps filing case after case alleging claims that are wholly without merit?  In so doing, the resident takes up more and more time of the leasing office staff.  Can management simply evict the resident?  Generally no -- not because of the fair housing complaints.  The only good news is that the resident will likely tire out the agency (and investigator) assigned to the case.

If management wants to non-renew a resident, make sure your record is appropriately documented so no retaliation claim can be successful.  Ensure every action is done because of conduct not related to the fair housing case.  Or you may need a lawyer like me.

Just A Thought.

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As we have written about in previous entries, included in the protected classes of the federal Fair Housing Act (FHA) is familial status.  That means, families with children (and women who are pregant as well as families who will be adopting a child) cannot be discriminated against because of the children.  We see regular reminders that familial status is either still not understood or that the law may not be followed.

To illustrate, in mid-December, 2008, residents of Pelican Lake Village (located in Pahokee, Florida), allegedly received a notice directing that any residents with children living or staying at the apartment community under the age of 18 must vacate by January 1, 2009 or face immediate eviction.  The notice came shortly after management at Pelican Lake Village allegedly leased a majority of the units to a not for profit organization which was created, at least in part, so it could rent the majority of the apartments at Pelican Lake Village to former prison inmates, many of whom were sex offenders.  

Allegedly, the notice caused numerous families to seek other housing during the holiday season, and the families with children who did not move by January 1, 2009 learned that management had stopped school bus stop service to the complex. 

On September 2, 2010, the Fair Housing Center of the Greater Palm Beaches commenced a civil action in the United Sated District Court Southern District of Florida, Whyte, et. al. v. Alston Management, Inc. et al., seeking a declaratory judgment and damages for discrimination on the basis of familial status under the FHA and Florida common law. The attorney representing the Fair Housing Center of the Greater Palm Beaches describes the case as the most egregious case of housing discrimination he has seen, as it is the first time he has seen the “wholesale eviction” of a class of people. 

While there are always two sides to every case and we here at the Fair Housing Defense blog want to hear from management, the complaint reflects yet another cautionary tail about how to act (and not act) with your residents.

Just A Thought.

Article by Karin Corbett

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As we have discussed on numerous occasions in this blog, the Fair Housing Act ("FHA") prohibits discrimination based on race, color, national origin, religion, gender, disability, and familial status. Acknowledging that the FHA does not explicitly protect against discrimination against persons based on their sexual orientation or gender identity, HUD issued guidance on July 1 to provide its thoughts regarding potential discrimination claims that may arise based on those categories.

For example, HUD will take the position that a landlord who discriminates against a gay man because of the landlord’s belief that the prospective tenant may infect other tenants with HIV likely constitutes actionable discrimination because the landlord is discriminating based on the tenant’s perceived disability as a carrier of AIDS.  Likewise, HUD notes taht a landlord who discriminates against a transgendered person based on their non-conformity with gender stereotypes has likely violated the FHA’s ban on gender-based discrimination.  The new guidance also identifies states that prohibit sexual orientation and/or gender identity housing discrimination, along with contact information for each state’s human rights enforcement authority. Currently, nineteen states and the District of Columbia outlaw discrimination based on either sexual orientation or gender identity.

The issuance of this guidance is hardly surprising in light of the initiatives announced by HUD in October 2009. The proposed rules intended to (1) clarify that the term “family” as used to describe eligible beneficiaries of HUD’s public housing and Housing Choice Voucher programs to include otherwise eligible lesbian, gay, bisexual or transgender individuals and couples; (2) require grantees and those who participate in HUD’s programs to comply with local and state non-discrimination laws that cover sexual orientation or gender identity; and (3) specify that any FHA-insured mortgage loan must be based on the credit-worthiness of a borrower and not on unrelated factors or characteristics such as sexual orientation or gender identity. 

The bottom line is that even though sexual orientation and gender identity are not included in the FHA, many states include these as protected classes.  And as the HUD guidance makes clear, the department will attempt to use existing law to "fit" perceived discrimination against members of those classes.

Just A Thought.

Article by Christian Moffitt.

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Fair Housing Act (FHA) cases are literally filed across the country.  Every so often, however, a case gets filed right in our own backyard.

Recently, HUD charged two Bucks County, Pennsylvania landlords with violating the FHA for discriminating against families with children when renting residential properties. In one instance, the landlord allegedly went so far as to terminate one tenant’s lease after she adopted a child.

In March 2007, the tenant rented a three-bedroom apartment from the landlords in Doylestown, Pennsylvania. While viewing the apartment, the tenant informed the landlord that she planned to adopt a child, to which the landlord allegedly replied that she never rented her properties to people with children. The landlord also allegedly informed the tenant that she deliberately advertised that her apartments had fewer bedrooms than they actually contained to discourage families from renting them.

In December 2007, the tenant adopted a 9-year old boy. The newly formed family lived in the apartment until approximately April 2009, when the landlord informed the tenant that her lease had been terminated.  As a result of the lease termination, the family was forced to move to a new town, which deprived the child of his school, friends, and family members that he visited regularly.

The tenant approached the Fair Housing Council of Suburban Philadelphia, who suggested that the tenant send an email to the landlord inquiring into the reason for the lease termination. In response, the landlord wrote, in pertinent part: “When you rented the apartment... you were told we cannot have children living in the apartment because the property is zoned commercial and is used commercially by three companies, we have never had children living on the property because of liability.” 

To the contrary, according to HUD, the property in question is zoned for residential use.

If the HUD Administrative Law Judge finds after a hearing that a violation of the FHA has occurred, the court can award damages to the family for its losses and may also order injunctive and other equitable relief. In addition, the landlord may be subject to additional fines and may be ordered to pay the tenant’s attorneys’ fees.

While I always want to learn both sides of any story, these charges are another cautionary tale that if you get into the rental housing marketplace you must know and follow the FHA.  Or you can be subject to unnecessary and unneeded litigation.  And lawyers like us.

Just A Thought.

Article by Christian Moffitt.

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We have posted previous entries discussing the need for apartment owners and management companies to ensure that reasonable accommodation and reasonable modification requests from residents are appropriately handled. The consequences of failing to respond or acting as to deny a request for an accommodation or modification can be severe.

Just last week, HUD charged a property owner, its president, and a management company, with violations of the Fair Housing Act (FHA) for failing to provide reasonable accommodations to a disabled veteran. HUD claims that the property owner failed to accommodate a 71 year old double amputee (who is a Vietnam Era veteran) with a wheelchair accessible housing unit. HUD further alleges that the owner threatened to evict the tenant after he sought assistance from the Miami-Dade County Commissioner’s office.

According to HUD, the tenant’s social worker contacted management on numerous occasions, requesting that accessibility features, such as wider doorways, be provided to the resident’s apartment, or that management move the tenant to an accessible unit. The complaint alleges management refused these requests, and the tenant contacted a government agency for help. Following a visit from a local government representative, the tenant was transferred to a different unit, which was also not accessible, for six months. The tenant was later returned to his original unit, which had still not been made accessible, and which had its stove removed.

As faithful readers of this blog know, I need to hear management’s version of the events as we believe there are always two sides to every story. That being said, even if management has a good reason for making the decisions it did, this case demonstrates the costs of delaying or failing to appropriately respond to a reasonable accommodation request. Even if management was correct (and the HUD complaint asserts management was flat wrong in violation of the FHA), the landlord must now pay lawyers like us to defend against a charge. 

This case also reaffirms my belief that HUD takes seriously claims that efforts by a resident to seek assistance from a government official or fair housing agency were thwarted. HUD just will not stand for actions the department believes are in retaliation against a resident for exercising his or her rights under the FHA.

Just a Thought.

Article by Christian Moffitt.

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The Department of Justice, the Department of Housing and Urban Development as well as various state, city, and county civil rights agencies – often assisted by fair housing testers – continue to seek out and file cases alleging discrimination in housing across the country.

Earlier this week, the Department of Justice announced a proposed settlement with Fountain View Apartments, Inc., its landlord, and a former rental manager in which the defendants agreed to pay $415,000 in monetary damages and civil penalties to settle a Fair Housing Act (FHA) lawsuit alleging that they discriminated against African Americans and families with children at Fountain View Apartments, a 42-unit apartment complex in Orange City, Fla. Under the proposed consent decree, the defendants will pay $175,000 to nine individuals identified by the United States as victims of defendants’ discriminatory conduct, $140,000 to three plaintiffs who intervened in the lawsuit, and $100,000 to the United States as a civil penalty. In addition, the consent decree prohibits the defendants from engaging in discrimination and requires Fountain View Apartments Inc. to retain an independent manager to manage the property.

The case stated when an African American woman visited Fountain View with her grandson and inquired about the availability of apartments. The community manager told her that there were no vacancies and while the manager provided an application, the prospective resident was not permitted to submit it. The application also contained the notation "ADULTS ONLY" in the space designated for the number of children. Later that same day, the prospective resident had a friend telephone Fountain View to request information about apartment availability and she was told that apartments were available. A local television station subsequently conducted a series of fair housing tests – simulated transactions to compare responses given by housing providers to different types of apartment-seekers to determine whether illegal discrimination is occurring – and found that the defendants were providing more information and better treatment to white persons than to African American persons.

In December 2009, the court found that the defendants had violated the FHA by engaging in a pattern or practice of discrimination against families with children. Additionally, the DOJ was prepared to show that the defendants also discriminated against African Americans by, among other things, telling white persons that a selling point of the apartment complex is that Fountain View does not have any black residents; denying the availability of apartments to African American persons while at the same time telling white persons about available apartments; refusing to show apartments to African American persons while at the same time showing apartments to white persons; discouraging African American persons from applying for an apartment while encouraging white persons to apply; refusing to negotiate with African American prospective tenants for rental; threatening to evict one or more tenants who were known or believed to have African American friends and associates; and making statements with respect to the rental of apartments at Fountain View indicating a preference, a limitation, or discrimination because of race or color.

Cases and settlements like these continue to illustrate while management must continue to be vigilant in following our anti-discrimination laws. It is not only that we have an obligation to follow the law – it is also the right thing to do.

Just A Thought.

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The Fair Housing Act (FHA) has been on the books for decades. Professional apartment community owners know the law and we train our employees to follow the law. Providing housing in a non-discriminatory manner is not just required by the FHA, it makes good business sense:  we want all qualified applicants to move into (and then to renew their leases at) our communities. 

The U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD), along with various state, county, and city agencies, enforce the FHA. Periodically, there are reminders about what can happen when the FHA is not complied with. For example, in November 2009, the Justice Department announced that it obtained the largest monetary payment ever obtained by the DOJ to settle a case of alleged housing discrimination in the rental of apartments. Los Angeles-based apartment owner Donald T. Sterling agreed to pay $2.725 million to settle allegations of discrimination against African Americans, Hispanics, and families with children.

Specifically, the lawsuit alleged that Sterling, his wife and the Sterling Family Trust deliberately engaged in discriminatory renting practices targeted at tenants and prospective tenants who were not of Korean descent. The DOJ presented evidence that Sterling’s employees prepared internal reports that identified the race and/or national origin of tenants at properties that the defendants had purchased in certain sections of Los Angeles. There was also evidence that the defendants made statements to their employees indicating that African Americans and Hispanics were undesirable tenants.

Under the terms of the settlement, which were memorialized in a consent order:

• The defendants would pay a $100,000 civil penalty to the United States;

• The defendants would pay $2.625 million into a fund that would be used to pay monetary damages to persons who suffered discriminatory treatment as a result of the defendants’ conduct. The remaining balance would be used for further FHA education in the Los Angeles area;

• The defendants would be enjoined from discriminating on the basis of race, national origin or family status;

• The defendants would be required to implement a self-testing program over the next three years to monitor employee compliance with the FHA;

• The defendants would be forced to maintain non-discriminatory practices and procedures; and

• The defendants and their employees would be forced to undergo fair housing training through an independent contractor.

Management should always want to get it right.  This is what can happen if something goes seriously wrong.

Just A Thought.

Article by Christian Moffitt.

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We’ve talked a bit on this blog about the different classes that are protected under the Fair Housing Act ( "FHA") --  including race, national origin, sex, color, disability and familial status. Today, the Justice Department’s Civil Rights Division, along with the U.S. Attorney’s Office for the Southern District of Alabama and HUD made a joint announcement underscoring the consequences that arise when a property owner appears to discriminate against actual and prospective tenants on the basis of their familial status, and specifically based on whether those tenants have children. The government entered into a settlement agreement and the court issued a consent decree with the owners and managers of Pina’s Mobile Home Park to settle charges of discrimination against families with children. In settling the action, the defendants agreed to pay up to $104,130 to the victims of their discriminatory tactics, along with a $30,000 civil penalty to be paid to the federal government.

The lawsuit arose when HUD filed a charge on behalf of a prospective tenant who attempted to rent a home at the mobile home park, and was denied because the applicant was told she had too many children to live in the park. During the owner’s initial meeting with the Complainant, the owner allegedly indicated that there were vacancies in the park, but that families with children under the age of 18 were required to pay an additional $15 per month. Once the child reached 18 years of age, that fee would increase to $30 per month. In a second meeting, the owner of the park allegedly told the Complainant that the property’s rules only permitted families with two or fewer children to reside in the mobile homes. The Complainant, however, had three children. 

During HUD’s investigation, the owner stated that the park refused families with more children because “[i]f you have too many children, you have too many problems.”

As we’ve stated before: as a property owner, you cannot discriminate against any of the classes protected by the FHA and its state counterparts. Although you may have legitimate concerns that a large number of children concentrated in one unit of your property may cause “too may problems,” such as elevated noise levels, potential property damage, and an increased number of general liability issues, as a landlord, you cannot turn away a family based on their number of children if it meets the occupancy standards.

Furthermore, you cannot charge families with children additional rental fees to offset the additional repair costs that you fear may arise.  What you can and should do is determine what the applicable laws are concerning occupancy standards where your property located and ensure management follows that law.  

Just A Thought.

Article by Christian Moffitt.

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When dealing with occupancy standards, it used to be easy. The traditional rule of “two heartbeats per bedroom” was perceived as the way to go. HUD published what was referred to as the Keating Memorandum back in the early 1990s which detailed this standard and it was considered generally reasonable.  Over the years, I successfully defended any number of cases based on the Keating Memorandum and the two person per bedroom guideline.  Many professional apartment management companies, including those I represent, adopted that standard. But that is not, of course, the end of the story.

Occupancy standards are useful because management has an absolute right to set reasonable, non-discriminatory limits as to how many people can live in a specific apartment. Yet management must be careful so as to not discriminate against a family with children. Those rational goals sometimes conflict.

Issues come up when a tenant gets pregnant and a family increases in size. Is it appropriate to ask a family to move to a larger unit? When is it appropriate to ask the family to move? What if the family cannot afford a larger unit? What if there are no larger units available? What if a family has twins? What should you ask an applicant about a pregnancy?

To be sure, the Keating Memorandum also made clear that there could be other factors which might change the analysis. Factors such as the size of the bedroom and the age of any children living in an apartment need to be taken into account. For example, if two bedrooms are large and/or if there is a spacious living area or study, a two person per bedroom standard might be unreasonably restrictive.

Additionally, some states (like California) and even cities (like Austin, Texas) have amended their laws such that in essence “two plus one per bedroom” is the new standard.

What should management do? First, check the law in your jurisdiction. If you don’t know where to find the standard, ask a lawyer. Then examine the size and configuration of your apartment units and develop a reasonable occupancy policy that does not unfairly discriminate against families with children. Again, if your bedrooms are large or there is additional living space, you may consider adding more than just two heartbeats per bedroom. 

Always be consistent in applying your occupancy standards. Management cannot make exceptions.

You cannot ask an applicant (or a current resident) about how many children they plan on having. You can certainly ask how many people will be living in the unit. When you ask, I recommend phrasing the question in terms of “people” as opposed to “children” so there will be less confusion about management’s intent. In my view, occupancy standards which limit the number of children per unit will be view more harshly than a standard which only refers to people living in a unit.

Management cannot discriminate against families with children. I have seen many discrimination cases based on familial status. They are never fun to defend against because any number of very cute children are involved. Setting reasonable standards – and informing applicants and residents of those standards – can help ensure that such a case never gets filed. 

Just A Thought.

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                        What happens if management posts an on line advertisement for housing with a website provider if the content of that advertisement possibly contains a discriminatory preference or a limitation based on a protected class? Two recent cases provide important guidance.

                        In Chicago Lawyers Comm. For Civil Rights Under Law, Inc. v. Craigslist, Inc., 519 F.3d 666 (7^th Cir. 2008) the court issued a decision impacting how the Communications Decency Act (“CDA”) interacts with the Fair Housing Act (“FHA”). Specifically, can a website operator be held liable for a FHA violation because of allegedly discriminatory statements in an online advertisement for housing? In this case, the appellate panel concluded that the CDA protects website operators and was not subject to the FHA since it did not post the statements or cause them to be posted. 

                        On facts with a slight – but significant – difference, in Fair Housing Council of San Fernando Valley, Inc. v. Roommates.com, LLC, 521 F.3d 1157 (9^th Cir. 2008) (en banc), the court held that Roommates.com violated the FHA by contributing to the creation or development of discriminatory statements and advertisements on its web site. While the Ninth Circuit agreed with the Seventh Circuit that websites are protected from FHA liability based on advertising content provided by others, because Roommates.com required advertisers to fill in a questionnaire stating their preferences and by directing them to other advertisers whose preferences matched their own, the court held that Roommates.com was not entitled to immunity under the CDA and would be subject to FHA liability.

                        As is always the case in these circumstances, when you use any online advertisement for housing: follow the anti-discrimination provisions in the FHA so you will not need to have an appellate court review your ad.

Just A Thought.

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According to the U.S. Department of Housing and Urban Development’s (“HUD’s”) annual report, 10,552 fair housing discrimination complaints were filed in fiscal year 2008. That is an all time record. Some other notes from HUD’s report include:

• Allegations based on disability remain the most common basis for a complaint – in fiscal 2008, 4,675 disability complaints (or 44 percent of the total) were filed. 
• Allegations based on race were the second most frequent basis for a complaint – 3,669 race complaints (or 35 percent of the total) were filed.  
• Interestingly, the approximate percentage of complaints filed under each of the seven characteristics protected under federal fair housing law has remained relatively stable during the past four fiscal years.
• After disability and race, familial status (1,690 complaints or 16 percent of the total) and national origin (1,364 complaints or 13 percent of the total) were the most common bases of complaints. 
• Retaliation, religion, and color were the least common bases of complaints filed with fair housing agencies in the past four fiscal years. In fiscal 2008, retaliation was cited as a basis for 575 complaints (or 5 percent of the total). Religion was alleged as a basis for 339 complaints (or 3 percent of the total). Color was cited as a basis for 262 complaints (or 2 percent of the total).
• Also, the number of complaints based on “failure to make a reasonable accommodation” jumped 5 percent during the last four years. In fiscal 2008, “failure to make a reasonable accommodation” was alleged in 2,401 complaints, or 23 percent of the overall total—the third most common issue.

These figures continue to show us that management must remain vigilant. We must always train our employees to know and follow the law. We must appropriately document our resident and community files. I see no meaningful reduction in the number of fair housing complaints in 2009. Significantly, always remember that while management is alleged to have done something wrong when a complaint gets filed, it is up to us to prove our innocence in these cases. Doing so requires good education and documentation. One last point: while the number of retaliation cases is not statistically large, agencies and investigators always take retaliation cases seriously and we must clearly demonstrate that management did not retaliate against anyone because he or she filed a fair housing complaint.

Just A Thought.

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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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Not necessarily. The Fair Housing Act provides no remedy for neutral restrictions.

In September 2001, the Shoreline Towers Condominium Association adopted rules prohibiting mats, boots or objects of any sort be left sitting outside owners’ unit entry doors. The rules also banned signs on doors or in hallways. The rules were not initially enforced against religious symbols. When the hallways were repainted in 2004, all religious objects were removed in preparation for the painting. At that time, the association’s board interpreted the rules to prohibit religious (as well as other) items and ordered the maintenance staff to keep the hallways and doors clear.

When the hallway painting was completed, the residents replaced their mezuzah on the doorpost, according to Jewish tradition. The mezuzah was removed by the association because of the rule.

The residents filed suit under §§804 and 817 of the Fair Housing Act, 42 U.S.C. §§3604, 3617, and one of the implementing regulations, 24 C.F.R. §100.400(c)(2). By the time of their lawsuit, the association had adopted a religious exception to the rules, but the residents sought damages for distress they claimed in the interim, plus an injunction to prevent the association from removing religious symbols in the future. The District Court (N.D. Ill.) granted summary judgment to the condominium association. The residents appealed.

The Seventh Circuit noted that the Fair Housing Act addresses discrimination in the sale or rental of a dwelling, not discrimination after the sale. Religiously motivated harassment must be addressed, if at all, under different laws. The Court concluded that religious harassment so severe as to make a dwelling unavailable on religious grounds might be actionable under the Fair Housing Act, but here the rules were religion neutral—they targeted all objects, not just religious objects.

The residents sought a religious exception to the rules, which they described as an accommodation. According to the Court, however, the Fair Housing Act does not provide a remedy for the failure to make accommodations on the basis of a particular religion.

The majority held that deciding whether a religious accommodation must be required and how far the obligation extends is a task for the legislature. The Religious Land Use and Institutionalized Persons Acts stops with land use and prisons.

The Seventh Circuit affirmed the judgment of the District Court. The case is Bloch v. Frischholz, 533 F.3d 562 (7th Cir. 2008).  According to this Court, the Fair Housing Act requires accommodations for disabilities but not for religious beliefs and practices.

As this case proves once again, issues dealing with religion are among the most personal and emotional.  Apartment management companies and their employees must work to ensure that all religions are respected and treated appropriately.

Just A Thought.

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