Readers from California (thank you very much) sent me comments asking for more details about the new rental housing laws in their state. Here are some highlights of the Tenant Protection Act of 2019. In short, California now has a type of statewide rent control and mandates “just cause” to terminate a tenancy.  Some details:

Rent Control.

With respect to rent control (which is subject to some exceptions), the new law prohibits a housing provider from increasing the rental rate by more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower, over the course of a 12 month period.

Just Cause Termination.

The new law requires California property owners show “just cause” to terminate a residential lease, provided a tenant has continuously occupied a residential property for 12 months. “Just cause” can be either “no fault” or “at fault.”

“At fault” just cause includes: default in payment of rent, breach of a material term of the lease (including a violation of a provision of the lease after being issued a written notice to correct the violation), committing or permitting a nuisance; waste; certain criminal activity; assigning or subletting the rental property; refusing to permit the landlord to enter the property; using the property for an unlawful purpose; and failure to deliver possession of the unit after notice.

“No fault” just cause includes: an intent by the owner (or a close family member) to occupy the property (for leases entered into after July 1, 2020, this provision applies only if the resident agrees in writing to the termination or if this type of provision is included in the terms of the lease); withdrawal of the residential property from the rental market; and if the landlord is complying with any of the following—(1) an order issued by a government agency or court relating to habitability that necessitates vacating the residential real property; (2) an order issued by a government agency or court to vacate the residential real property; (3) a local ordinance that necessitates vacating the residential real property; or (4) intent to demolish or to substantially remodel the residential real property.

Property owners desiring to use a “no-fault” lease termination must either waive payment of the last month’s rent or pay for the resident’s relocation.

Again, there are a number of exceptions built into the laws, but these are the highlights. There will be more to come here in California. Hope this helps.

Just A Thought.

In a significant development for housing providers in California, the state legislature passed and the Governor signed a bill (now a law) designed to prohibit property management from discriminating against residents and potential residents who use housing vouchers to pay their rent. The new law expands the definition of “source of income” under California law.

To briefly review, the federal Fair Housing Act (FHA) has seven protected classes, which include: race, color, religion, national origin, sex, disability, and familial status. In addition to those covered under the FHA, California’s anti-discrimination laws include protections for the following additional protected classes: sexual orientation, gender identity and gender expression, marital status, medical condition, ancestry, source of income, age (over 40), genetic information as well as a catch-all class known as protection from discrimination for any arbitrary reason.

This new law expands the definition of “source of income” as a protected class under California law. It provides that property management must now accept a voucher from a local housing authority or other government agency (with the resident paying any balance if the rent is more than the voucher). Now, management is still permitted to use the same credit and criminal background checks as we have done in the past and this is not an effort to force management to lower our rents. Your humble Fair Housing Defense blog editor will continue to review the new law, but it appears the Governor signed the bill to go along with a handful of other resident protection measures, including one to cap annual rent increases at 5 percent (plus inflation) and to prevent management from evicting residents without “just cause.”

At this point, a best practice would be to work with a lawyer like me to ensure that all leasing office team members are trained and have a script to respond to a prospect (or a fair housing tester) calling, emailing, or visiting your California properties with questions about paying their rent with vouchers.

Just A Thought.

In a statement issued at the end of last week, the U.S. Department of Housing & Urban Development (HUD) announced it resolved a disability discrimination Fair Housing Act (FHA) case in California asserting that various housing providers in and around Los Angeles failed to permit assistance animals for residents with disabilities. The settlement includes a payment of $15,000 as well as mandating various training, recordkeeping, and drafting of new anti-discrimination policies.

Factually, a local fair housing tester group filed a complaint after allegedly conducting tests at six Los Angeles area properties in an effort to demonstrate that the housing providers failed to permit residents with disabilities to have assistance animals. The complaint also asserted that employees of the housing providers refused to give individuals with disabilities appropriate information concerning assistance animals. The housing providers denied the allegations, but agreed to amicably resolve the case.

Neither HUD’s press release nor the text of the agreement provide any level of detail to determine what specific facts were contested or conceded. It does appear there were concerns over a perceived lack of ability to communicate in English as well as in other languages, as part of the agreement requires language assistance to those who may need it. There was nothing in the agreement identifying if there were medical verification concerns or if management was unaware of the disabilities of the residents.  I also suspect (but cannot confirm) there was a refusal by the housing providers to permit service and/or emotional support animals altogether, which is a FHA red flag in 2019.

Just A Thought.

Continuing on a theme of late, last week the U.S. Department of Housing & Urban Development (HUD) charged a New York property owner with violating the federal Fair Housing Act (FHA) when he refused to rent an available apartment home to a father with a teenager.

Factually, the property is a mixed-use building with an office on the first floor and two residential units on the second floor. The residential floor contains a two bedroom apartment and a one bedroom apartment. The building also has a parking lot. The apartment in question is allotted one space in the parking lot. HUD’s complaint asserts that the father telephoned the owner to inquire about the one bedroom apartment after seeing an ad for the unit. HUD alleges that the prospective renter believed the apartment would work well and would accommodate his son for the three nights a week that they would be together and that once the son headed off to college, the one bedroom unit would not be too large for him to live in alone.

The applicant completed the necessary paperwork, including a notation that his son would live in the unit part time (in fact, he wrote “1.5” in response to the question of how many people would live in the unit, an answer that vexed the owner). After submitting the application, in a subsequent telephone call between the prospect and the owner, HUD claims the owner said “I don’t want any kids there” and “It is only a one-person apartment” as well as “I don’t want any kids there during the day as I have a dental practice downstairs.” In another call, HUD asserts the owner said he did not more than one person in the unit because he was “concerned with the parking.”

Now, just because HUD makes a factual assertion does not mean it is true. But, for our purposes, this is a useful guide as to what apartment management professionals should never say when discussing housing options with a prospect. Unless the property is designated as housing for older persons, we welcome families with children. Further, while busy parking lots might be perceived as a benign safety reason for not wanting children at a property, that reason will not pass muster with HUD and may get you really needing to speak with a lawyer like me.

Just A Thought.

 

A couple of weeks ago, the U.S. Department of Housing and Urban Development (HUD) charged a couple from Georgia with familial status discrimination pursuant to the Fair Housing Act (FHA). HUD asserts that the couple, who own an apartment building, refused to rent to and made discriminatory statements about families with children.

The case started when a local fair housing group and a mother of two kids filed complaints alleging that the property owners had a policy unlawfully limiting the number of children that could reside in their apartments.  Specifically, HUD claims that the Respondents left a message on their voice mail announcing an occupancy policy to potential renters which permitted only one child in a two-bedroom unit and two children in a three-bedroom unit.

To be sure, occupancy standards are not always one size fits all. Indeed, the 1992 HUD guidance suggesting that a policy of two heartbeats per bedroom was typically reasonable has been superseded such that occupancy standards in 2019 are better evaluated with respect to the number of rooms in the unit generally and size of the bedrooms specifically as opposed to a simple formula. Additionally, some jurisdictions have amended their laws to mandate that 2+1 (or 3) people per bedroom can be appropriate.

As I always make clear, just because HUD has filed a complaint does not mean the allegations are true. But my best advice is not to have a policy on a recorded message which appears to be discriminatory on its face (even if you believe it is for safety or another non-discriminatory purpose). It will be a rare two bedroom apartment home in which only one child is appropriate. Same with a three bedroom apartment in which only two children can live. If you have questions about your occupancy standards and/or the size of your units, it is better to speak with a lawyer like me for advice.

Just A Thought.

I do my level best to be evenhanded when I review emotional support animal (ESA) medical verification letters when I know they have been purchased over the internet after a short self-diagnosis questionnaire and perhaps use of an online assessment tool. There has likely been no legitimate, therapeutic relationship between the patient (who must have a recognized disability) and the individual providing the medical verification. As written here (and elsewhere), anyone can go online and buy what look like a formal letter and/or “certificate” or “registration” from various internet-based providers seeking to make a buck (or more than a buck).  Remember, there is no official ESA registration site or certificate.

While the professional apartment management industry has been doing our best to determine which verifications are legitimate and which are not, our efforts are limited in that the law only permits us to ask certain questions. And, in truth, we have no interest in medical records or other confidential health care information between a therapist and a patient.

Although it was believed the U.S. Department of Housing & Urban Development (HUD) had some new ESA guidance ready last fall, it was never published. And we continue to wait to see what, if anything, is released by HUD or the Department of Justice.

In the interim, a number of states (including at least New York, Virginia, Utah, Texas, North Carolina, New Mexico, New Jersey, New Hampshire, Nevada, Michigan, Maine, and Colorado) have passed various laws or adopted regulations prohibiting the misrepresentation of service animals. The goal, of course, is to discourage those who might otherwise attempt to submit a reasonable accommodation request for an assistance animal that is verified by someone who sells them online.

While I have not seen a list of individuals charged under these laws, the fact that they are now on the books and available for use is a helpful sign as a growing number of state legislatures take fraudulent medical verifications seriously. I will continue to update this list.

Just A Thought.

At the end of last week, the U.S. Department of Housing & Urban Development (HUD) issued a press release announcing that it charged the owner and manager of a condominium community in Colorado with discriminating against families with children under the Fair Housing Act (FHA). In the charge, HUD asserts that the owner and manager refused to rent units to individuals under 35 years of age as well as refused to rent to a fair housing tester who claimed to have a four year old child.

The case came to HUD’s attention when a local fair housing advocacy group challenged a number of newspaper ads which, on their face, appeared to violate the FHA. Specifically, the complaint alleges that the owner and manager placed no less than ten advertisements in a local newspaper offering the property for “1 or 2 people max, both over 40 years of age, no exception.” Other ads promoted the property as a “private, restricted adult…community” requiring renters at least 35 years old.

Now, just because HUD has filed a charge does not mean that the allegations are true. Always remember there are at least two sides to every story. The teaching moment here is simple: do not run advertisements which can be read as discriminatory on their face. A fair housing tester will see the ad as low hanging fruit.

Welcome all to your community, even if you think there is a legitimate, non-discriminatory reason (such as safety) to prohibit children (or to limit children to certain floors, buildings, or areas). If you are uncertain if your ad complies with the law, check with a lawyer like me. We can help with advertising compliance. Indeed, with a few exceptions (and it would not surprise me if the owner and manager here was attempting to designate the property as housing for older persons), the FHA has prohibited “adults only” housing since 1989. And if as is likely here, copies of the questioned ads were kept, it is an easy case for HUD to charge.

Just A Thought.

So, what’s the first thing you should do if your professional apartment management company (or ownership entity or leasing office employee) receives a notice from the U.S. Department of Housing & Urban Development (HUD) or a similar state, city, or county agency informing them that a housing discrimination case has been filed? Of course, the initial answer is to send it to a lawyer like me to ensure an appropriate notice of appearance is prepared and to work on submitting a written response. A lawyer will help to ensure the “other” side of the story is told (and, believe me, I know there are at least two sides to every fair housing complaint). But there is another important step management should take – send the complaint to your insurance carrier to determine if one of your policies includes coverage for discrimination cases.

Sure, some policies specifically exclude this type of coverage, but other policies cover fair housing matters. And finding insurance coverage can be an important step for management. Particularly as you have paid the premium, don’t miss out on potential coverage.

Now, my best advice is to always engage in the interactive process with residents to avoid fair housing complaints (and having to deal with a lawyer like me). But if and when a complaint is filed, always check to determine if an insurance carrier can assist.

Just A Thought.

Pursuant to an agreement released just last week, the U.S. Department of Housing & Urban Development (HUD) announced that it resolved a race discrimination Fair Housing Act (FHA) case for $20,000. The case, involving a property management company with many properties in the Los Angeles area, was filed by a fair housing tester group in southern California, asserting that management provided more information about available units to white fair housing testers than they did to black fair housing testers who all posed as potential residents seeking information about homes.

Under the terms of a conciliation agreement, in which the management company admitted no wrongdoing and denied the allegations, the company agreed to pay $20,000 and participate in fair housing training.

The takeaway for professional apartment management? This case further demonstrates why we must train our leasing office staff members to treat each applicant/guest/prospect in the same manner. To be sure, every interaction with a prospect is different and, of course, our leasing agents always hope to lease our available units to legitimate home seekers. But, as we engage in our leasing operations, we want to avoid a situation in which a fair housing tester can make a claim, like here, that individuals are receiving perceived less preferential treatment because of their race (or any other protected class).

Just A Thought.

A little wonky fair housing policy today. Last week, the U.S. Department of Housing & Urban Development (HUD) issued proposed new rules to amend how HUD interprets “disparate impact” under our federal Fair Housing Act (FHA). Public comment on HUD’s proposal is due on or before October 18, 2019.

I try never to do politics here in the Fair Housing Defense Blog. My goal is to call balls and strikes with the best guidance that is available. Here is where we are in mostly non-legalese: Back in 2013, the Obama Administration sought to clarify that “disparate impact” (policies that appear neutral on their face but which have a significant negative impact on a protected class or classes without a legitimate business justification) was included in the FHA, even though the words “disparate impact” are not in the statute. Since passage of the FHA back in 1968, any number of courts had approved of using “disparate impact” to prove housing discrimination. In a 2015 case (decided by a 5-4 vote), the U.S. Supreme Court approved the use of disparate impact in housing cases, but included certain defenses for management as well as various hurdles a plaintiff must prove. With these new proposed rules, the Trump Administration seeks to pull back from the Obama Administration interpretation.

In short, the new rules will make it harder for a plaintiff’s claim to survive a motion to dismiss and/or a motion for summary judgment. HUD describes its change as intended to ensure the “disparate impact” rules are in “closer alignment” with the Supreme Court’s decision from 2015. In the text, HUD proposes to remove a defendant’s burden to prove a substantial business reason for the challenged policy and instead mandates that a plaintiff prove the policy is unnecessary to achieve a legitimate business interest. Furthermore, the new rule describes how a housing management company or property owner could defend against disparate impact claims by use of an algorithm (fancy word for a computer model) in its housing policies. Finally, another change is that HUD now suggests the burden of proof should be shifted such that a plaintiff will need to prove each element by a preponderance of the evidence.

The takeaway? Even if these new rules go into effect, “disparate impact” claims will still technically be cognizable under the FHA. Professional apartment management will still need to ensure our policies do not have a disproportionate negative impact on a protected class or classes. But if management faces a “disparate impact” case, it is likely there will be more defenses available to assist in defending against the case.

Just A Thought.