A Review of Important Fair Housing Cases

In last week’s post, we reviewed some statistics on housing discrimination complaints filed in 2017. One positive note from that review was that landlords are rarely found to have committed acts of housing discrimination. This week, I want to look at some cases across the country that shed light on some important topics in Fair Housing. One of several lessons from this week’s review: while housing discrimination might be rare, it can be very costly for landlords. Here are four cases that illustrate that point and give us lessons to consider:

Case #1 - Fair Housing Center of West Michigan v AMP Residential – This case involved fair housing centers from multiple states suing a company that owns and operates rental property in multiple states. The lawsuit stated that the landlord had discriminated against families with children at 20 of its properties in three different states by adopting a strict policy that only allowed two people per bedroom in any of its rental units.

The lawsuit arose because one the landlord’s properties in Michigan refused to rent a large two-bedroom unit to a woman seeking housing for her family, which consisted of her, her husband, and three children. The family made a complaint to the local fair housing council, who opened an investigation into the landlord’s practices. The investigation involved reviewing the landlord’s floor plans and local occupancy standards and sending testers posing as a family of two adults with three children to the landlord’s properties seeking to rent two-bedroom units. It found that the landlord offered large two-bedroom units (over 1,100 square feet) with large bedrooms and living areas, but restricted occupancy to two-people per bedroom consistently.

The local fair housing council then spread its investigation to other properties owned by the landlord in the state and made similar findings. It then partnered with fair housing councils in Indiana and Ohio to investigate properties owned by the landlord in those states and made similar findings.

In total, five fair housing groups conducted over 20 tests at 20 properties in three states over a period of approximately eight months. Each time, the testing showed that the landlord had a strict occupancy policy of two people per bedroom for rental units that had large floor plans and large bedrooms and in areas where the local property code allowed a higher occupancy limit for units with such square footage. Based on these findings, the groups concluded that the landlord had engaged in widespread housing discrimination against families with children and jointly filed a Housing Discrimination Complaint against the landlord.

The Result: the landlord settled the case by agreeing to pay $207,000.00 to the fair housing groups. In addition, as is always the case, the settlement required the landlord to revise its occupancy policies, to participate in fair housing training and provide documentation of such, and other administrative obligations.

The Lesson: Two-persons per bedroom is NOT the rule for occupancy limits. HUD also requires that landlords consider the size and configuration of the unit, the age of the children, local occupancy guidelines, and other factors in establishing their occupancy limits. Also, children under one year of age should not be counted against the limit.

Case #2 – Hart v. Premier Apartments, LLC – This case involved two Section-Eight tenants who lived on the third floor of an apartment building. The husband suffered from severe mobility impairments and used a wheelchair. The elevator to the building broke and was unable to be repaired for three months. During that time, the tenants requested to be moved to a first-floor unit as an accommodation for the husband’s disability. The landlord did not respond to the tenants’ request. Without an elevator, the husband attempted to use the stairs to attend a medical appointment. He fell down the stairs, hit his head, and was bedridden thereafter. Not long after the incident, the tenants were issued an eviction notice (for unknown reasons).

The tenants filed a housing discrimination complaint against the landlord for their failure to grant the reasonable accommodation request to be transferred to a first-floor unit.

The Result: In order to settle the ensuing lawsuit, the landlord agreed to pay the following:

• $273,564.10 to each tenant, for a total of $547,128.20.
• $333,333.33 for the tenants’ attorney’s fees.
• $21,553.46 for the tenants’ litigation costs.

      TOTAL LANDLORD PAYOUT - $902,014.99, plus their own attorney’s fees.

The Lesson: Failing to respond to a reasonable accommodation request in a timely manner is considered a denial of the request. If that denial results in an injury to the tenant, be prepared to pay a lot of money.

Case #3 – Equal Rights Center v. Lenkin Company Management, Inc. – This case is a bit different in that it was based on Source of Income discrimination. As you likely know, Source of Income is not a protected class under the Fair Housing Act. However, states and local governments are allowed to adopt additional protected classes, and many have done just that. Neither the state of Kentucky nor any local government in Kentucky have adopted Source of Income as a protected class . . . yet. I know that many within Lexington and other cities are pushing for those areas to adopt local protections based on Source of Income.

This case came out of Washington, D.C., which prohibits housing discrimination based on Source of Income. The Equal Rights Center filed a housing discrimination complaint because the management company refused to rent available units to applicants using Housing Choice Vouchers as payment for all or part of their rent. The ERC had done testing at multiple properties managed by the landlord and found that, via six separate phone conversations, the management company had a policy of refusing to accept Housing Choice Vouchers as a source of payment and otherwise refusing to rent to Voucher-holders.  

The Result: The management company agreed to settle the lawsuit on the following terms:

• Pay the Equal Rights Center $125,000.00 in damages and attorney’s fees
• Pay the Equal Rights Center $24,000 over three years to conduct testing on its properties to ensure that it is complying with the terms of the settlement agreement
• Pay the Equal Rights Center $7,000 to conduct two fair housing training sessions for up to 25 of the company’s employees.

       Total payment: $156,000.00

In addition, the landlord agreed to:

• Create and implement a Non-Discrimination Policy consistent with the settlement agreement and that contained certain mandatory statements
• Create and display signage in English and Spanish that states that the property accepts Housing Choice Vouchers and other types of rental assistance payments
• Include “Housing Choice Vouchers Welcome” in English and Spanish in all advertising.
• Undertake significant affirmative marketing efforts to attract voucher holders
• If a voucher-holder is the first qualified applicant for a unit, the landlord must hold the unit for 30 days to allow the voucher program to process the application and perform all necessary activities to approve the rental (emphasis mine)
• Require all employees to participate in fair housing training conducted by the ERC
• Designate two executive or managerial employees to participate in training about the Housing Choice Voucher Program and to be available to answer applicant questions about the program
• Allow the ERC to review and approve any changes to the landlord’s tenant selection criteria prior to implementation

The Lesson: The Source of Income issue seems to always come down to landlords being forced to participate in the Housing Choice Voucher Program or something similar. Such programs require not only additional administrative obligations for the landlord, but also extra time before the rental arrangement is approved by the voucher program officials. As noted by this settlement, landlords often have to allow units to sit vacant, with no income being produced, while the voucher application and rental arrangement are being considered and approved. An extra month without income from a unit is not optimal for landlords. Neither are $156,000.00 payments to fair housing centers.

Case #4 – Sams v. GA West Gate, LLC – The case involved 15 tenants who alleged that a landlord had discriminated against them by (1) adopting different rules for properties primarily occupied by blacks than at its properties that were primarily occupied by whites and (2) adopting a policy that no tenants would be approved or retained if they had been convicted of any felony or misdemeanor within the last 99 years. The tenants argued that creating different rules for different properties amounted to discriminatory treatment against black residents. It further argued that rejecting or evicting tenants based on their criminal history had a disparate impact on blacks because they are significantly more likely to be convicted of crimes.

The Result: Ultimately, the landlord settled the case by agreeing to pay the 15 tenants a total of $357,500.00 in damages, attorney’s fees, and costs. As always, this amount does not include the amounts that the landlord had to pay its own attorneys.

Lesson #1 - Fair housing laws require that you not only treat similarly situated tenants in a similar manner at each property, but you must also do so across all of your properties. So, if you own or manage multiple properties, your rules should be similar at each if those properties are similarly situated. There may be differences in the nature of certain properties that justify different rules, but those will be exceptions and likely rare.

Lesson #2 - When using criminal records to reject applicants, you should base rejections only on convictions and should always consider the nature and severity of the underlying offense, the age of the person at the time of the offense, the amount of time that has passed, the rental history since the conviction, and any rehabilitative efforts undertaken by the person. This helps to ensure that your policy is written the most inclusive (read “least discriminatory”) manner possible while still accomplishing your goal of keeping the property safe and free from damage.

As these four cases show, landlords sometimes have to pay severely for missteps. As the old saying goes, “Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.” If you have questions about how to improve your fair housing practices, contact your friendly neighborhood attorney. Also, be sure to sign up for my upcoming Fair Housing seminar, which will take place on October 17 in Lexington. Registration will open on September 1, so keep an eye on my Events page.