Fair Housing Lawsuits on the Rise Nationwide
by Editorial Staff
Very few property owners and managers would intentionally discriminate against a prospective tenant based on their race, color, religion, sex, familial status, or national origin. In fact, over the last decade acts of tenant discrimination by managers and landlords–as defined by the Fair Housing Act–have decreased dramatically. Notwithstanding, fair housing lawsuits and claims against property owners and managers are on the rise nationwide. Why? To answer this question you must first understand where the Fair Housing Act originated and how it has evolved.
The Fair Housing Act
The need for housing regulation and fair housing legislation evolved out of a long history of discriminatory practices in the United States stemming from deep rooted personal and racial prejudice. Following the assassination of Dr. Martin Luther King, Jr., and in an effort to quell widespread urban disorder spawned by residential segregation, congress passed the Civil Rights Act of 1968, including Title VIII–or the Fair Housing Act.
The Fair Housing Act, as originally written, prohibited discrimination in the sale, rental, and financing of housing on the basis of race, color, religion, or national origin. However, in 1974 the Congressional Black Caucus (CBC) supported a successful amendment to have sex added to the list of protected classes under federal fair housing law. In 1988, disability and familial status were also added, bringing the total number of protected classes under the Federal Fair Housing Act to seven.
Following the passage of the Fair Housing Act, minorities and other protected classes were much less likely to experience overt discrimination. Even so, the CBC, and minority interest groups, continued efforts to expand fair housing protections and enforcement through the 1990s to combat less overt housing bias believed to continue in more subtle forms.
Throughout the 1990s and first decade of the 21st century, the federal government dumped millions into enforcement of fair housing regulations–and it worked. Overt housing discrimination all but disappeared. Property owners and managers haved stepped up their effort to implement fair and impartial tenant screening and management practices. Notwithstanding, claims and judgments against property owners for violations of the fair housing act are at an all time high.
While the primary tenant of the act–non-discrimination in the sale, rental, and financing of housing–is fairly straight forward, fair housing laws are extremely complex and easy for well-intending property owners and managers to violate if they’re not knowledgeable and careful. One misstep, one moment at the wheel with your eyes closed and you could be looking at a serious claim or lawsuit with your name on it.
Additionally, interpretation and application of fair housing laws continue to evolve as does the definition of discrimination. Did you know that denying housing to someone over a criminal record may now be housing discrimination–opening you up to fines, punitive damages and civil actions? Yet, people with criminal records are not a protected class under the Fair Housing Act.
The federal Housing and Urban Development agency (HUD) has issued new guidelines warning that landlords and property managers could be breaking the law if they refuse to rent to individuals with criminal records–even if they have no intention to discriminate. Why? Because, “such a policy would likely have a disproportionate impact on African-American and Hispanic applicants”. Blanket policies denying rent to people with criminal records–according to HUD–is now a violation of the fair housing act. HUD notes that whether a landlord’s policy toward criminals has a discriminatory impact must be determined on a case-by-case basis.
And this is just one example of the complexities landlords face as they try to interpret and apply the Fair Housing Act.
It would stand to reason that as the level of discrimination and housing violations decrease, so would the number fair housing enforcement agencies and personnel. But this has not occurred. As landlords and property managers have complied with the Fair Housing laws, and violations have declined, more advocacy groups have joined the movement and launched “Fair Housing Programs” aimed at enforcement of the Fair Housing Act.
There are now more advocacy groups, and legal organizations, with Fair Housing enforcement programs in the United States than ever before. Examples of advocacy groups with Fair Housing programs include the Disability Law Center of Salt Lake City, Utah and Fair Housing Contact Services, Inc. of Akron, Ohio–to name just a couple. There are now hundreds of similar groups and organizations nationwide proactively involved in identifying, alleging and prosecuting violations of Fair Housing law. More often than not, these cases are settled out of court–but not all.
Just last year, Kent State University agreed to pay nearly $150,000 to settle a case alleging housing discrimination against two disabled students. The university paid $100,000 in damages to the students, $15,000 in government fines and $30,000 to the organization that advocated on behalf of the students. (See Disability Compliance for Higher Education; Volume 21, Issue 10, page 9, May 2016.)
So who is the mysterious “advocacy” group that advocated on behalf of the students and was subsequently awared $30,000 as part of the settlement? It is Fair Housing Contact Services, Inc. of Akron, Ohio. Now, unless you’re an experienced attorney, you may be asking yourself how does a third-party advocacy group get involved in a civil action between a tenant and property owner and then walk away from the table with a settlement?
They establish legal standing.
Standing is the legal term for the ability of a party to show the courts that they have sufficient connection to and harm from the action of another party to (1) bring suit against or (2) participate in a case to ask a court for relief. For standing to exist, one of three causes must be established:
- The party is directly and adversely effected by the statute or action in question.
- The party is not directly harmed by the statute or action in question BUT seeks relief from the court because the harm perpetrated has some reasonable relation to their situation AND the existence of the harm may affect others who might not be able to ask a court for relief.
- The party is granted automatic standing by act of law
Advocacy groups can establish legal standing in housing discrimination cases against property owners and managers even when no act of discrimination involving a tenant has actually occurred. Often it’s the advocacy group itself that claims harm from the alleged actions of a landlord and names themselves as the defendant or respondent in a complaint.
Consider the recent case of Disability Law Center v. Sdg Enterprises LLC, in which the Disability Law Center asserts…
“This is a testing-based complaint filed on behalf of the Disability Law Center. The DLC has standing to bring this complaint because housing discrimination frustrates the DLC’s mission and diverts its resources from other fair housing activities.”
In the above case, the defendants in the complaint never discriminated against an actual tenant. In fact, the complaint only involved two parties: the defendants and the DLC. The defendants–Sdg Enterprises LLC and Mr Loveless–were simply the unknowing participants in a test-based complaint. Even though no laws were broken, the DLC asserts that by “frustrating the DLC’s mission” it has standing to file the complaint, bring suit and seek relief from the defendants.
What is a test-based complaint? Excellent question.
Fair Housing Testing
As housing discrimination has declined in recent years, advocacy groups have found it increasingly difficult to identify and prosecute cases of Fair Housing violations. Makes sense, right? Less discrimination leads to less discrimination cases to prosecute. However, many advocacy groups operate under the theory that acts of housing discrimination have decreased, in part, because landlords have become more astute at hiding violations. Consequently, advocacy groups have turned to “fair housing testing” as a more effective tool for uncovering housing violations and gathering litigation quality evidence of discrimination.
So what exactly is Fair Housing testing? Fair Housing testing involves covert investigation conducted by “testers” who pose as housing applicants and then document the treatment they receive from landlords and property managers. Fair housing testing does not involve real housing applicants or renters. Testers are paid actors.
The danger in such testing is that it not only uncovers intentional acts of discrimination but it also penalizes property owners who are simply ignorant of the complexities of the various Fair Housing statutes. In addition, testing allows advocacy groups to claim standing in cases against landlords and seek damages, whereby creating economic incentive to hire testers and file complaints–even when violations are inadvertent.
Consider the job description to become a Fair Housing Tester with Pine Tree Legal Assistance of Portland, Maine.
Claims and Lawsuits Steadily Grow
In just the last five years Fair Housing lawsuits have spiked. HUD has dramatically stepped up rental discrimination lawsuits, complaints and cases–and advocacy groups are out in force using testing to catch unsuspecting landlord. In 2013, HUD even released a mobile app making it easier for housing applicants and renters to report cases of perceived discrimination.
If the laws associated with the Fair Housing Act were more black and white, it would be easier for landlords to avoid unintentional acts of housing discrimination–but they’re not. Just recently, a property manager in Colorado was found guilty of housing discrimination because she attempted to move tenants who had children toward one end of the apartment complex in an effort to appease some older tenants who couldn’t handle the noise the children were making.
Hardly your stereotypical bigot or slumlord, but she was prosecuted and found guilty nonetheless.
In another case, a Pennsylvania property manager was found guilty of housing discrimination under the Fair Housing act because, for safety reasons, he wouldn’t allow families with small children to rent units from one of their buildings that had minimal guardrails and high stairs. Common sense, right? Also found guilty of discrimination.
Such complaints and lawsuits are now popping up with landlords nationwide. Just read to the recent headlines.
“Landlords Settle Fair Housing Pet Discrimination Case for $72,000”
“HUD Investigation Confirmed Discriminatory Statements by Property Manager”
“California landlords settle over alleged fair housing violation”
“Seattle Area Landlord To Pay $95,000 To Settle Discrimination Complaint”
“Landlords Appeal Ruling In Tenant Relocation Lawsuit”
“[Reno] Landlord To Pay $20,000 To Settle Pet Discrimination Case”
“Apartment management settles discrimination complaint for $70,000”
If you think you’re immune, too small, or too far removed from the situation to be found liable, think again! Even small landlords and property management companies are finding themselves being prosecuted for unintended violations of the Fair Housing Act.
What You Should Do
So what should landlords and property managers do? The following is a list of recommendations.
- Get educated. Become familiar with the Fair Housing Act. Most city governments now offer Fair Housing compliance programs designed to educate property owners and managers. Participating in one of these community education programs will help you understand how to develop screening and property management policies and practices that will keep you out legal hot water.
- Hire an experienced property manager. The Fair Housing Act is complex and laws regulating housing discrimination are always evolving. If you’re not going to spend the time to stay educated, it’s well worth the investment to hire a competent property management company. A good property management company will stay up-to-date on Fair Housing laws and insulate you from legal liability. The money you save from managing your own properties isn’t worth the cost of defending a housing discrimination complaint or lawsuit.
- Get enough insurance. Being underinsured or having the wrong type of insurance is a recipe for financial disaster. While most general liability policies don’t cover housing discrimination, the better policies will typically provide coverage for your cost of legal representation if you’re ever sued.
- Business structuring. If you don’t own your properties in an LLC consider creating one. Keeping your real estate holding completely separate from your personal assets and business activities will help insulate your from catastrophic claims–including a discrimination lawsuit.