Archive for category Protected Classes

HUD Issues New Rule On “Discriminatory Effect” a.k.a Disparate Impact

HUD has issued a new Fair Housing “disparate impact” rule that may cause problems for landlords during the screening process.  The new rule creates a new provision entitled “Prohibiting Discriminatory Effects” which defines “discriminatory effect” as situations in which a facially neutral (i.e. not discriminatory) housing practice can become discriminatory if it actually or predictably has an effect on a group of persons that are members of a protected class.

The concern is whether or not this new rule will restrict landlord’s use of criminal background checks on prospective tenants.  Recently Pepsi Co. agreed to pay $3.13 Million to resolve allegations of hiring discrimination against African-Americans based on Pepsi’s use of the African-American’s arrest records.

This recent settlement when read in conjunction with HUD’s new rule causes concern regarding whether it will be considered discriminatory to use a person’s criminal arrest or conviction as a basis for rejecting a rental applicant when such use would result in members of a protected class being rejected as tenants.  For more on this issue and
please read Tim Ballering’s blog post entitled ‘Will Criminal Background Checks For Screening Be Restricted By Proposed Federal Rule?”

In light of this concern, the AASEW’s Executive Committee submitted the following comments to HUD:

The Apartment Association of Southeastern WI, Inc. is a trade association representing approximately 575 owners and managers of rental housing in the Metro Milwaukee area.

Our organization supports Fair Housing as well as community efforts to reduce the effects of crime within the neighborhoods that our members own and manage rental housing.

We are concerned that this proposed rule will restrict the  legitimate and necessary use of criminal arrest and conviction records in screening tenants to exclude those who will cause disruption and harm to other occupants, the neighborhoods those properties are located in, and to our properties.

Many communities in southeastern Wisconsin have “Nuisance Property Ordinances” that hold owners accountable for the misdeeds of their tenants.  For example Milwaukee’s Nuisance Ordinance does not require the conviction, nor the arrest of the tenant or their invitees, rather simply repeat law enforcement activity will trigger the enforcement provisions of that ordinance.

As part of your proposed rule property owners need “bright line” guidance, establishing what background screening criteria and methods will remain acceptable under this proposed rule as well as protections from potentially conflicting local requirements.

It would be inequitable, causing unnecessary costs and harm to property owners if such guidance is not provided in advance of the implementation and enforcement of this proposed rule.

Hopefully additional guidance will be provided.  If and when it is I will be sure to provide everyone an update.

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You Will Not Want To Miss AASEW’s Fourth Annual Landlord Boot Camp on Saturday Feb. 25th

Landlording can be pretty complex, with a seemingly never ending myriad of paperwork, rules, landlord-tenant laws and simple mistakes that can cost you thousands of dollars.

The Apartment Association of Southeastern Wisconsin’s Fourth Annual Landlord Boot Camp can help you navigate these treacherous waters and teach you how to run your properties with greater profit and less hassles.

I have given similar landlord-tenant law seminars to fellow attorneys, landlords, and property manager organizations throughout the state for other state-wide semianr companies that charge attendees $300-$400.  This is your opportunity to learn all of the same information at a huge discount through the Apartment Association.

 

Who:   Taught by Attorney Tristan R. Pettit (who drafts the landlord tenant forms for Wisconsin Legal Blank)

When:    Saturday, February 25th, 2012. 8:30 am – 5 pm

Where:   Clarion Hotel 5311 S. Howell Avenue, Milwaukee [Map]

Included:  100 plus page manual/outline to help you put what you learn into practice plus helpful forms.

Cost:  $159 for AASEW members and $249 for non-members.  If you are not a member of AASEW but are a member of another landlord/apartment association the cost to attend will be $199.

Specials: Not a member?  Pay just a dollar more and enjoy a 2012 AASEW membership.

Wisconsin landlord-tenant laws are constantly changing.  To help keep you up to date we offer prior attendees a $50 discount.

Sign up by going to the AASEW’s Landlord Boot Camp landing page where you can sign up online and pay via PayPal.

 

What you will learn at the Apartment Association’s 2012 Landlord Boot Camp

Landlord Boot Camp covers everything that you need to know about residential Landlord Tenant law in Wisconsin, including:

  1. How to properly screen prospective tenants.
  2. How to draft written screening criteria to assist you in the selection process and protect you from discrimination complaints.
  3. How to comply with both federal and state Fair Housing laws including how to handle with “reasonable modifications”  and “reasonable accommodations” requests.
  4. How to legally reject an applicant.
  5. What rental documents you should be using and why.
  6. When you should be using a 5-day notice versus a 14-day notice, 28-day notice, or 30-day notice and how to properly serve the notice on your tenant.
  7. Everything you wanted to know (and probably even more than you wanted to know) about the Residential Rental Practices (ATCP 134) and how to avoid having to pay double damages to your tenant for breaching ATCP 134.
  8. When you are legally allowed to enter your tenant’s apartment.
  9. How to properly draft an eviction summons and complaint.
  10. What to do to keep the commissioner from dismissing your eviction suit.
  11. What you can legally deduct from a security deposit.
  12. How to properly draft a security deposit transmittal / 21 day letter.
  13. How to handle pet damage.
  14. What to do with a tenant’s abandoned property and how this may affect whether or not you file an eviction suit.
  15. How to pursue your ex-tenant for damages to your rental property and past due rent (and whether it is even worth it to do so).

. . .  and much more.  There will also be time for questions and answers.

You get all this for less than you would pay for an hour of an attorney’s time.

Last year’s AASEW Landlord Boot Camp was filled to capacity and we even had to turn a few people away.  So call early to reserve your spot.

Call the Association at (414) 276-7378, email membership@apartmentassoc.org or go to our Landlord Boot Camp landing page to sign up online and reserve your spot.

Remember that “landlording” is a business — so take the time to educate yourself on how to better manage your business and avoid costly errors!

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Housing Discrimination: What Actions Are Covered?

There are federal, state and municipal laws that make discrimination in the area of housing illegal.  The breadth of fair housing laws is vast and landlords should educate themselves on just what actions may be discriminatory before they get themselves into trouble.

I have previously blogged about what the various protected classes are but this post will focus on what actions may be considered to be discriminatory if they are solely based on a person’s membership in a protected classes.

The key federal law that sets forth what actions can be discriminatory within the housing context is the Fair Housing Act, which is Title VIII of the Civil Rights Act of 1968.  Wisconsin, for the most part has adopted the federal laws related to housing discrimination (and has even added a few additional protected classes) and codified those laws in sec. 106.50(2), Wis. Stats.  The city of Milwaukee has its own fair housing laws which can be found in subchapter 3 of Chapter 109 of the Milwaukee Code of Ordinances.

Essentially if an individual engages in one of the following actions and does so solely based on an individuals membership in a protected class, it may constitute housing discrimination:

1.   Refuse to rent

2.   Refuse to discuss the terms of a rental

3.   Refuse to allow the inspection of rental housing

4.   Refuse to renew a lease or cause the eviction of a tenant

5.   Misrepresent the availability of housing for rent or inspection

6.   Apply different terms or conditions for the rental of housing

7.   Refuse to allow reasonable accomodations or reasonable modifications for persons with disabilities

8.   Printing, publishing or displaying advertising or notices that state or indicate a preference based on a protected class

9.   Engage in harassment, coercion, or intimidation

10.   Engage in blockbusting – which consists of efforts to induce or attempt to induce a person to rent housing by representation regarding the presence or entry of a person/s of a protected class or economic status

11.   Steering - which includes restricting of or attempt to restrict, by word or action, an individual’s housing choices

12.   Segregation by floor, building, development, or community, based on membership in a protected class.

There are additional discriminatory actions within the housing context (i.e. selling of real estate) that are also addressed in the aforementioned laws that are not listed above, but I have attempted to limit my discussion to a rental housing context.

I will spend some time in future blogs providing additional explanations for some of the above — especially “reasonable accomodations” and “reasonable modification” which I have been meaning to blog about for several months now.

It is important to remember that a landlord or manager does not need to possess the intent to discriminate in order to be found to have engaged in discriminatory behavior.  Whether a landlord or manager meant to do something is not relevant; if the action was discriminatory, it will still be considered a violation of fair housing laws.

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I Discovered A Really Informative Blog Devoted To Fair Housing Issues

This past weekend I was trying to think of some ways to add some variety and fun to Tristan’s Landlord-Tenant Law Blog.  While I feel that my blog is informative and helpful I wish that I could make it more fun.  Toward that end I decided that I would spend some time trying some new types of blog posts in the future — a list post (i.e. Top Ten Reasons To Not Allow Cats in Your Rental Unit, Top Ten Excuses for Paying Rent Late), a video post, a book review post. 

Those of you that are regular readers of my blog or those of you that have met me personally may know that I really enjoy learning knew things relating to Landlord-Tenant law.  Because of this, I was really excited this past weekend to discover a blog devoted totally to discrimination/Fair Housing issues. 

The Fair Housing Blog is published by Attorney Ron Leshnower.  He started his blog in 2008 to coincide with the 40th anniversary of the Fair Housing Act.  The purpose of his blog, according to his bio, is to explore housing discrimination issues that are important and interesting but do not always get much press.

This blog covers all issues that could possible arise in the Fair Housing context.  He talks about all of the protected classes, reasonable modifications and reasonable accomodations for individuals with disabilities, testing, voice profiling, steering, and many more issues.  What I like most about this blog is that the author provides links to the actual legal documents that the federal or state government filed against the landlord,  property manager, or owner who allegedly violated the law.  This allows you to read the actual factual allegations.  While many of these lawsuits are resolved without a need for a hearing and therefore there is no written decision necessary,  it is still very enlightening to read about what specific situations are egregious enough to cause the government file a lawsuit. 

What better way to learn then from other’s mistakes.  Some of the author’s blog posts include links to fair housing studies performed by various municipalities as well as media reports

If you are interested in Fair Housing issues as I am or just want to learn what type of actions can land you in trouble I would encourage you to spend some time at the Fair Housing Blog.

I have previously posted a three-part series about Fair Housing law that will give you some useful basic information to better understand the Fair Housing Blog.  You can read those posts here, here and here.

Housing Choice Vouchers (Section 8 Rent Assistance) Are Not A “Lawful Source of Income” In Wisconsin

I am often asked whether or not a landlord is able to legally decline to rent to a tenant that is receiving “rent assistance.”   I believe that the primary reason that landlords are unsure of the answer to this question  is because Wisconsin’s Open Housing Act (Sec. 106.50, Wis. Stats.) prohibits a landlord from discriminating against a tenant or a prospective tennat based on their “lawful source of income.”  For more information on Wisconsin’s protected classes you should read my prior post entitled “FAIR HOUSING – Part 1:  What Are The Protected Classes?”

The Housing Choice Vouchers Program (previously referred to as Section 8 Rent Assistance) is a voluntary federal program that assists very low-income families, the elderly, and the disabled to locate housing in the private market.  Housing Choice Vouchers are administered locally by public housing agencies (PHA’s).  The PHA’s receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program.  If a landlord accepts a tenant who is enrolled in the Housing Choice Voucher Program then the local PHA will pay a housing subsidy (to cover a portion of the tenant’s rent) directly to the landlord.  The tenant then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program.  For more information on the program please go to the Housing Choice Vouchers Fact Sheet which is located on HUD’s website.  The federal regulations that cover this program can be found at 24 CFR Part 982.

An earlier version of the Wisconsin Administrative Code defined “lawful source of income” as including “lawful compensation or lawful remuneration in exchange for goods or services provided, profit from financial investments, any negotiable draft, coupon, or voucher representing monetary value such as food stamps, social security, public assistance or unemployment compensation benefits.  Sec. IND 89.01(8), Wisc. Admin. Code.  (Please Note that this section of the Code is no longer available).  Lawful source of income would also include child support payments, family support payments (i.e.  alimony).

Under the above definition it would seem that “rent assistance” would be considered to be a lawful source of income, however the Seventh Circuit Court of Appeals — which includes Wisconsin — held otherwise in the 1995 case of Knapp v. Eagle Property Management Corp., 54 F.3d 1272, 63 USLW 2750 (1995).

The court in Knapp specifically held that rent assistance vouchers are NOT considered to be a lawful source of income under Wisconsin’s Open Housing Act.  The court reasoned that the Section 8 voucher “does not equate” to the other forms of aid mentioned above.  The Court explained that of the types of income enumerated in the regulation, that rent assistance vouchers would be the most like food stamps — but yet they are still very different.  Unlike food stamps, rent assistance vouchers do not have a montary value independant of the voucher holder and the apartment sought.  Additionally, unlike other forms of support, the local housing authority that administers the federal program makes the rent assistance payments directly to the landlord, rather than to the voucher holder.

The Knapp Court did acknowledge that while rent assistance vouchers could arguably be included within the definition of “lawful source of income”  under the Wisconsin Statutes, that they would “decline to ascribe such an intent to the state legislature because of the potential problems in doing so.”

The primary problem that the Court was referring to is that if section 8 vouchers were to be considered a “lawful source of income” then Wisconsin would in essence be making the Section 8 program mandatory for all Wisconsin landlords.  As mentioned above the federal program is voluntary.  The court felt that it would be wrong to allow a state to make a voluntary federal program mandatory without the legislature clearly stating that that was its intent.

Thus, it is because of the Seventh Circuit Court of Appeal’s holding in Knapp that landlords in Wisconsin are legally allowed to refuse to rent to a prospective tenant that is on “rent assistance.”

ADDED after reviewing comment:  PLEASE NOTE THAT SOME MUNICIPALITIES HAVE DECIDED TO MAKE RECIPIENTS OF HOUSING CHOICE VOUCHERS PROTECTED — So it is always important to check the local ordinances in which you hold property as local municipalities are allowed to create additional protected classes.  Dane County and the City of Madison are notable for doing this.

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Fair Housing – Part 3: Legal Reasons To Deny A Rental Applicant

From reviewing the analytics program that works in conjunction with my blog, I have learned that my two prior posts on fair housing/discrimination issues peaked a lot of interest which resulted in them being two of my most read posts to date.  My prior posts can be read here and here.  As a result I have decided to add another post related to Fair Housing issues.

When I give seminars on the topic of screening and accepting tenants, especially after I have just discussed the 12 protected classes, the attendees often feel as if they are not allowed to reject any applicant that is a member of a protected class.  The important thing to remember is that you are legally allowed to deny rental to a member of a protected class as long as the reason you are denying them rental is not because they are a member of a protected class.  This is a subtle distinction but a very important one.  If you keep this distinction in mind during your screening process I think you will feel less “hamstrung” in general and hopefully more confident that you are not running afoul of the law.

Here are some examples of acceptable reasons to deny an applicant rental, which do not violate fair housing laws at the federal, state or local level (at least not in the city of Milwaukee):

1.     The person smokes.

2.     The person wants to keep a pet (not to be confused with a service animal or a comfort animal, both of which are not pets).

3.     The applicant has insufficient income (income is defined broadly and includes more than just a salary from a job)

- Note:  The City of Madison does have a local ordinance preventing landlords from denying a rental applicant based on minimum income standards.

4.     The person’s income cannot be verified.

5.     The applicant has been arrested and/or charged with a crime.

- Note: Dane County and the City of Madison have made persons with arrest records or criminal convictions protected classes in some instances.

6.     The person has been convicted of a crime.

- Note: Dane County and the City of Madison have made persons with arrest records or criminal convictions protected classes in some instances.

7.     The individual has been sued for owing someone money.

8.     The applicant has a money judgment against them.

9.     The person does not have a prior rental history (1st time renters are not protected).

10.     The applicant has a poor rental history.

11.     They do not provide complete answers on the application.

12.     The applicant provided false information on the application.

13.     Prior landlords had negative comments about the applicant and would not rent to them again.

14.     The person has poor or no credit history.

15.     They have only been employed for a short period of time at their current job ( I prefer to see at least 6 months – 1 year of employment at their current job so that I know there is some stability in their source of income).

16.     The individual has filed bankruptcy in the past.

17.     They have a foreclosure on their record.

These are just 17 of the many legal reasons that a landlord may deny a person’s rental application even if the applicant is a member of a protected class.  As long as you are rejecting an applicant for a reason other than the person being a member of a protected class — such as for the reasons set forth above — you are not violating the fair housing laws.

To protect yourself further, I strongly suggest that rental property owners and management companies utilize written screening criteria which sets forth the minimum standards that must be met for an applicant to be accepted, or to put it another way, what will cause you to deny an applicant.

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FAIR HOUSING – PART 2: Interesting Statistics from HUD’s 2008 Annual Report

I was recently reviewing the U.S. Department of Housing and Urban Development’s (HUD) Fiscal Year 2008 Annual Report on Fair Housing.  Not exactly beach reading but then the weather here in Milwaukee isn’t exactly conducive to going to the beach.

HUD and its various Fair Housing Assistance Programs (FHAP) agencies handle all complaints regarding discrimination related to the federal protected classes.  To see a list if the 7 federal protected classes please refer to my earlier post here.  The report contained some very interesting statistics.  You can review the entire Annual Report here. (Be patient as it is a large document and takes awhile to download)

In 2008, HUD and its FHAP agencies received a record-breaking number of housing discrimination complaints – 10,552.  That is a huge number when you realize that only a small portion of complaints are ever reported.  Added to that is the fact that most states also receive and investigate fair housing complaints with regard to alleged discrimination of the state’s protected classes (which often overlap with the federal classes). And many large cities also have a municipal agency that investigates complaints as well.  In Wisconsin, for instance, the State’s Equal Rights Division (ERD) investigates complaints of Wisconsin’s Open Housing law.  For a list of Wisconsin’s protected classes see my earlier posts here.

This is the third year in a row in which HUD and its FHAP agencies received more than 10,000 complaints.

The most common basis of housing discrimination complaints was involving a “disability” (4,675 complaints or 44%) with “race” coming in second place (3,669 complaints or 35%).  The most common type of complaint was discrimination in the terms, conditions, privileges, services or facilities for the sale or rental of housing (5,862 complaints or 56%) – typically this means treating a person differently such as having different requirements or rules for a person based on their protected class status.  In second place was the refusal to rent to members of a protected class (2,697 or 26%).

In 2008 HUD and its FHAP agencies closed 11,189 housing discrimination complaints – an all-time record.  54% of those complaints resulted in a determination on the merits by HUD (they made a determination as to whether or not their was discrimination in the specific case), while 29% of the complaints were resolved in a voluntary resolution by the parties prior to HUD making a decision as to whether or not there was discrimination.  The remaining cases were closed for administrative reasons, the report states.

Over the last 4 years, apparently the number and the type of complaints have remained relatively stable.  There was a slight increase in the number of complaints of disability-related discrimination and a slight decrease in complaints related to a person’s race over the past 4 years.

Fair Housing claims are not inexpensive. Housing discrimination charges that continue to the point that a hearing is held before an Administrative Law Judge (ALJ) carry a maximum civil penalty of $16,000 for a 1st offense.  That does not include the actual damages that can be awarded to the aggrieved person, nor do they include the attorney’s fees (of the complainant) or the costs that can be awarded.  Even if there is a finding of no discrimination, the cost to pay your own attorney is often quite high because of the length of time it takes for HUD to complete its investigation.  Once a complaint has been issued HUD has up to 100 days to conduct its investigation.  According to the report, over 800 investigations involved investigations lasting beyond the 100 days.  In the several fair housing cases that I have been involved with, the investigation process always lasted longer than 100 days and was very intrusive for my clients and their current and past tenants.

2008 was the first year in which HUD issued its first charge of discrimination in a case that alleged same-sex sexual harassment (two male roommates alleged that the property owner and a maintenance worker subjected one of the roommates to verbal and physical advances that were sexual in nature).

Other key cases in which HUD issued discrimination charges in 2008 included a complaint against a retirement community that refused to allow the use of motorized scooters in the units, and a complaint that a property owner refused to allow the keeping of an emotional support animal by a young boy with a form of autism (Asperger’s Syndrome).

If there is one key point to remember after reviewing HUD’s 2008 Annual Report it is that it is better to be very well-versed in the law of Fair Housing issues so that you can operate in a proactive manner by implementing legal screening and management policies, than it is to have to defend against a charge of discrimination after the damage has already occurred.

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