Posts Tagged Discrimination

Occupancy Standards . . . Not As Simple As “2 Persons Per Bedroom”

Simply stated, occupancy standards focus on how many individuals can live in a rental unit.  Landlords have the right to set reasonable, non-discriminatory, limits as to how many people can live in a rental unit.

Many landlords believe that as long as they follow a policy of  “2 person per bedroom” that they will be fine.  Unfortunately that is not always the case.  There is no clear-cut occupancy guideline and as such there is confusion amongst landlords, management companies, and even the attorneys representing them : ).

In what is referred to as the Keating Memo, the Department of Housing and Urban Development (HUD) stated that it believes that “an occupancy policy of two persons per bedroom, as a general rule, is reasonable under the Fair Housing Act.”  However, the memo goes on to say that “the reasonableness of any occupancy policy is rebuttable” and HUD clarifies that the memos it issued in the past on the subject of occupancy standards do not state or imply that HUD will determine compliance with the Fair Housing Act based solely on the number of people permitted in each bedroom.

In fact, HUD issued the following statement in the final rule implementing the Fair Housing Amendments Act of 1998:

“Thus, the Department believes that in appropriate circumstances, owners and managers may develop and implement reasonable occupancy requirements based on factors such as the number and size of bedrooms and the overall size of the dwelling unit.”

In the Keating Memo, HUD sets forth what factors it will consider when reviewing fair housing complaints involving occupancy issues:

1.  Size of the bedroom and unit

2.  Age of the children

3.  Configuration of the unit

4.  Other physical limitations of housing (i.e. capacity of the septic, sewer, or other building systems)

5.  State and local law

6.  Other relevant factors, such as:

– if the landlord has made discriminatory statements

– if the landlord has taken steps to discourage families with children from living in its housing

– if the landlord has enforced its occupancy policies only against families with children

So what occupancy standard can a landlord set forth that will avoid discrimination complaints and keep the landlord out of trouble?  I wish that I could provide you with a simple answer but unfortunately there is no bright line rule.

What I can tell you is the key issue or focus in discrimination cases that involve occupancy limits is always whether or not the landlord is discriminating against a family with children.  So even if your occupancy policy is reasonable, if you make some discriminatory comment to the applicant, you can forget about hiding behind your occupancy standards.  As such, an occupancy policy based on the number of children per unit is much less liklely to be found to be reasonable than one which limits the number of persons per unit.  A Mississippi property management company learned that lesson the hard way earlier this year.

Margaret Bowitz of the Metropolitan Milwaukee Fair Housing Council stated during a seminar that I attended, that “2 persons per bedroom” is just a starting point.  Next, a landlord should look at the size of the bedroom.   So if you have a large-sized bedroom than possibly more than 2 persons could sleep there.  If the bedroom is smaller than average, maybe only 1 person would be allowed.  Consider an occupancy code of 70 square feet per person for one person using the room for sleeping purposes and 50 square feet per person for rooms to be used for sleeping purposes by more than 1 person.  Ms. Bowitz added that if the room is less than 70 square feet you would not have to allow it to be used for sleeping purposes, although you could allow it.  She also mentioned that one can consider whether or not the area must be allowed to be considered a “sleeping quarter.”  So for instance, if you have to walk through the room in order to get to another room in the rental unit, you would not be required to allow it to be used for sleeping purposes.

The city of Milwaukee has an ordinance that was created to prevent overcrowding (not to serve as an occupancy standard) that focuses on size (square footage) and ignores the number of bedrooms in a rental unit entirely.

Some states such as California have laws that state that “2 persons plus one” is the occupancy standard that should be used..

So “clear” guidance on this issue is hard to come by.

I am currently defending a landlord against a fair housing complaint for refusing to rent a two-bedroom unit to a family of 5 persons.  When speaking with the investigator I was told that HUD’s policy is 2 person per bedroom and if that was my client’s policy, the case would most likely be dismissed.  But later in that same conversation I was asked if the rooms were larger than average and then told that if they were then maybe more than 2 people could live there.  I was told that measurements of the room would need to be taken.  So obviously, it is not as simple as having an occupancy standard of “2 persons per bedroom.”  If it was, why would HUD have even investigated this claim against my client.

Another example that demonstrates that the “2 person per bedroom” occupancy standard is not the panacea that some landlords believe it to be, occurred in December of 2012 when 3 real estate groups in Connecticut agreed to pay a local woman $40,000 as a result of a complaint she filed against them for discrimination based on familial status (i.e. children).  The woman’s complaint alleged that a “2 person per bedroom” occupancy limit was more restrictive than state and local law and therefore unreasonably limits the ability of families with children to rent from the 3 real estate groups.  Again, if it was as simple as “2 persons per bedroom” why would the Connecticut case have been investigated and why would the landlords involved have agreed to pay out $40,000 to the complainant.

So it is pretty clear to me that the “2 person per bedroom” occupancy limit is not enough to protect an landlord.  However, to confuse the issue further, I have read conciliation agreements (i.e. settlement agreements resolving a claim of discrimination) between HUD and a landlord in which the settlement language requires that the landlord adopt an occupancy standard of “2 persons per bedroom” going forward.  What gives?

All I can tell you is there is no “hard and fast” rule for occupancy limits in residential rental housing.  Whether or not the occupancy standard that you have in place will be found to be reasonable will depend on the specific facts of your rental property and the specific facts of your interactions with the prospective tenant that says you discriminated against her.

So don’t be foolish and assume that you are “safe” as long as you follow the “2 person per bedroom” rule, otherwise you might find yourself on the wrong side of a discrimination claim.

 UPDATE 8-26-13:  Here is yet another example of the 2 person per bedroom rule no longer being acceptable for HUD. 


Tags: , ,

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.

Tags: , , , , ,

Largest Settlement of State Fair Housing Claim Occurs in Arizona

A 2007 Fair Housing complaint filed by two Arizona tenants alleging that their apartment managers discriminated against them based on their race, nationality and religion, has resulted in the largest state Fair Housing claim to date.

In 2007, Soha Abdelrahman and her husband Hany Obrahim filed a lawsuit against their Tempe, Arizona apartment managers claiming discrimination based upon their Arabic race, Egyption nationality and Muslim religion.  The defendant in the lawsuit is Texas-based Hall Financial Group, Ltd., which manages rental properties in various states — but no longer in Arizona.

The Arizona Attorney’s General Office announced that Hall Financial Group agreed to pay a total of $227, 5000 to settle the lawsuit.  $197,500 of the settlement amount will go to the tenants and $30,000 will go to the Arizona AG’s Office to enforce civil rights laws in Arizona.

The settlement did not include an admission of wrongdoing by Hall Financial Group.   However the lawsuit alleged that Hall discriminated against the tenants based on their race, religion and nationality, when the tenants applied to rent an apartment in 2006.  Allegations included claims that Hall’s agents discouraged the tenants from aplying for housing, inspected their apartment and possessions during their move-in, and ignored requests for repairs to the apartment.  The lawsuit also claimed that once the tenants alleged discrimination the managers attempted to evict them.

You can read more about this settlement in the Arizona Republic.

If you would like to learn more about Fair Housing and what the protected classes are I have written about that issue in a prior blog post as well as discussing what actions by landlords are covered under Fair Housing law.

Tags: ,

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.

Tags: ,