Posts Tagged Fair Housing / Discrimination

Fair Housing Update: Review of 2010 Fair Housing Trends Report

A large segment of my work involves advising landlords and property managers about fair housing laws and counseling them what they can and cannot do in the rental industry with regard to the federal and state fair housing laws and discrimination in general.  As such, I recently took the time to read the National Fair Housing Alliance’s (NFHA) 2010 Fair Housing Trends Report which was published May 26, 2010.  

To provide you with some background on the protected classes and fair housing law in general you may wish to review my July 10th post which discusses the various protected classes or visit Atty. Ron Leshnower’s Fair Housing Blog.

Some of the relevant highlights of the report are below. 

–   In 2009 there were a total of 30,213 fair housing complaints filed.  This is a significantly higher number of complaint than in past years.  It should be noted that all of these complaints do not arise in the context of rental housing — many involve mortgage lending, hosing construction etc.

–   NFHA conservatively estimates that there are over 4 million fair housing violations each year although most of them are never reported.

–   In 2009 H.U.D. (U.S. Dep’t of Housing and Urban Development) and D.O.J. (Department of Justice) charged more fair housing cases than in past years.

–   Private fair housing groups continue to process the highest number of complaints — 19,924 (or 66%) of the total complaint load even though there are fewer private fair housing groups than in prior years. 

–   Since 1999, private non-profit fair housing organizations have processed 186,308 (66%) of the complaints.  By comparison, Fair Housing Assistance Program (FHAP) agencies processed 69,358 complaints (25%), and HUD processed 25,881 (9%) of the cases.

–  People with disabilities continued to be the protected class that is most discriminated against (or at least the most reported) in 2009.  This was also true in 2008.   The report explains that disability complaints remain high for several reasons: (1) HUD has an office devoted solely to disability issues, (2) many apartment owners make direct comments refusing to make reasonable accomodations or modifications for people with disabilities so the discrimination is easier to detect, (3) builders, developers, and architects still continue to design and construct apartment complexes that violate the Accesibility Guidelines, (4) every state has a Protection and Advocacy System and every city has one or more non-profit agencies dedicated to assisting people with cognitive, mental, sensory, and physical disabilities. 

ASIDE:   In a recent article from Milwaukee Magazine’s newsbuzz, disability related discrimination leads the way in Milwaukee also.

–   In 2009, private fair housing groups reported 15, 624 complaints of housing discrimination in the rental market.  FHAP agencies reported 6,464 and HUD reported 1,656.  The report goes on to explain that one reason for the increase in the number of rental market complaints from prior years may be the foreclosure crises — i.e. many tenants were evicted when the owner defaulted on his/her mortgage and many others lost their homes and needed to enter the rental market where they faced discrimination.

–   In 2009, several representatives in Washington introduced bills to extend the protection of the Fair Housing Act to create 2 additional federally protected classes: (1) gender identity, and (2) sexual orientation.

Obviously, more work needs to be done to ensure that landlords are aware of the protected classes and do not engage in discrimination, but as the title of the report says – 2009 was a “step in the right direction.”

ASIDE:  There is a portion of the report that addresses fair housing implications of the foreclosure crisis that is very interesting and worth a read.

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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 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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FAIR HOUSING – PART 1: What Are The Protected Classes?

A large part of my law practice is meeting with and consulting with landlords and management companies with regard to how to avoid trouble. This would include assisting them with the drafting of rental documents and guiding them on the proper notice to use when terminating a tenancy. It also includes consulting with clients with regard to fair housing / discrimination issues.

I enjoy this consulting work as it typically occurs before the landlord is embroiled in a dispute or litigation – thus my client tends to be in a better mood at the consulting stage which puts me in a better mood also.

Recently I have had a lot of calls on topics related to discrimination and fair housing and so I thought that I would devote several posts in the future to topics related to fair housing issues.

The easiest place to start would be to identify the various protected classes under Federal and Wisconsin law.

Federal law (which starts at 42 U.S.C. 3601 et. seq.) has 7 protected classes which are:

1. Race

2. Color

3. National Origin

4. Sex

5. Religion

6. Familial Status

7. Handicap

Wisconsin law (which is found at §106.50(1), Wis. Stats) also includes the above 7 protected classes plus adds an additional 5 more, which include:

1. Marital Status

2. Sexual Orientation

3. Lawful Source of Income

4. Ancestry

5. Age (18 years and older)

It is important for managers and owners to also check their local municipal ordinances as well as because there are some municipalities that have added additional protected classes. The city of Madison for instance also treats convicted criminals, students, and a person’s physical appearance as additional protected classes. You can read more about the City of Madison municipal code – Ch. 32 entitled Landlord and Tenant here.

So if you make a housing decision based on a person’s membership in a protected class you may have discriminated against them. Discrimination in housing covers a wide range of activities such as: refusing to rent to, refusing to discuss rental terms with, refusing to allow the inspection of rental housing, refusing to renew a lease, causing the eviction of, misrepresenting the availability of rental housing, applying different terms or standards, and engaging in harassment, intimidation, or coercion of.  There are many more but you get the general idea.

It is important to remember that a landlord does not need to have the intent to discriminate in order to be found to have engaged in discrimination.  Also be aware that most insurance policies do not cover an owner’s or manager’s discriminatory acts.

Remember that just because someone is a member of a protected class does not mean that you cannot deny them rental or evict them. It only becomes discrimination if you do the above because they are members of a protected class.  So if you are denying a person rental or filing an eviction action against an individual for reasons other then their protected class status then you are not discriminating against them. For example, if a person does not meet your screening criteria because they have been evicted in the past, have no prior rental history, or their gross monthly income is not 3 times the monthly rent (or some other legal screening criteria that you have in place) then it is not discrimination to deny that person rental even though they may also be a member of a protected class.

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