Posts Tagged Protected Classes

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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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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NEW LEGISLATION TO MAKE VICTIMS OF ABUSE A NEW PROTECTED CLASS

On May 14, 2009, Wisconsin Senator Spencer Coggs along with 7 other state senators introduced 2009 Senate Bill 204 entitled the “Victim Fair Housing Act.”

This bill will prohibit discrimination in housing on the basis of a person’s status as a victim of domestic abuse, sexual assault, or stalking. The bill also prohibits the owner of housing from requiring that a rental applicant supply information concerning the person’s status as a victim of domestic abuse, sexual assault, or stalking.

If passed (and there appears to be a great many co-sponsors to date) this bill will create an additional protected class in Wisconsin for victims of domestic abuse, sexual assault, and/or stalking with regard to housing. Discrimination in housing includes such actions as rejecting a person who applies to rent your property or causing the eviction of a current tenant solely because they are a member of a protected class. Wisconsin currently prohibits discrimination in housing based on a person’s sex, race, color, sexual orientation, disability, religion, national origin, marital status, family status, lawful source of income, age, or ancestry. Some municipalities like the City of Madison and Dane County have even more protected classes then the twelve mentioned above.

While I am not aware of any landlord that would refuse to rent to a victim of abuse in theory it is when that theory is dropped into the “real world” that sticky situations may arise. One concern I have is the fact that the abuser often follows his/her victim. This could pose noise and safety issues for the other tenants that reside in the same building with the abuse victim. What happens if the abuser shows up at the victim’s apartment banging on doors and disturbing the quiet enjoyment of the other tenants? Is a landlord allowed to evict the abuse victim/tenant in this situation? Or worse, what if the abuser shows up at the property and engages in criminal acts such as destroying the landlord’s property or assaulting other tenants who get in his/her way? Will the landlord be prohibited under this new law from evicting the abuse victim/tenant under this scenario? While I don’t think it is fair to evict the abuse victim in these situations I also don’t think it is fair that the other tenants and neighbors should have to endure such situations either. What is the landlord who is providing housing to that abuse victim to do? The landlord also owes his/her other tenants the right to quiet use and enjoyment of the property and to be free from criminal activity and harm.

Another concern is the fact that under the City of Milwaukee’s nuisance ordinances a landlord can be fined for having repeated calls to the police from the same property within a certain period of time. If the abuser should try to contact the abuse victim/tenant there is a strong probability that the victim will call the police (and they should). But under the nuisance laws, even if the police calls are legitimate, if there are too many of them the owner of that property may be fined. If the landlord doesn’t pay the fine it will be added to his/her property tax bill. While I have no supporting data, I think it stands to reason that a victim of abuse may need to contact the police more often than a non-victim of abuse

I don’t know what the answer is or should be. I certainly don’t think that victims of abuse should be discriminated against in housing but I also hope that the legislators, the police, the city and others that will be drawn into this dialogue will understand that there needs to be some protections or accommodations made to a landlord who may be stuck between the proverbial “rock and a hard place.”

Tell me what you think about this new legislation and how it might affect your rental properties.

Here is a link to view the press conference regarding the Victim Fair Housing Act.

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