From the Courts: Lessons Learned on Fair Housing Law

For this month’s lesson, the Coach gathered some interesting fair housing cases from the past few months. In some, communities are called to defend their actions when dealing with prospects—over the phone and during on-site visits. Others involve disputes with residents in how they handled maintenance problems and enforcement of rules governing common areas. And there’s a recent case over what property managers did—or should have done—about an offensive joke that circulated among the residents via email.

For each case, the Coach explains what happened and why the cases landed in court. Then we review what the court decided—and why—to explain the lessons you can learn to avoid similar problems at your community. Finally, you can take the Coach’s Quiz to see how much you’ve learned.

DISABILITY—ASSISTANCE ANIMALS

Owner’s Buddy Turns Away Prospects with Assistance Animals

Was Owner Responsible for Friend’s Discriminatory Statements to Fair Housing Testers?

This case shows what can happen if you’re unprepared when fair housing testers come calling—and demonstrates the need to adequately supervise and train anyone interacting with prospects on your behalf.

What Happened: In 2010, the owner and a partner bought an old hotel in Oregon to refurbish and operate as a rental housing community. Soon after, the owner bought out his partner through a corporation of which he was president.

In 2011, the owner allowed his friend Steve to live at the community in exchange for keeping an eye on the place and answering the business phone when the owner was away. They agreed that Steve wasn’t an employee or manager, but he was authorized to show units to prospects and to provide them with applications. He wasn’t allowed to make changes to the applications, which authorized no pets other than service animals. After getting the completed applications, he gave them to the owner, who retained sole authority to accept or reject them.

A few months later, two testers from a fair housing organization called the community posing as prospects. According to the first tester, he spoke with Steve, who gave him information about available units. The tester said that when he told Steve that he had a therapy animal, Steve said he was just the interim manager and had to talk to the owner. When the tester called back, Steve said that he talked to the owner, and the owner didn’t want dogs in the building.

The second tester called a few days later and also spoke with Steve, who said he was a friend of the owner and filling in until the owner found new management. After discussing the rental, the tester said she had an assistance animal, but Steve responded that he didn’t think they’d let people have animals. The tester said she had a note from her doctor, but Steve repeated that he didn’t think they would allow it.

The testing later triggered a lawsuit, filed by the state fair housing commissioner and the fair housing organization, against the owner and corporate entities associated with him. The complaint alleged that the defendants discriminated against prospects based on their disabilities and failed to provide reasonable accommodations.

In pretrial proceedings, Steve and the owner gave conflicting accounts about the community’s willingness to accept prospects with assistance animals. Steve said that the owner told him that no animals, whether service animals or not, were allowed at the community—which he passed along when prospects called him.

The owner said the community didn’t allow pets, but the no-pet policy didn’t apply to service animals. He denied that he ever told anyone, including Steve, that disabled residents couldn’t keep service animals—or that he had ever received a completed application from a disabled resident with a service animal. He added that with documentation of an actual disability, residents were free to keep a genuine service animal in their unit.

The state fair housing commissioner asked the court for judgment without a trial.

Decision: The court granted the request, ruling that the community clearly violated fair housing law.

Reasoning: In statements made to the testers, Steve violated fair housing law. From what the testers said, Steve was on notice that they were requesting reasonable accommodations for their assistance animals. Rather than asking for additional information, he flatly said that animals weren’t allowed. Since it was a clear violation of fair housing law, the only question was whether the owner and corporate entities were liable for his statements.

It would be an open-and-shut case against the community if the owner told Steve that no animals, including service animals, were allowed at the community, but the owner denies telling Steve any such thing. In this case, however, it didn’t matter whether Steve was authorized to make the statements, because he had apparent authority to make them. Apparent authority means that the agent was put in a position to reasonably appear to act on behalf of the owner. The owner admitted authorizing Steve to man the front desk, answer the phone, answer questions about the units, and show units. The community was liable for Steve’s statements because he had apparent authority to act on its behalf.

Although various corporate entities owned the property over the years, the owner was personally responsible for the fair housing violations. The court said that he was clearly trying to shield himself from personal liability by moving the sole asset owned by the corporation in and out of various entities he controlled and managed.

• Avakina v. Chandler Apartments LLC, January 2015

Lessons Learned:

1.   Be prepared for fair housing testers by having policies and procedures in place to ensure compliance with fair housing law.

2.   Make sure that anyone working on your behalf—employees and agents—have had at least some basic training in fair housing law.

3.   Develop policies and procedures for handling reasonable accommodation requests, including requests for assistance animals.

DISABILITY—REASONABLE ACCOMMODATIONS

Resident Faults Community for Not Paying for Hotel During Mold Remediation

Can Resident Sue Community More than Two Years After Moving Out?

This case illustrates the importance of keeping good records about interactions with residents—and retaining them long after residents move out.

What Happened: In October 2010, the resident, who had an undisclosed disability, moved into a North Carolina community that accepted federal Section 8 housing vouchers. The following June, she began to have problems with mold from a malfunctioning air conditioning unit. She reported the issue to the manager, who made arrangements to inspect the unit for mold and have it removed. The community also replaced her air conditioning unit. While the work was being done, the resident was displaced from her unit for nearly a month, during which the community provided hotel accommodations at her request.

While the work was ongoing, the resident asked the manager to transfer her to another unit. The manager said none were available, but that one would be available at the end of September. The resident said she didn’t intend to renew her lease, regardless of unit availability, so the manager rented the unit to someone else.

The resident gave the manager written notice that she wasn’t renewing her lease, but then changed her mind when the manager told of renovations planned for the community. She cancelled her notice to vacate and said she wanted to go ahead with the transfer, but the manager said she was too late.

Around the same time, the resident had problems with moisture in her unit after a heavy rainstorm. After an inspection, mold was again detected. The manager gave her a remediation plan, which would take 10-15 days; the resident could stay during the process, but she had to move her possessions so they could do the work.

The resident called to tell the manager that she had removed her items, but got upset when they discussed what would happen with her keys. The next day, the manager found the keys in the rental office mailbox with a letter from the resident, stating that she had been “asked to leave” without a remedy and considered herself constructively evicted.

A few days later, the resident met with the manager and asked for keys to another unit, but was refused. She also asked to be given a hotel room, but was told that the community would not give her further assistance. The community later rented her unit to someone of a different race.

More than two years later, the resident sued the community for discrimination based on race and disability along with various state law claims. The community asked the court for judgment without a trial.

Decision: The court granted the request, dismissing the resident’s fair housing claims.

Reasoning: The resident couldn’t sue the community for violating fair housing law because she waited too long to file her complaint. Lawsuits for violations of federal fair housing law have to be filed within two years of the date of the last discriminatory housing practice. The resident’s last contact with the community occurred when she met with the manager and was refused alternative housing, but she filed the lawsuit more than two years later.

Moreover, the resident failed to prove that the community violated fair housing law by refusing her request for alternative housing while her unit was renovated. She argued that it was a reasonable accommodation, but she didn’t ask for a change in policy—only alternative housing during mold remediation. In any event, failure to remediate mold, without something more, doesn’t violate fair housing law. Although there was mold in her unit, she didn’t show that the community had a discriminatory mold remediation policy.

Her race discrimination claim also failed. Although the community rented her unit to someone of a different race, that fact by itself wasn’t enough to prove that the community discriminated against her based on race.

• Armstrong v. Yopp Properties, LLC, February 2015

Lessons Learned:

1.   Have policies and procedures in place to ensure prompt attention to requests for maintenance and repairs to ensure the same level of service to all residents, regardless of their race, ethnicity, and any other protected characteristic.

2.   Document interactions with residents—and keep them as long as possible—because you may need them later to show that you treated them fairly and followed your policies consistently.

RACE—DISCRIMINATORY TREATMENT

Community Accused of Misrepresenting Availability to Minority Prospects

Did Student Housing Provider Play Favorites Based on Race?

This case illustrates the need to treat prospects consistently—and to have the proof to back it up—to defend against discrimination claims. The case is still in litigation, so the facts have yet to be proved, but here’s a summary of the parties’ allegations.

What Happened: A student housing community in Utah houses nearly 300 students in six-bed shared apartments in the fall and spring semesters. The community rents to both groups and individuals, but availability varies widely throughout the school year. There are occasions when individual housing might be available but group housing isn’t because the open beds are located in different units.

In the spring of 2010, a Polynesian student visited the community looking for space for himself, and if possible, either three or five of his friends, for the fall semester. According to the student, he was told that the complex was full, but that he could complete an online application, pay a fee, and wait for the community to contact him if space became available. He didn’t go online or complete the application, but he said he later found out there were vacancies and suspected they had lied to him.

The following April, the student returned with his cousin, inquiring about upcoming vacancies (though there was conflicting evidence about the number of students and time requested). Allegedly, an employee told them that the community was full, but invited him to fill out an online application and pay the fee, and said that the community would let him know.

Suspecting that the community was discriminating against Polynesian students, the students said they contacted some white friends, three of whom went there 15 minutes later to inquire about housing for five students. According to the white students, the manager initially said that she could place the three friends in the same unit, but that the other two would be placed elsewhere. A few days later, the manager allegedly contacted them, saying she could place all five in the same unit and didn’t require a deposit or completed online application.

The following spring, three African-American students said they visited to ask about housing for the next school year. According to the students, they spoke with a manager who said she was 99-percent sure the complex was full, but they could go online and complete the application. Allegedly, they didn’t do so because of the $250 security deposit required as part of the application and because the manager thought they were full. When one of the students later returned with another African-American friend, he said that they were told the same thing.

The students sued the community for violating fair housing law by discriminating against them based on race, but the community denied the charges. According to the manager, she followed the same application process with all prospects and never committed to a rental unit until she received an application, deposit, and signed lease agreement. She also explained that housing availability changed from year to year, but that empty spots were minimal. Nevertheless, the students presented internal documents, obtained in pretrial proceedings, which allegedly showed there were units available at the relevant times.

The community asked the court for judgment without a trial, arguing that the students couldn’t claim they were denied housing because they never submitted the online application required of all potential residents.

Decision: The court denied the request, ruling that further proceedings were needed to resolve the case.

Reasoning: The students’ failure to submit a completed application wasn’t fatal to their fair housing claims. The students could sue for denial of housing and discriminatory terms and conditions based on allegations that minority applicants faced a more burdensome application process when seeking housing in comparison to white applicants. Taken in its entirety, the evidence from the students suggested that the community did not require the white students to submit an application and deposit before providing accurate information about apartment availability or offering a specific unit for rent. In this respect, a jury could find that the community intended to use discriminatory hurdles to deny protected groups housing or the opportunity to negotiate for a rental under fair housing law.

The students could also pursue claims that the community misrepresented the availability of housing. A reasonable juror could conclude that the community either failed or intentionally refused to provide truthful information to minority students when its manager said that she was 99-percent sure it was unavailable but reached out to and offered housing to white students.

In its defense, the community offered a legitimate, nondiscriminatory reason for its conduct—that it provided truthful and accurate information to the students but they simply requested housing for too many students or during unavailable times. Nevertheless, the allegations of the varied treatment of three groups raised enough questions about the community’s purported explanation for a jury to find it unworthy of belief.

• Neufi v. Snow Garden Apartments, December 2014

Lessons Learned:

1.   Have a written fair housing policy to let everyone know that the community does not make decisions about who lives there based on any characteristic protected under federal, state, or local law.

2.   Follow written policies and procedures related to the application process to ensure that prospects and applicants are treated fairly and consistently.

FAMILIAL STATUS—RULES FOR COMMON AREAS

Parents Accuse Community of Punishing Children for Playing Outside

Did Community Enforce Neutral Rules for Use of Common Areas?

This case shows why it’s important to adopt and enforce rules governing the use of common areas in a way that doesn’t unfairly target families with children. The case is still in litigation, so the summary is based on the allegations of the parties, which must still be proved in court.

What Happened: Several families sued a California community, alleging discrimination based on familial status by enforcing rules that prohibited children from playing in common areas. The complaint alleged a series of incidents in which on-site managers repeatedly told the parents that children couldn’t play in common areas or that the children needed to be quiet or stay home. The parents insisted that the children weren’t being excessively noisy but were playing like normal children. Two parents said that management threatened them with eviction due to the noise of their children and ultimately refused to renew their lease.

The community asked the court to dismiss the case, arguing that there was no rule prohibiting children from playing in common areas. As proof that it had no rule targeting children, the community submitted its lease addendum, which stated that the recreational areas were for the enjoyment of the residents and guests and that abuse of the facilities wouldn’t be tolerated; it also stated that skateboards, roller skates, and bicycles should be kept out of the courtyard and used in areas designated for those activities.

Decision: The court denied the community’s request to dismiss the case.

Reasoning: The community incorrectly presumed that the existence of a facial, written rule designating areas for skateboards, roller skates, and bicycles barred the families’ fair housing claims. The complaint alleged a pattern and practice of discrimination by, among other things, enforcing a rule prohibiting children from playing in common areas. The complaint also described at least seven incidents with approximate dates when managers allegedly told the families and their children that they couldn’t play in any of the common areas and even chased the children out of the common areas. Taken as true, these allegations were enough to proceed on the families’ fair housing claims, despite the language in the community’s rules.

The families could also pursue their claim for hostile living environment. The Fair Housing Act prohibits the coercing, intimidating, threatening, or interfering with anyone in the enjoyment of the rights protected under fair housing law. The complaint alleged a pattern of discrimination that forced parents to keep their children indoors and not allow them to play in common areas. It also said that the manager threatened to evict one couple if their children continued to make noise and did not renew their lease.

• Anderson v. TCAM Core Property Fund Operating LP, January 2015

Lessons Learned:

1.   Adopt reasonable, nondiscriminatory rules governing common areas, such as hallways, parking lots, and outside spaces.

2.   Apply the rules fairly and consistently to avoid claims that you’re singling out children for noisy behavior.

DISCRIMINATORY STATEMENTS—RESIDENT RELATIONS

Resident Says Neighbor’s Joke Crossed the Line into Racial Stereotypes

Did Management Discriminate by Failing to Intervene?

This case shows what can happen in what the court described as the “oft treacherous practice of telling jokes. Even the most well-meaning and cautious jester treads the line of one day offending her audience with her humor.” The case is still in litigation, but here’s a summary of the parties’ allegations.

What Happened: Two residents, both African American, lived at Delaware condominium retirement community. The problem started when one of them received an email containing a joke from a neighbor. They previously traded jokes, but the resident thought this one was offensive and replied to the neighbor saying so. She also forwarded the email and her response to the community’s listserv, including the property manager and other residents. The neighbor replied and profusely apologized. The resident accepted her apology, but didn’t share this exchange with the rest of the community.

Irate as a result of the neighbor’s email, both residents contacted the manager, requesting that she take action. The manager said that after consulting the company’s attorneys, she determined that she wasn’t legally entitled to intervene.

Unsatisfied with the manager’s decision, the residents filed a complaint with the state human rights commission, claiming that the management company discriminated against them by allowing such racially offensive conduct to persist in the community.

Siding with the residents, the commission sued on their behalf, accusing the manager and the management company of violating fair housing law by failing to take action upon the residents’ request. The residents asked for judgment without a trial.

Decision: The court denied the request, ruling that further proceedings were needed to resolve the case.

Reasoning: The residents could pursue claims that the managers’ failure to take disciplinary action for the racial slur violated fair housing law, but a trial was needed to sort out the facts.

The residents’ complaint was based on the managers’ enforcement of rules forbidding residents from interfering with the quiet enjoyment of other residents. They claimed that the managers did not act upon their complaints about the neighbor’s off-color humor, but they had previously taken action when white residents complained of harassment by another neighbor. According to the residents, this difference in action showed either a discriminatory policy or, at least, a discriminatory impact since white residents received preferential treatment. 

The managers argued that the reason for their decision had nothing to do with race. They pointed to the significant difference in severity between the email and the prior incident, which involved ongoing harassment that residents were unable to work out on their own. They said they didn’t involve themselves in the email controversy because the resident and the neighbor had already worked out an amicable solution by the time they found out about it.

At this point in the litigation, the court said that the managers’ version of the events was as equally probable as the residents’ assertions of discriminatory conduct. A jury would have to decide whom to believe—along with whether a racial slur occurred to begin with; and if it had, whether the resident and the neighbor had not resolved the matter on their own.

• State Human Relations Commission ex rel. Green v. Field, January 2015

Lessons Learned:

1.   Be consistent when applying rules governing resident conduct. Unless you’ve applied the rules fairly and consistently, you could find yourself on the defense if it looks like you’re acting in a discriminatory manner.

2.   Investigate complaints by and about residents, without regard to race, color, and any other protected characteristic.

3.   Keep good records to document legitimate, nondiscriminatory reasons for taking—or not taking—action against residents who break the rules.

• Fair Housing Act: 42 USC §3601 et seq.