How To Address A Formal Fair Housing Complaint

This month's issue focuses on what to do if your community is ever accused of a fair housing violation.

The risks of facing a fair housing complaint have never been higher, given HUD's renewed commitment—and increased funding—to end housing discrimination. HUD recently expanded its outreach activities through online venues, such as Facebook and Twitter, to alert the public to fair housing law and to make it easier to file discrimination complaints. Meanwhile, HUD has awarded millions in grant money to public and private fair housing agencies to fund fair housing enforcement.

“Despite much progress and hard work, Americans continue to face housing discrimination because they're in a wheelchair, are a different color or background, or have children,” Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña said in a statement announcing the Obama Administration's first annual report on the state of fair housing in America. “This report is a stark reminder that HUD and our fair housing partners must redouble our commitment to end housing discrimination.”

Even if you've done everything by the book, there's a good chance that you could face a fair housing complaint sooner or later. For example, there's nothing to stop a resident from making false or frivolous claims as a defensive tactic to delay or derail eviction proceedings. By the same token, you face an inherent risk of a discrimination complaint any time you reject an application or a request for an accommodation—even if you have legitimate reasons for doing so.

Sometimes a formal complaint can signal a real deficiency in your fair housing prevention efforts. A complaint could unveil problems in your training program if an inexperienced employee made a rookie mistake in answering phones or greeting prospects that led to a perception of discrimination. A complaint could also reveal flaws in your marketing program if some troublesome language has slipped into your online advertising. Or perhaps a formal complaint is your first notice that, unbeknownst to you, an outside contractor or rogue employee is making discriminatory comments or sexually harassing residents.

This month, we are going to explain the basics of fair housing enforcement—the various ways that complaints may be filed, who can file them, when they can be filed, how they are processed, and how much you could face in potential liability. Then, we're going to give you seven rules on what to do if you are ever the subject of a formal fair housing complaint. Then you can take the Coach's Quiz to see how much you have learned.

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) prohibits discrimination in the rental of housing based on seven protected characteristics: race, color, religion, sex, national origin, familial status, or disability. In addition, many state and local laws also protect other characteristics, such as marital status, sexual orientation, and source of income.

In general, the law prohibits a broad range of activity that either directly or indirectly discriminates against anyone based on a protected characteristic. Banned practices include:

Refusing to rent or denying a dwelling;

Refusing to negotiate for housing or falsely denying that housing is available for rental;

Making housing unavailable;

Setting different terms, conditions, or privileges for the rental of a dwelling;

Providing different housing services or facilities;

Advertising or making any statement that indicates a limitation or preference; and

Threatening, coercing, intimidating, or interfering with anyone exercising a fair housing right or assisting others who exercise that right.

Furthermore, under special provisions to protect individuals with disabilities, the FHA makes it unlawful to:

Refuse to make reasonable accommodations in rules, policies, practices, or services if necessary for the disabled person to use the housing; and

Refuse to allow reasonable modifications to the dwelling or common use areas, at the resident's expense, if necessary for the disabled person to use the housing.

The disability provisions also make it unlawful for most multifamily communities built since the early ′90s to comply with specified accessibility requirements.

Based on the laundry list of prohibited practices, it's easy to see that discrimination claims could arise from virtually any aspect of a community's operations, such as:

Advertising and marketing practices;

The application process, including responding to inquiries and showing units, screening and evaluating applications, and negotiating terms and conditions of rentals; and

Interactions with residents, including responding to maintenance requests, dealing with complaints by or about neighbors, enforcing community rules, and evicting lease violators.

Who can file a fair housing claim? Claims can be filed by an “aggrieved party,” which generally means anyone who claims to have been—or is about to be—injured by a discriminatory housing practice. Those people include prospects, applicants, and residents, as well as anyone associated with them, such as their family members, friends, and guests. They also include employees—who could file a claim under the retaliation provisions—and potentially anyone affected by discriminatory advertising.

Private fair housing advocates may file a discrimination claim on behalf of aggrieved parties. In some cases, they have been allowed to file lawsuits to recover damages on their own based on the expense of uncovering alleged discrimination through the testing process.

Government agencies on the federal, state, and local levels may also pursue fair housing complaints.

Who may be accused of a fair housing violation? Owners, managers, and employees may all be accused of a fair housing violation. Employees or managers who directly engage in a discriminatory activity may be held liable for violating fair housing law. Owners may be held liable directly for their own actions—such as maintaining an exclusionary admittance policy—and indirectly for discriminatory actions of their managers, employees, and agents performed on their behalf.

How can claims be filed? In general, there are two routes to filing a fair housing claim. One is an administrative process in which an aggrieved party files a complaint with HUD or its state or local counterpart. The other is by filing a lawsuit in federal or state court.

There is no requirement that complaints must be filed with HUD before a lawsuit is filed. The applicant or resident can bypass the administrative process and go directly to court, according to fair housing attorney Robin Hein, author of the Georgia Apartment Law Book, published by the Atlanta Apartment Association (2009). Furthermore, the two options are not mutually exclusive. An aggrieved party may file both an administrative complaint with HUD and a lawsuit in court, although there are procedural rules on the timing of the proceedings when both are pursued at the same time.

Each has its advantages and disadvantages, with different rules governing time limits, procedures, and potential recovery. In general, the administrative process is supposed to be quicker and easier and at no cost to the party filing the complaint, but it has a shorter statute of limitations for filing complaints—within one year of the alleged discriminatory practice—and does not allow for recovery of punitive damages.

Private litigation has a longer statute of limitations—generally two years—for filing suit and offers the potential to recover punitive damages, but it takes longer and costs more to resolve disputes through the courts. The procedures for private litigation depend on whether it is based on federal, state, or local law.

How are administrative complaints handled? We are going to focus on the FHA's provisions governing administrative complaints filed with HUD, which is how most fair housing claims start, according to Hein. The complaint need not be formal; it requires only basic information, including the names and addresses of the parties, the location of where the allegedly discriminatory action occurred, a short description of what happened, and the date of the alleged violation. Complaints may be filed in person, by telephone, through the mail, and online through the agency's Web site.

Complaints also may be filed with state or local government agencies that participate in HUD's Fair Housing Assistance Program (FHAP). According to HUD's most recent report, there were 108 FHAP jurisdictions, located in 39 states and the District of Columbia as of the end of fiscal year (FY) 2009. In those jurisdictions, the FHA requires that complaints originally filed with HUD be referred to the state or local FHAP agency, which must begin work on the complaint within 30 days after the referral or HUD can take it back.

In general, HUD and FHAP agencies follow similar, though not identical, procedures for handling complaints, according to HUD. The first step is for the agency to review the complaint to determine whether it meets certain minimal standards. If it does, then HUD or a FHAP agency sends notice to the party filing the complaint that it has been accepted.

Within 10 days, the agency must serve notice on the party accused of discrimination—the community owner, manager, or employee—known as the “respondent.” The notice, sent by first-class mail with return receipt, identifies the alleged discriminatory housing practice and explains procedural rights and obligations. A copy of the complaint must be included.

Although it is not required, Hein says that the respondent should file an answer to the administrative complaint within 10 days of receiving the mailed notification.

Investigation: The next step is an agency investigation to determine whether there is reasonable cause to believe that a discriminatory housing practice has occurred or is about to occur. The investigation may include interviewing the parties and witnesses, obtaining and reviewing relevant documents, and, when appropriate, conducting on-site investigations.

The law requires HUD and FHAP agencies to complete investigations and make determinations within 100 days, unless it is impracticable to do so. In practice, many investigations are not completed within the 100-day time limit. HUD's report revealed that nearly half of the 10,242 fair housing complaints filed with federal and FHAP agencies in fiscal year 2009 passed the 100-day mark. According to HUD, it's generally impracticable to complete an investigation within 100 days when a complaint involves a great number of witnesses, large volumes of evidence, or particularly complex claims and evidence.

Conciliation: During the investigation phase, the law also requires HUD or the FHAP agency to try to work out a settlement through a process known as “conciliation.” If the parties sign a conciliation agreement, the agency ends its investigation and closes the complaint without making a determination on the merits of the complaint. Settlements may include monetary payments or other relief to the complaining party as well as civil penalties. In addition, conciliation agreements typically include provisions requiring respondents to eliminate discriminatory policies and practices, attend fair housing training, report periodically to the agency, and allow the agency to monitor compliance with the agreement.

Charges: If the case doesn't settle through conciliation, HUD or the FHAP agency completes the investigation and issues a report. If the agency finds no reasonable cause to believe that a discriminatory housing practice has occurred or is about to occur, HUD will dismiss the complaint. That doesn't necessarily end the dispute, because the complainant still has the right to file a private lawsuit, even if HUD dismisses the complaint.

If HUD does find reasonable cause to believe that a discriminatory housing practice has occurred or is about to occur, then it issues a charge of discrimination. Hein explains that the charge is not a conclusive finding of discrimination, although it may be used in evidence in later proceedings. It still takes a hearing—either by an administrative judge or by a court—to determine liability for a fair housing violation.

HUD's report shows that HUD and FHAP agencies made determinations on the merits of 53 percent of the complaints they closed in FY 2009. Nearly half—47 percent—were closed with a “no reasonable cause” determination, and nearly a third of complaints—31 percent—were settled or conciliated. HUD and FHAP agencies administratively closed 16 percent, while only 6 percent were closed with a discrimination charge by HUD or a reasonable cause determination by a FHAP agency.

Once a charge has been issued, the parties can pursue the matter either in an administrative proceeding or in federal court. Complaints handled by FHAP agencies are pursued in administrative proceedings or the courts, depending on state and local law.

HUD administrative proceedings: If the parties choose to pursue administrative proceedings, HUD represents the government and brings the case on behalf of the aggrieved person, who has the right to join the proceedings to represent his or her own interests.

The case goes to an administrative law judge (ALJ). Once before the ALJ, the parties may settle the case by an initial decision and consent order issued by the ALJ; otherwise, the ALJ conducts an administrative hearing. The FHA requires the hearing to begin within 120 days of the issuance of a charge and for the ALJ to issue an initial decision within 60 days after the end of the hearing, unless it is impracticable to do so.

If the ALJ finds that the respondent has engaged, or is about to engage, in a discriminatory housing practice, the judge may award actual damages to the aggrieved parties as well as a civil penalty of up to $16,000 for a first offense of housing discrimination under federal, state, or local law. The amount goes up to $37,500 for a second offense during the preceding five-year period, and $65,000 for a third offense during the preceding seven-year period. The ALJ also may award attorney's fees and costs to a prevailing party other than HUD.

HUD reports that there were 62 fair housing cases on the administrative docket in FY 2009. Two were voluntarily withdrawn by HUD, 11 were settled, and one resulted in an ALJ decision.

Court proceedings: The other option is to go to federal court, but the election to do so must be made within 20 days after being served with the charge. The case will be litigated by the U.S. Department of Justice, which brings the case on behalf of the aggrieved person and the public interest. The aggrieved party also may hire his own attorney to represent his interests in court. Either party has the right to request a jury trial.

If discrimination is proved, the court may award actual damages for the aggrieved person, injunctive or other equitable relief, punitive damages, and attorney's fees and costs for the prevailing party. Courts may also impose a civil penalty.

In FY 2009, the parties elected to proceed to federal court in 31 cases, 11 of which were resolved by the Justice Department, according to HUD.

COACH's TIP: Even in the absence of a formal complaint by an aggrieved party, HUD may file what is known as a “Secretary-initiated complaint” when its investigation has found evidence that a discriminatory housing practice has occurred or is about to occur. HUD also may file a Secretary-initiated complaint when it has received an individual complaint, but believes that there may be additional victims of the discriminatory act or wants to obtain broader relief in the public interest. In FY 2009, HUD filed 12 Secretary-initiated complaints—six were resolved, two through settlements and four as administrative closures.

7 RULES FOR ADDRESSING A FAIR HOUSING COMPLAINT

Rule #1: Call Your Lawyer

If you receive notice of a formal fair housing complaint filed against your community, one of your first steps should be to contact an attorney well versed in fair housing law, advises Hein. Unless you have the in-house legal expertise to handle formal fair housing cases, your attorney can advise you on the proper response, oversee your investigation, and communicate with the HUD investigator on your behalf. Even when you feel comfortable handling many of these activities on your own, it's a good idea to at least check in with your attorney to let her know what is going on—just in case you later find yourself in need of legal assistance to resolve the matter.

Rule #2: Check Your Insurance

If you receive notice of a fair housing complaint, look into whether your community has any insurance policy that may cover such claims. Although most general liability policies do not cover fair housing complaints or lawsuits, some do, so you need to check the fine print. Though it's rare, some communities have policies that specifically cover housing discrimination claims and lawsuits. Either way, it's necessary to strictly comply with the policy's notice requirements to trigger the insurer's responsibility to provide coverage for the claim.

Rule #3: Designate a Fair Housing Coordinator

If you don't have one already, appoint a fair housing coordinator to expedite your response to the complaint. The best person to choose is a manager or experienced employee who understands fair housing laws and procedures and can act as your in-house resource for all fair housing matters, including training, record keeping, and procedures.

If your community receives a formal complaint, the fair housing coordinator will oversee your investigation and act as the point-of-contact with your attorney, if you have one, or with the HUD investigator. The coordinator will collect the necessary documents and information on anyone who witnessed or may have witnessed the events.

Rule #4: Cooperate with HUD Investigator

Soon after the complaint has been accepted, HUD will begin its investigation by requesting documents and other information to determine whether there is reasonable cause to believe that you have violated fair housing law. It is best to cooperate in the investigation, says Hein. If you ignore the notice and don't respond at all to the requests for information, Hein warns that federal or state enforcement officials have the power to issue subpoenas and compel attendance to investigate the matter.

Don't stonewall if the investigator's requests for information or documents seem to go far afield from the allegations in the administrative complaint. Hein explains that federal and state enforcement agencies have very broad investigative powers, so you should get legal advice on how to respond if you believe the information requested by the investigator is irrelevant.

Rule #5: Collect Relevant Documents and Witness Information

As soon as you receive the formal notice of an administrative complaint, read it carefully to determine exactly what your community has been accused of, who was allegedly involved, and when it was supposed to have happened. Although an informal request for documents or information often accompanies the notice, you don't have to wait until HUD begins its investigation to start pulling together the appropriate documents needed to defend yourself.

Start with any documents that detail interactions with the person who filed the complaint. If, for example, the complaint alleges steering or other misconduct while showing units, you'll need to collect records such as telephone logs, guest cards or logs, and files detailing which apartments were available and which were shown. If your community is accused of discrimination during the application process, you'll need to pull together the application, the information provided by the applicant, the results of applicant screening, and the reasons that the application was denied.

If the complaint involves a resident, look for documents pertaining to the allegations of the complaint, such as maintenance records, disability-related accommodation or modification requests, complaints by or about the resident, or records detailing the reasons leading up to and including the eviction proceedings. In addition, investigators will be looking for information about other residents in similar situations to determine whether they were treated differently from the resident who filed the complaint, says Hein.

After you collect the relevant documents, talk to any potential witnesses. As part of the HUD investigation, the investigator may interview employees and management staff about dealings with the person who filed the complaint. In addition, the investigator may interview or obtain statements from current or former residents or other applicants, depending on the allegations of the complaint.

COACH's TIP: Be prepared to pull together documents commonly requested by HUD investigators, such as your community's fair housing policies, documentation of fair housing training, and pertinent rules and procedures.

Rule #6: Avoid Retaliation Claims

Take special care to avoid even the appearance of retaliation against anyone who threatens or files a fair housing complaint against your community. The FHA considers retaliation to be a separate offense, which means that you could be found liable for damages or penalties for retaliation, even if the initial discrimination claim is ultimately found to be groundless.

And be careful if you find out that an employee or another resident suggested or helped someone file a fair housing complaint against your community. The FHA's retaliation provisions also prohibits coercion, intimidation, or interfering with anyone who aided or encouraged any other person in the exercise of his fair housing rights.

Rule #7: Fix Problems to Prevent Future Complaints

So far, we've discussed the immediate steps you should take after receiving a formal fair housing complaint. After that, you may have to be patient and wait while the case goes through the administrative process or the courts. In the meantime, it's a good idea to take a long, hard look back at the complaint—and what you learned during your investigation—so you can prevent similar fair housing problems in the future.

In many cases, an investigation into a fair housing complaint will reveal that there were clues of a potential problem that were not caught at the time. Sometimes you'll learn that there were warning signs because a resident complained of discrimination or being treated unfairly before filing a formal complaint, says Hein. Or perhaps your employees missed early signs that your community was the subject of fair housing testing, for example, if your investigation reveals that several prospects asked the same questions—such as how you treat people with disabilities—within a short time frame. Circumstances such as these could point up the need to train employees to alert management anytime they sense a potential problem, so it can be addressed before it turns into a formal fair housing complaint.

Fair Housing Act: 42 USC §3601 et seq.

HUD regulations on complaint processing: 24 CFR §103.1 et seq.

COACH Source

Robin Hein, Esq.: Attorney at Law, Fowler, Hein, Cheatwood and Williams, P.A., 2970 Clairmont Rd., Ste. 220, Atlanta, GA 30329; (404) 633-5114; RobinHein@ApartmentLaw.com.

Carl York: Vice President, Sentinel Real Estate Corp., 8495 Scenic View Dr., Ste. 106, Fishers, IN 46038; (317) 570-6724; York@sentinelcorp.com.