Keep Grievances From Escalating Into Costly Litigation

This month, the focus is on preventing resident grievances from escalating into costly litigation. Of course, you can't prevent anyone from filing a fair housing complaint—doing so may itself be a fair housing violation. But if you focus your fair housing efforts on prevention, you can avoid the costly drain on your resources—in the time, effort, and expense needed to defend your community from a full-blown HUD investigation or a private fair housing lawsuit.

Due to current economic conditions, communities are taking a close look at their budgets to cut costs wherever they can. You may be tempted to trim fair housing expenses—by delaying scheduled training or limiting attendance to leasing personnel, for example. You might justify the decision because you have fair housing policies in place and never had a complaint filed against you. But you should think twice before cutting your fair housing compliance efforts—it could come back to haunt you.

The number of fair housing claims reached an all-time high last year, and that number is likely to mount with renewed enforcement commitment on the federal, state, and local levels. In announcing the 2008 State of Fair Housing report this summer, HUD's Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña said, “Fighting against housing discrimination and affirmatively furthering fair housing are twin priorities of HUD and the Obama Administration.” As part of its outreach effort, HUD has sponsored a public service campaign—including a presence on Facebook and YouTube—to encourage those who believe they may have experienced housing discrimination to report it.

And an influx of more than $26 million in federal grant money will spur increased enforcement by public and private fair housing organizations on the state and local levels. The funds are to be used to investigate allegations of housing discrimination and to educate the public and the housing industry about their rights and responsibilities under the Fair Housing Act. “These grants help make combating housing discrimination a national priority,” Trasviña said in a statement.

Given renewed vigor in enforcing fair housing requirements, now is not the best time to cut your fair housing budget. Instead, you should target your dollars on prevention—which will keep costs down in the long run. In this issue, we'll suggest seven rules to help you resolve potential fair housing problems before they turn into formal complaints or costly lawsuits. 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 housing discrimination based on disability, race, color, religion, national origin, sex, and familial status.

You may think your community is immune from discrimination complaints because you have adopted fair housing policies and strive to treat everyone fairly. But in many cases, fair housing problems arise from a simple misunderstanding—the perception of discrimination from an offhand comment, for example—that can quickly spiral out of control unless it's addressed properly.

Or complaints can be the result of a more serious problem that your management doesn't know anything about. Perhaps a maintenance worker overhears a contractor engaged in suggestive banter with female residents, but without sufficient training, he may not recognize it as a potential sexual harassment complaint. On the other hand, your community could face a completely baseless accusation of housing discrimination—as a smokescreen to forestall eviction for failure to pay rent, for example—but without adequate documentation, you could get stuck in protracted litigation, leading to costly legal expenses, even if you ultimately win.

Adopting and following a fair housing policy are good first steps to prevent fair housing problems, but it's often necessary to go beyond the basics to battle these types of situations. Standardized written policies and procedures, fair housing training of your entire staff, and a general insistence on professional courtesy toward all prospects, applicants, and residents may help prevent these sorts of problems. And—in circumstances when prevention efforts don't work—having complete documentation should boost efforts to resolve disputes quickly—and in your favor.

Fair housing attorney Avery Friedman says that race and disability claims are among the top reasons that unhappy applicants or residents seek his advice for potential housing discrimination claims against communities. When asked what communities could do to resolve disputes before they get to that point, he stresses the importance of having “a well-trained, diplomatic, and thoughtful fair housing officer.” By appointing a staff member as your fair housing officer, your community has someone who—by temperament and training—can help diffuse potential fair housing problems before they escalate into formal complaints or lawsuits. And you'll have an in-house resource to answer questions from staff members about possible problems, handle fair housing training, and maintain your records and procedures.

It's also important to avoid possible missteps—such as retaliation claims—arising from potential fair housing problems. Regardless of the merits of a resident's accusations of discriminatory treatment, you could be accused of retaliation if you say or do anything that could be misconstrued as an attempt to threaten or intimidate a resident to prevent him from filing a formal complaint. HUD warns that it is illegal under the FHA to threaten, coerce, intimidate, or interfere with anyone exercising a fair housing right or assisting others who exercise that right.

Example: The former owners and managers of a 24-unit Washington community recently agreed to pay $35,000 to settle allegations of intentional disability discrimination by allegedly refusing a disabled resident's request for an accessible parking space and then seeking to evict him after he requested it [U.S. v. Price, 2009].

The fair housing image of a community has much to do with fending off accusations of discrimination or retaliation, says Friedman. Marketing your strong commitment to fair housing principles and having a well-oiled mechanism to resolve disputes internally are the most important components to resolving potential fair housing issues before they gain enough traction to become formal complaints, he says.

7 RULES TO KEEP GRIEVANCES FROM ESCALATING INTO COSTLY LITIGATION

Rule #1: Train Staff to Report Potential Problems

Your staff—particularly the cleaning crew, maintenance workers, landscapers, pool attendants, and similar service providers—are the eyes and ears of your community. While making a service call or working in common areas, they may overhear disputes between residents, observe inappropriate behavior, or get an earful from a resident about a neighbor's guests.

With sufficient training, employees can alert you to a potential fair housing problem, so you can take steps to avert a formal complaint. In addition to fair housing basics, make sure your training covers how to recognize potential fair housing problems. For example, a resident may complain to one of your maintenance staff about a neighbor. The conversation may start off innocently enough, but if it veers off into derogatory comments related to a protected characteristic—such as a gripe about noisy children or unfamiliar cooking smells—it should raise a red flag for a possible fair housing problem.

Tell employees not to take matters into their own hands, but to refer applicants or residents to register complaints with a manager or the leasing office—and then follow up by reporting the conversation themselves. The same goes for an employee who overhears or observes problems related to a protected characteristic of a resident or guest—he should report it to the office. This practice not only helps ensure consistent treatment of applicants and residents, but also avoids inadvertent violations by employees unequipped to resolve sometimes difficult problems.

When in doubt, employees should err on the side of reporting. Even if it doesn't seem serious, it's better for the management to know about it and make a note—just in case it turns out to be the first sign of trouble. For example, an employee should report it if he overhears an argument in the parking lot—particularly name-calling or offensive language tied into a protected characteristic. Even if the employee can't identify the parties, it's better for management to keep a record about it. Although it could be an isolated incident that you can't do anything about, it could turn out to be the first time anyone witnessed harassment of a resident or guest because of his race or other protected characteristic.

Rule #2: Be Proactive to Address Potential Problems

When a potential fair housing problem comes to your attention, you should take the matter seriously—particularly when an applicant or resident complains of discrimination. As long as you demonstrate a good-faith effort to resolve the problem, an applicant or resident may be less inclined to initiate a formal complaint.

Even something as seemingly inconsequential as a squabble among children at the community could lead to a fair housing complaint if it touches on a protected characteristic. For example, one fair housing expert we spoke to described what happened when a community received a call from the mother of a child who had been bullied by other children at a bus stop. She said that the other children—who were white—had told her son—who was African-American—that he couldn't wait with them at the bus stop.

The community took the complaint seriously by investigating the complaint, contacting the families involved, and sending a notice to all concerned about the community's policy to allow all children to use its bus stops. Behind the scenes, the community also monitored what was happening at the bus stop, contacted school officials, and sought advice from its attorney. By taking proactive steps promptly after receiving the complaint, the community was able to head off a potential fair housing problem—and make sure it didn't become an issue in the future.

When you receive a complaint from an applicant or resident, demonstrate your concern by inviting her to come to your office to talk about the problem, or at least discussing it over the phone, says Friedman. Emphasize your community's commitment to fair housing principles and promise to look into the matter right away. Get details about who was involved and what happened. Refer to the resident's grievance as a misunderstanding and explain that you'll try to correct any problem as soon as possible.

During your investigation, find out exactly what happened, says Friedman, by contacting everyone who may have played a role—or knew about—any alleged discrimination. Keep notes about whom you talked to and what they said. Gather all the key documents related to the complaint and check your records to see how you've treated other residents or applicants in similar situations. When you have a clear picture of what happened, look critically at the facts to determine whether your community was at fault—and the best way to handle it.

COACH'S TIP: By taking proactive steps, you may avert fair housing complaints arising from disciplinary action against a resident for lease violations, such as late rent payments. Of course, you don't have to accept such conduct simply because the resident is a member of a protected class, but a simple phone call before initiating legal proceedings could resolve the problem. Even if it doesn't, you'll be able to counter any accusations of unfair treatment with documentation that the manager called to explain the community's policy, listened to the resident's explanation, and tried to work out a solution.

Rule #3: Engage in Interactive Process to Resolve Disability-Related Disputes

Problems related to disability merit special attention. Disability-related fair housing complaints are now the most common reason for a complaint to be filed with HUD, and fair housing experts expect the number to rise as the Baby Boom generation ages.

Many complaints involve accusations that communities have violated the FHA by refusing to grant requests for reasonable accommodations or reasonable modifications to permit individuals with disabilities equal enjoyment of the community. In fact, a growing share of complaints is based on “failure to make a reasonable accommodation,” which rose by 5 percent in the past three years, according to the latest HUD report. In fiscal year 2008, it was alleged in 2,401 complaints—or 23 percent of the overall total.

In response to frequent questions concerning these requirements, HUD and the U.S. Department of Justice (DOJ) teamed up to provide guidance regarding the rights and obligations of individuals with disabilities and housing providers under the FHA. The memoranda—one on reasonable accommodations and one on reasonable modification—offer detailed guidance on when and how to respond to such requests, but the rules generally require communities to grant requests when there is an identifiable connection between the requested accommodation or modification and the individual's disability. An obvious example would be to make an exception to “no-pet” rules to allow a resident with a visual impairment to have a service animal.

But communities are not required to grant a request when the requested accommodation or modification is unreasonable—that is, it would either impose an undue financial and administrative burden on the community or fundamentally alter its operations. Again, the HUD/DOJ memoranda offer specific guidance, but in general, they call on communities to engage in what is described as an “interactive process,” a term also used in the Americans with Disabilities Act to describe good-faith negotiations with the person making the request to resolve the matter.

According to the joint memoranda on reasonable accommodations, engaging in the interactive process is “helpful to all concerned because it often results in an effective accommodation for the requester that does not impose an undue financial and administrative burden on the provider.” Even if you can't broker a compromise, your efforts to resolve the matter through the interactive process will make a positive impression on enforcement agencies in the event that the resident pursues a formal complaint.

Rule #4: Take Steps to Remedy Problems— Now and in the Future

After you've completed your investigation, you are now in a position to determine what to do about it. The nature of the problem, how it came to your attention, and the results of your investigation will determine your course of action.

If your investigation confirms an applicant or resident's discrimination complaint, then your response should be guided by twin goals—to remedy the current problem and to prevent it from happening again. If the complaint is against an employee, then you'll have to consider whether additional training or disciplinary action is appropriate, depending on the nature and severity of the objectionable behavior. If it involves a contractor, your response could range from reporting the problem to terminating its contract.

You may question your responsibility to address discrimination complaints about another resident, but fair housing experts warn that communities may be found responsible if a resident has complained of harassment by a neighbor but did nothing to stop it. To head off potential litigation, do your best to resolve the problem. Otherwise, you could become embroiled in protracted litigation—and mounting legal fees—even if a court ultimately exonerates you for the neighbor's discriminatory conduct.

Rule #5: Close the Loop with the Resident

Regardless of whether a complaint is justified, it's important to communicate with the applicant or resident as soon as you can to resolve the issue amicably.

Show the resident you took the complaint seriously by explaining what you did to investigate and what you found. If your investigation shows that your actions were not, in fact, discriminatory, you can explain to the resident how he misunderstood the situation and apologize for the confusion.

You are most in need of legal advice if your investigation confirms a resident's complaint against one of your employees or contractors. Some sort of apology is in order, but Friedman warns against admitting that you violated fair housing law—it could be used against you in court if the resident ultimately decides to sue you. After expressing your regrets, explain what you did to fix the problem and ask if there's anything else you can do for him.

Rule #6: Document Good-Faith Effort to Resolve Problem

Good recordkeeping is essential to protect your community if, despite your best efforts to resolve the matter, an applicant or resident decides to file a complaint with HUD or a lawsuit against you.

At some point during formal proceedings, you'll be called upon to explain your side of the story. Having all the key documents relating to the resident's complaint, as well as the results of your investigation and what you did to resolve it, will make it much easier to respond. And it will demonstrate your commitment to fair housing principles if you have a formal fair housing policy as well as written policies and procedures for operating your community.

COACH'S TIP: Having a good recordkeeping system will go a long way toward addressing and resolving fair housing problems. Maintain uniform, detailed records of every contact with prospects and applicants, including logs of telephone calls and in-person meetings. If a showing occurred, you should have records detailing when it occurred, what apartments were available, and what apartments were shown. Keep good records related to the application process, including the application and screening results. Resident files should include any contact between the resident and the staff, including requests for maintenance and any complaints by or about the resident.

Rule #7: Contact Your Attorney for Legal Advice

One of the big reasons for trying to resolve grievances at an early stage is to save on legal expenses. Although there may be many problems you can handle on your own, don't scrimp on getting legal advice when you need it. It's much cheaper to pay for a few hours of your attorney's time to discuss how to resolve a problem than to foot the bill for him to represent you during a HUD investigation or private lawsuit.

At what point should you call an attorney? Friedman counsels it's a good idea to contact your attorney for direction as soon as it's obvious there's a fair housing issue involved.

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

• HUD guidance: Reasonable Accommodations Under the Fair Housing Act, www.hud.gov/offices/fheo/library/huddojstatement.pdf.

• HUD guidance: Reasonable Modifications Under the Fair Housing Act, www.hud.gov/offices/fheo/disabilities/reasonable_modifications_mar08.pdf.

COACH Sources

Avery Friedman, Esq.: Chief Counsel, Fair Housing Council, 705 The City Club Building, 850 Euclid Ave., Cleveland, OH 44114-3358; (216) 621-9282; averyfriedman@fairhousingtraining.com.

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