Preventing Discrimination Claims Based On Occupancy Standards

This month, Fair Housing Coach focuses on a potential source of discrimination complaints based on familial status—your occupancy standards.

Fair housing law bans discrimination based on familial status, which generally means that communities may not exclude applicants or residents with children under the age of 18, unless the community qualifies under strict rules governing “housing for older persons.” Fair housing law extends beyond overt discrimination to prohibit communities from enforcing policies, procedures, or rules that have a discriminatory effect on families with children.

Occupancy standards may be a source of fair housing concerns because they can limit the housing choices of families with children under age 18. Fair housing law does not prevent communities from maintaining reasonable occupancy policies as long as they apply them consistently, but it is illegal to set overly restrictive occupancy standards that have the effect of excluding families with children.

It may not be easy to assess whether your occupancy standards will pass muster under fair housing law. For one thing, federal fair housing law generally defers to reasonable state and local restrictions on occupancy, so you have to be familiar with those laws before you set or enforce your occupancy standards. On the federal level, there is no national occupancy code, and HUD has issued only general guidelines—which may be open to interpretation and include a number of exceptions based on the circumstances of a particular case.

In this month's issue, we'll give you seven rules on how to avoid fair housing complaints based on familial status that may arise from your occupancy standards. Then, you can take the COACH's Quiz to see how much you have learned.

COACH'S TIP: Owners of federally assisted housing must comply with federal law and related regulations related to setting and maintaining occupancy standards.

WHAT DOES THE LAW SAY?

Through amendments adopted in 1988, the Fair Housing Act (FHA) bans discrimination based on familial status. The law generally protects anyone with legal custody or written permission to have a child under 18 living in the household as well as anyone in the process of obtaining custody, such as through adoption or divorce proceedings. Unless your community qualifies under the FHA's strict rules governing housing for older persons, it is illegal to exclude or otherwise discriminate against applicants and residents based on familial status.

When Congress enacted the familial status protections, it recognized that many state and local laws limit occupancy based on number of people or square footage. The FHA defers to those laws by specifically stating that it is not intended to “limit the applicability of any reasonable local, State, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling.”

According to HUD, the FHA was not intended to implement a national occupancy code. Although communities are free to adopt reasonable occupancy standards, the FHA prohibits the use of overly restrictive occupancy standards that effectively prevent families with children from living there. Subject to applicable state and local laws, it is up to each community to set reasonable occupancy standards, explains fair housing expert Anne Sadovsky.

To guide their decisions, communities have only general guidelines in what was originally intended as a 1991 internal memorandum, known as the “Keating memo,” from a HUD official to enforcement personnel on how to review complaints about occupancy standards. In the mid-1990s, criticism over the lack of specifics led officials to withdraw the Keating memo in favor of more specific recommendations. However, those recommendations also were met with dissatisfaction, ultimately prompting Congress in 1998 to order HUD to adopt the “specific and unmodified standards provided” in the Keating memo as the agency's official policy.

As a general rule, the Keating memo provides that two people per bedroom—without distinction to age or gender—is a reasonable occupancy standard. In other words, the general rule is to allow two people per one-bedroom unit, four people per two-bedroom unit, and six people per three-bedroom unit.

Nevertheless, the memo emphasizes that two people per bedroom was not intended as the sole standard, so a prospect may argue that the standard is not reasonable under the particular circumstances. According to the memo, HUD may examine any nongovernment restriction on occupancy to determine whether it operates unreasonably to limit or exclude families with children. To make that determination, the memo counsels an examination of factors including:

Size of bedroom. According to the memo, the size of the bedroom could make it reasonable to allow more or fewer than two people per bedroom. The memo states that it would be reasonable to allow more than two people to share an extra large bedroom, while a two-bedroom unit with one extremely small bedroom may justify limiting occupancy to two people. However, communities still must make their own assessments of exceptions to the two-person/bedroom ratio based on bedroom size because HUD has not specified what would be considered extra large or extremely small in terms of square footage, according to Sadovsky.

Size of unit. The memo states that the size of a unit may make it reasonable for a community to exceed the two-person/bedroom ratio under certain circumstances. That would be the case, for example, if a family of five wanted to move into a unit with two large bedrooms and a spacious living room, according to the memo. Just as with the size of the bedroom, Sadovsky notes that HUD has declined to provide firm numbers to determine when a unit is considered large enough to go over the two-people/bedroom standard.

Configuration of unit. Under some circumstances, fair housing law may require a community to allow more than two people per bedroom based on the configuration of a unit. That would be the case, for example, when a unit contains another room or area not designated as a bedroom—such as an office or alcove—which may be counted as a sleeping area. In general, enforcement officials don't consider kitchens or bathrooms as sleeping areas, but Sadovsky says that HUD has not provided any examples or model floor plans to determine when to apply this exception to the two-person/bedroom ratio. She warns that enforcement officials are particularly sensitive to designating what is really a two-bedroom unit as a one-bedroom unit with a loft, office, or den in an effort to limit the number of children in a unit or community.

Age of children. Although fair housing law prohibits communities from limiting occupancy based on the number of children—as opposed to people—per bedroom, the memo states that the age of the children involved in a particular case may make it unreasonable for a community to limit occupancy based on the two-person/bedroom standard. As an example, the memo states that it may be reasonable to deny a one-bedroom unit to an adult couple with teenager, but not to a couple with an infant who want to occupy a one-bedroom unit when both the bedroom and unit are large.

Other physical limitations of housing. In addition to the size of the bedrooms and overall size and configuration of the unit, the memo states that HUD may examine other limiting factors identified by the community, such as the capacity of the septic, sewer, or other building systems.

State and local law. A community is not immune from a fair housing complaint just because its occupancy standards are based on state or local requirements. However, the memo states that HUD will consider such government requirements as “a special circumstance tending to indicate that the housing provider's occupancy policies are reasonable.”

Other relevant factors. To determine whether a housing provider is departing from the two-person/bedroom ratio in an effort to deny housing to families with children, HUD may examine other factors tending to show discrimination based on familial status. These factors include:

• Making discriminatory statements;

• Adopting discriminatory rules governing common areas;

• Taking other steps to discourage children from living there;

• Enforcing the occupancy policy only against families with children;

• Having a history of marketing the community as “adults only”; and

• Limiting the total number of units the community is willing to rent to families with children.

Finally, the memo states that “an occupancy policy which limits the number of children per unit is less likely to be reasonable than one which limits the number of people per unit” [emphasis in original].

COACH'S TIP: A community may be required to make an exception to its occupancy standards as a reasonable accommodation for an individual with a disability, advises Sadovsky. A community may have to allow a resident's household to exceed the occupancy limit if a member of the household has a disability and requires a caregiver.

7 Rules to Prevent Discrimination Claims Based on Occupancy Standards

Rule #1: Comply with State and Local Occupancy Standards

Check all occupancy rules of the state and local area where your community is located, advises Sadovsky. The FHA was not intended to establish a federal occupancy code, so state and local governments may adopt occupancy laws that are different from HUD's general two-person/bedroom standard. A community may not restrict the occupancy of a unit below the legal limit, so you need to know the actual legal limits for a unit before turning away a family based on the number of intended occupants.

Some state and local governments have adopted an occupancy standard based on a minimum square footage per person or minimum square footage per bedroom-per person. In Massachusetts, for example, the state restricts the number of people who can occupy housing based on a minimum square footage per person for the unit and for every room occupied for sleeping purposes.

Other states have adopted rules that add to the HUD's general two-person/bedroom standard. Sadovsky points out that in California, for example, state law allows two people plus one per bedroom. Under that standard, the community must allow three people per one-bedroom unit, five people per two-bedroom unit, and seven people per three-bedroom unit. And in Texas, she says, the law permits two people plus one under the age of six months per bedroom.

And in Vermont, some local occupancy standards are based on the square footage of the unit or the area of the sleeping rooms, but many more are based on septic, sewage, or water-use permits that limit the number of people who can occupy a dwelling, according to the Vermont Fair Housing Commission.

Note that, although you could face a discrimination complaint if your community adopts more restrictive occupancy standards, there's nothing in the FHA that prevents a community from setting an occupancy standard above the legal limit, Sadovsky says. As long as you comply with applicable state and local restrictions, it may make sense in today's financial climate to adopt less restrictive occupancy standards to boost your occupancy levels, she says.

In Texas, for example, where the law sets the occupancy standard at two people plus one under the age of six months per bedroom, a community could increase the age limit of the additional occupant to one or two years of age instead of six months. With that change, a community would not have to turn away a young couple with a seven- or eight-month old baby, she says. In her experience, communities in Texas that increased the age limit in this way experienced a significant difference in their occupancy levels without any hardship on the community or amenities such as parking.

COACH'S TIP: Because of differences in state and local laws, Sadovsky stresses that it's essential to check with an attorney familiar with the laws where your community is located when considering any changes to your occupancy standards.

Rule #2: Develop Written Occupancy Policy

Establish a written policy on your occupancy standards that complies with applicable federal, state, and local laws. It's important to put it in writing, Sadovsky says, because your written policies—including your occupancy standards—are the first thing HUD and other fair housing enforcement officials want to see if you are ever accused of discrimination.

Unless supplanted by other state or local laws, the two-person per bedroom standard is considered a reasonable occupancy standard in most cases. Anything less than that may be suspect, according to Sadovsky, so your community should be prepared to answer a discrimination complaint with valid business reasons for restricting occupancy below that level.

Study the description of the exceptions listed in the Keating memo to determine whether any of the units in your community would be considered large enough to house more than the two-person/bedroom ratio. To avoid any misunderstandings about which units may house additional occupants, Sadovsky says that you should identify those units by floor plan or unit number, depending on the specifics of your community.

COACH'S TIP: When evaluating the reasonableness of your community's occupancy standards, you may find it helpful to refer to a guidance memo issued by the Washington State Human Rights Commission. Although not binding outside the state, the memo lists the factors that its investigators consider when reviewing a discrimination complaint based on occupancy standards. They include:

• Whether the standard applies to the number of people or the number of children occupying a unit;

• Any history of “adults only” rules, segregation, or prohibitions;

• Whether families with children live in the community;

• Whether there are rules (unrelated to safety) directed at children;

• The business-related factors for the occupancy standard;

• Any local zoning or building occupancy limits on a particular unit, complex, or community;

• The size and configuration of the unit;

• The size and configuration of the community;

• Other structural or configuration elements;

• The percentage of families with children in the local population;

• The age and condition of the structure and its accompanying systems;

• Whether parking is a consideration; and

• Any other information that supports or refutes that the occupancy standard is being used to bar children from the community.

The guidance memorandum is available on the commission's Web site at www.hum.wa.gov/FairHousing/OccupancyStandards.html.

Rule #3: Train Staff on Occupancy Policy

To avoid fair housing trouble, it's essential that your staff understands your occupancy policy and how it relates to fair housing protections based on familial status.

Explain that the concept of familial status is much broader than traditional notions of what makes up a family, says Sadovsky. When she runs fair housing training sessions, she says that she is shocked at the number of people who either don't understand what familial status is or assume that it has something to do with marital status or kinship.

Sadovsky stresses that it's the presence of a child under 18—not kinship—that is the key to who is protected based on familial status. Make sure your staff understands that the law protects one or more people who are not yet 18 and live with a parent, legal guardian, or someone else who has permission to care for the child on a permanent or temporary basis. That means that an applicant is protected under fair housing law regardless of whether she is taking care of her grandchild or a friend's child—as long as she has written permission of the child's parent or guardian.

In addition, explain that the law protects pregnant women and others who are in the process of obtaining legal custody of someone under the age of 18. So an applicant who is in the process of adopting a child or becoming a foster parent would be covered under familial status protections.

During the application process, make sure your staff steers clear of any comments about the size of a prospect's family or the number of children the prospect has. And they should never ask any questions about pregnancy, even if an applicant is obviously pregnant. In conventional housing, a pregnant woman is considered one person, so you may not take her pregnancy into consideration when deciding what size unit she needs.

Rule #4: Explain Policy Early in the Process

Inform all prospects—not just families with children—about your occupancy standards. Telling only families with children about the occupancy standards will look as though you are treating prospects differently based on whether they have children.

Explain your occupancy standards early in the process. A good time is when you are describing a particular unit, says Sadovsky. If you wait until some later time, then it may appear that you have discriminatory reasons for doing so. Prospects should understand the occupancy standards along with your community's policies, rules, and regulations well before they sign a lease, says Sadovsky.

Give prospects a copy of your occupancy policy or have it prominently displayed, Sadovsky advises. She says you also may include the policy as an addendum to the lease. These steps will document your efforts to ensure that everyone, including your own leasing team, understands your occupancy standards.

Rule #5: Don't Intrude on Private Family Decisions

To apply your occupancy standards, you may consider only how many occupants are in the applicant's household, unless permitted under state or local law. For example, in Texas, where the standard is two-people per bedroom plus one under six months, Sadovsky says that you may ask if one of the occupants is a child under six months. Otherwise, you should not ask questions about the age or gender of the occupants.

Even if you don't think it's appropriate, you may not require male and female children, regardless of their age, to have separate bedrooms. Similarly, you may not require adults and children of either gender to have separate bedrooms.

Rule #6: Avoid Problems When Child Joins Household

Develop policies and procedures to handle situations when a child under 18 moves into a unit after the start of the lease. You may have grounds to evict a resident if another adult moves into a unit without prior authorization, but you must carefully examine your occupancy standards before attempting to evict a resident when a child under 18 has joined the family. Even if there are more occupants than listed on the lease, you could be accused of discrimination if you attempt to evict the family when the unit is legally permitted to house the number of residents.

The policy also should address what happens if the additional occupant under the age of 18 pushes the household above the occupancy limit. For example, Sadovsky says that you could include an addendum that provides that the resident will have a certain time—such as until the end of the lease term—to either move into a larger available unit or to move out.

Rule #7: Apply Your Policy Consistently

Apply the same occupancy standards—regardless of whether a household is comprised of adult roommates or families with children. You could face a fair housing complaint if you allow five adults to share a unit, but deny a similar unit to a single mother with four children.

Even if your occupancy standards are reasonable, you could still face a fair housing complaint unless you apply them consistently for all prospects. Carefully consider before making any exceptions to your occupancy policy, because you could be accused of discrimination if you deny the same exception to an applicant of another race, color, or other protected characteristic.

Whenever you make an exception, Sadovsky says to keep track of the particular units or circumstances involved so you can show the legitimate, nondiscriminatory reasons for the decision to counter any suggestion of discriminatory motives.

Fair Housing Act: 42 USC §3601 et seq.

HUD Policy on Occupancy Standards (Keating Memo): www.hud.gov/offices/fheo/library/occupancystds.pdf.

COACH Source

Anne Sadovsky, CSP: Anne Sadovsky and Co., Dallas, TX; (866) 905-9300; anne@annesadovsky.com.

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What Does “Familial Status” Mean?

Though commonly understood to include traditional families with minor children, familial status under federal fair housing law covers an individual who has—or expects to have—a minor child in the household. Examples include children living with grandparents, noncustodial parents, foster parents, and anyone else who has written permission to care for the child. It also includes anyone who is going through the process of seeking custody of a child, including noncustodial parents, foster parents, or adoptive parents. Specifically, the law defines familial status to include one or more individuals under the age of 18 living with:

• A parent;

• An individual with legal custody;

• An individual who has the written permission of the parent or custodian;

• Pregnant women; and

• An individual in the process of securing legal custody.