47 Years Of The Fair Housing Act: Where We Stand

May 22, 2015Articles Law360

Reprinted with permission from Law360. (c) 2015 Portfolio Media. Further duplication without permission is prohibited. All rights reserved.

Last month marked the 47th year since the passage of the federal Fair Housing Act. Our federal FHA was passed by Congress literally days after the assassination of Martin Luther King and included race, color, national origin and religion as protected classes. The FHA was amended in 1974 (to add gender as a protected class) and then again in 1988 (to add disability and familial status as protected classes). While noting that anniversary in April, the acting head of the Civil Rights Division of the U.S. Department of Justice highlighted some recent DOJ accomplishments. It remains important for professional apartment management to know about fair housing priorities at both the DOJ and the U.S. Department of Housing and Urban Development. First, HUD and the DOJ continue to believe that fair housing is more than just about finding a place to live. Particularly in a time when recent national events have again raised the profile of racial divisions in our country, the DOJ and HUD view fair housing as including equal access to good jobs, good schools, credit and lending, transportation, safety as well as a range of professional opportunities and personal relationships. While there are seven protected classes covered under federal law, many states (as well as various cities and counties) have adopted their own fair housing laws which include additional protected classes, such as source of income, sexual orientation, marital status, occupation and/or age. What this means is if you operate in an arena covered by the fair housing laws, you need to know the laws in your specific jurisdiction.

For about the first 20 years after the law was initially adopted, the majority of cases had to do with allegations of race discrimination. From all metrics, discrimination claims based on disability have now passed race and make up a majority of the claims filed, both with HUD and in the courts. What this means is that much of the best work we can do is to affirmatively engage in the interactive process with our residents in an effort to find solutions short of the filing of formal complaints. And if our informal efforts are unsuccessful, then we have a record for use in defending against a claim.

Here are some recent cases and initiatives covering various protected classes:

Race: In one fair housing discrimination case from 2014, in which it was alleged that management at an Ohio community told African-American applicants that apartments weren’t available and made statements such as “black people are trouble,” the DOJ obtained a payment of $175,000 to victims, a $25,000 civil penalty to the United States as well as an additional $650,000 in damages and attorneys’ fees. The settlement also mandated that the defendants hire an independent management company to operate all of their rental properties, hire an unaffiliated third party to test fair housing compliance, receive FHA training, and submit regular reports to HUD for the next three years.

Familial Status: The DOJ resolved two familial status cases in which it was alleged management implemented policies that restricted children from common areas of the property or required constant supervision for anyone under 16. In those two cases, the DOJ obtained $270,000 in monetary relief and changes to the alleged discriminatory practices.

Gender: In three recent cases, the DOJ alleged that management employees engaged in a pattern or practice of sexually harassing female tenants and prospective tenants. The complaints asserted that the employees made repeated unwanted sexual comments and advances toward their female tenants, requested sexual acts for reduced rents, delayed evictions and took adverse actions when those sexual overtures were resisted. The DOJ was able to obtain over $4.6 million in monetary damages for the victims. Three more cases asserting sexual harassment were filed by the DOJ in November 2014.

Disability: In addition to cases asserting failure to make reasonable accommodation or reasonable modifications, the DOJ filed or settled a total of nine cases in 2014 alleging a failure to design and construct rental properties in compliance with the FHA accessibility guidelines promulgated by HUD. The design and construction requirement must be followed in today’s world. Saying “I did not know the law” is not a defense and is not an excuse which will be successful.

Fair Lending: Since 2010, the DOJ has settled 18 lawsuits alleging discrimination in mortgage lending, including pricing discrimination, steering and redlining. Most of these cases involved allegations that if a borrower was African-American or Hispanic, he or she was more likely to be placed in a subprime loan or pay more for a mortgage loan than if the borrower were a white with similar creditworthiness.

Disparate Impact: Earlier this term, the U.S. Supreme Court heard arguments in a case in which the court is poised to answer if “disparate impact” (legalese for if a policy which appears neutral on its face but which unfairly and adversely effects a protected class) is covered by the federal FHA. For most of the last 40 years, the various federal courts assumed that “disparate impact” was covered under the law. That conclusion has now been challenged as the words “disparate impact” appear nowhere in the text of the FHA. And while it took three tries (because the first two cases in which the Supreme Court agreed to decide the legal issue were settled before argument), the court is expected to issue a decision before the end of June. In an effort to support use of “disparate impact” in fair housing investigations, in 2013 the Obama administration published new regulations in the Federal Register specifically including the “disparate impact” analysis and arguing to the justices that their regulations are entitled to deference under the law.

Testers: The DOJ, HUD, state, city and county fair housing investigators are not alone. Indeed, in the FHA world, HUD issues millions of dollars in grants to various state and local organizations to act as fair housing testers to probe compliance with the FHA and to file complaints when they believe the law has been violated. The courts have uniformly held that fair housing testers (even though they have no intent to rent an apartment or home from a housing provider) have standing to bring FHA discrimination claims.

The point here is to simply note that HUD and the DOJ (as well as private fair housing tester entities) are on the lookout for FHA violations. Indeed, in our fully digital world, any ad (online, in print or elsewhere) is subject to scrutiny. Any telephone conversation you have can be recorded or the applicant may be taking notes and reporting back. Any applicant might be a tester. Which is why fair housing training is so important. Again, ignorance of the law (especially one that has been on the books for now 47 years) is no excuse. Management has to do our best to get it right. Indeed, I tell my clients that we have no issue complying with the law — we just want to know the rules of the road. And if someone makes a mistake (inadvertent or otherwise), then you may need to speak with a lawyer like me.

Reprinted with permission from Law360. (c) 2015 Portfolio Media. Further duplication without permission is prohibited. All rights reserved.