If you've already taken a fair housing course, why would you need an update? Fair housing, like most areas of the law, is constantly changing. Law schools stress how to find the law, not just what the law is now. Memorizing today's rules will not safeguard you against tomorrow's legal problems. As Mark Twain (and others) said: "No man's life, liberty or property are safe while the Legislature is in session."
One of the big surprises of early 1999 was the decision of the Court of Appeals for the Ninth Circuit allowing a landlord to violate an Alaska fair housing law that prohibits the refusal to rent to unmarried couples. The Ninth Circuit, which has jurisdiction over federal court appeals in California as well as Alaska and other States, reached a conclusion at odds with decisions by State Supreme Courts in Alaska, California and Michigan.
In all of these cases, the landlord claimed that cohabitation by unmarried couples is a sin, and that by renting to unmarried couples the landlord would be violating his or her religious beliefs. The Ninth Circuit case, Thomas v. Anchorage Equal Rights Commission, in a 2 to 1 decision, agreed with the other cases that generally applicable laws not intended to punish conduct motivate by religious belief are valid despite some incidental religious effect. Under this rule, fair housing statutes are general laws that are not directed against religious practice and therefore are valid.
However, the Ninth Circuit applied an exception to this general rule called the "hybrid rights" exception. When a party claims that a generally applicable rule infringes on another constitutional right, in addition to religious freedom, the law must be justified by a compelling government interest and narrowly tailored to advance that interest. The other constitutional rights invoked by the landlord in the Thomas case were the Fifth Amendment prohibition against the taking of private property for public use without just compensation and the First Amendment right to free speech as applied to a landlord's inquiry about the tenant's marital status and statements indicating a preference for a particular marital status.
Kids, don't try this at home! (No familial status discrimination intended.) I don't think any landlord should rely on the Ninth Circuit decision to refuse an apartment to an unmarried couple. Usually the reasons of the U.S. Supreme Court for deciding to accept a case for review are inscrutable. I don't think I'm taking much of a chance, however, in predicting that the Supremes will hear this case.
Part of the problem with the Ninth Circuit decision is that it can be extended too far. I believe it is a sin to eat pork. Millions of people throughout the world agree with me. (Billions of people may disagree.) This doesn't mean that I can refuse to rent to people who eat pork, even if they will cook it in my apartment units. The Ninth Circuit's reasoning is just as applicable to my beliefs about pork as it is to others' beliefs about unmarried couples living together. Landlords who want to refuse to rent to unmarried couples (or to people who eat pork) should see a lawyer first. If the lawyer says it's fine to discriminate this way, see another lawyer.
[NOTE: This case was reversed before it got to the U.S. Supreme Court. The losing side asked the Ninth Circuit for a review by all eleven of its active judges, sitting en banc. The full Ninth Circuit did review the case and found that it was not ripe for review. The dispute was purely hypothetical and the injury was speculative because no one had tried to sue or prosecute the landlord. Thomas v. Anchorage Equal Rights Commission, 220 F.3d 1134 (9th Cir. en banc, 2000). The initial opinion by the Ninth Circuit, 165 F.3d 692 (9th Cir. 1999), discussed in this article, has no value as a precedent. The U.S. Supreme Court refused to review the decision of the full Ninth Circuit, and denied a writ of certiorari. 531 U.S. 1143 (2001)]
"Occupancy standards" are rules which limit the number of people allowed in a rental unit. In other States, the State or local governments may establish occupancy standards to limit congestion problems which may lead to slums. In California, the only limit on occupancy comes from the Uniform Housing Code. Courts have ruled that local governments may not set their own occupancy standards except in very rare circumstances.
Some fair housing organizations have proposed using the Uniform Housing Code limits as the only occupancy standards. They believe that limits on the number of people allowed in rental housing affects families with children more than other people. There are no statistics to prove this claim. By encouraging overcrowding in rental units, these groups are really advocating slum housing.
The Uniform Housing Code limits were adopted to prevent a building from collapsing, not to prevent overcrowding. The UHC can allow a dozen or more people in a typical two-bedroom unit. Nor are these limits easy to apply. The UHC limits are based on the number of square feet of "living area" in a unit. If a landlord errs in measuring the unit, either he will allow too many people and violate the UHC, or allow too few people and possibly violate the fair housing laws.
The Fair Housing Act Amendments of 1988 made it illegal to discriminate in residential rentals to families with children. In adopting this law, Congress gave deference to occupancy standards imposed by State or local law. Since there are no official occupancy standards in California other than the UHC, landlords have had a dilemma. Courts have been reluctant to accept a landlord's expertise developed over years in the rental industry as a basis for setting a reasonable occupancy standard. Few landlords have the resources to do the studies these decisions have called for.
The situation became so difficult that in 1996 the Ninth Circuit lambasted the U.S. Department of Housing and Urban Development for prosecuting a landlord who had set a limit of two persons per bedroom. Pfaff v. U.S. Department of Housing and Urban Development, 88 F.3d 739, 749 (9th Cir. 1996). The Court found that HUD had radically changed its interpretation of occupancy standards without any notice to the public.
HUD's original interpretation of the 1988 prohibition against familial discrimination favored reasonable occupancy standards set by landlords based on the number and size of bedrooms, and the overall size of the unit. In 1991, HUD's General Counsel, Frank Keating, wrote a memorandum stating that in general a limit of two persons per bedroom would be presumed reasonable. The Keating memo also said that other factors should be considered; and that a landlord who uses an occupancy limit as a pretext to discriminate, who also makes discriminatory statements or who also adopts tenant rules that discriminate against families with children will be liable to prosecution.
Fortunately, in October, 1998 Congress enacted section 589 of the Quality Housing and Work Responsibility Act of 1998. This law accepted the 1991 Keating memorandum as the proper policy of the law. In December 1998, HUD issued an announcement affirming that it would apply the Keating memorandum in occupancy standards cases. "Two persons per bedroom" is presumed to be legal, but there may be exceptions for very large units or houses or in other still unknown cases. At the least, the law ends the threat that the UHC limits of 12 to 20 or more people in a two-bedroom unit must be allowed. How this new law will work out in practice remains to be seen.
The most powerful tool used against landlords in fair housing lawsuits is called "testing." A lawyer or fair housing group will send matched pairs of people posing as rental applicants to a landlord or manager to test for housing discrimination. The testers who pose as a protected class (minority or family with children or disabled) submit applications showing they have equal or slightly better qualifications than non-protected testers. If white testers are offered the apartment while blacks are not, that is strong evidence of racial discrimination. If a group of four adult testers are quoted a lower rent than a family of four, that is evidence of familial status discrimination.
A recent case from Queens, New York charges that a real estate firm failed to return calls from seven black applicants for apartment units, while calling back all seven white applicants. All of the "applicants" were really testers. This case is not yet decided; but a similar claim from Brooklyn led to a $30,000 settlement from an individual landlord.
In a Virginia case, black testers were treated differently and their applications were delayed. Six white testers were offered apartments before a black applicant. One white was offered an apartment within seven days after submitting an application while the black applicant had been waiting 21 days. The owners and managers of the 160-unit complex paid $480,000 in settlement.
Testing is also used to show "housing discrimination" by insurers. Fifteen pairs of testers sought homeowners insurance from Nationwide Mutual Insurance Company for similar, well-maintained homes. The black testers called about insurance in minority neighborhoods, while the white testers asked about insurance for homes in non-minority areas. Seven white testers were given a quote for insurance, while the similar black tester was refuse one. Five black testers were quoted higher rates than the similar white tester. A jury awarded $500,000 compensatory damages against the insurance company and $100 million in punitive damages! An appeal is almost certain unless the parties settle.
Testing has been used to prove housing discrimination for many years. What makes these recent cases so important is that HUD has launched a "national audit" of housing discrimination. This audit will cost $7.5 million in this fiscal year and involve 3,000 to 5,000 pairs of matched tests in urban, suburban and rural areas. HUD's new program is a major increase in funding for fair housing testing.
Testers do not inform you that they are testing. When discrimination is shown by testing it is usually too late to promise to do better. Make sure your employees are aware of fair housing rules. Send them to a fair housing class. Put a fair housing poster in your rental office. Review your rental application process to make sure everyone is treated equally. Revise your tenant rules to avoid discrimination against children. Read my other fair housing articles by clicking below on "Back to Home Page."
Fair housing is the law. It is also right. When testers (and real applicants) come to your property, everyone should be treated equally.
Copyright © 1999,2003 Martin S. Snitow Law Corporation. All rights reserved.
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