Note: Advice given herein does not constitute the formation of an attorney-client relationship. Further, any communication with the author may not necessarily be secure or confidential, and initiating contact with the attorney does not create an attorney–client relationship.
2nd in a multi-part series…What is a Property Manager to do?
By: Mitzi Hall, The Hill Firm PLLC
Imagine this scenario: You just received a complaint from the U.S. Department of Housing and Urban Development (HUD) alleging that you have engaged in discriminatory housing practices under the federal Fair Housing Act, 42 U.S.C. Section 3601-3619 (FHA). Immediate panic sets in…. Your assistant manager was named personally and so were you and the owner! Even if all your leases are run through the management company LLC, HUD Complaints typically name EVERYONE from the owner down to the employee involved in the incident. Even if the property “owner” was a partnership, HUD typically wants the names of all the individual general partners as well so they can add them to the complaint.
The Fair Housing Act (“FHA”)
The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, disability or familial status in most housing-related transactions. HUD has the authority to investigate complaints of discrimination involving, among other things, home sales, rentals, advertising, mortgage lending and insurance and property insurance. Although the Fair Housing Act does not include sexual orientation and/or gender identity as protected classes, in 2014 HUD published a rule stating that lesbian, gay, bisexual and transgender (LGBT) individuals have access to HUD programs, and commissioned a study on housing discrimination against same-sex couples in the rental market. HUD has found cause on several of these cases under the category of sex discrimination.
In 2017, 7,985 discrimination complaints were investigated by HUD resulting in over 8.9 million dollars in damages. (See FHEO Annual Report 2017).
As in recent years, complaints involving disability discrimination represented the single largest category of complaint filings at 59.4% of total complaints filed with HUD. Two-thirds of disability complaints alleged a housing provider’s refusal to make a reasonable accommodation in rules, policies, and procedures needed by a person with a disability. 26.0% of complaints were based on race discrimination and 2.3% on color. Discrimination based on sex, including complaints alleging sexual harassment, accounted for 9.8% of complaints. Familial status, national origin and religious based complaints accounted for 10.6%, 10.1%, and 2.8% of complaints, respectively.
HUD Procedure for Investigating Fair Housing Complaints
HUD operates similar to the Equal Employment Opportunity Commission (EEOC). Although HUD has an office in Nashville, complaints are most often investigated through its Regional Office in Atlanta, Georgia. HUD will also often transfer investigation to the Tennessee Human Rights Commission (THRC) for investigation, conciliation (settlement), and determination. The process is the same, however, statues of limitations on filing a claim and the tolling of the statute of limitations is different depending on which agency is investigating a complaint. Please consult with an attorney if you have case specific questions.
Anyone can file a complaint on their own behalf or through an agency that assists in the filing of such claims. HUD then has 10 days to serve the complaint by U.S. mail. HUD complaints often name individual property managers, landlords or other individuals personally, as well as any corporate entity involved in the housing relationship. The respondents then have 10 days to submit an answer. HUD is typically good in working with attorneys to allow more time to gather information and respond if a request for such is timely made. HUD will typically request documents and will usually conduct telephonic interviews with all involved parties.
In most cases, the HUD investigator will attempt to conciliate the matter to settlement. In this regard, HUD is different from the EEOC. EEOC investigators dismiss a significant majority of discrimination charges. In FY 2017, HUD only issued no-reasonable-cause findings in 36 percent of all cases. 18 percent of all cases, however, were dismissed “administratively” because the complainants backed out or did not respond or cooperate. A total of 33.8 percent of all cases were conciliated or settled, and only 1.2 percent resulted in a “charge of discrimination,” equivalent to a finding of probable cause by the EEOC. Only 1 percent of all cases were referred to the Department of Justice for prosecution. So while HUD finds no reasonable cause less often than the EEOC, it also finds cause less often, because it settles almost 40 percent of complaints.
If a case is not settled or dismissed, and a charge is issued, the case proceeds to an administrative law judge, unless either side requests that it be heard in U.S. District Court. Most opt for District Court. In 2017, 22 cases were sent to U.S. District Courts. Nine were settled by consent order and one resulted in an administrative law judge decision. The remaining cases carried over to 2018.
Tips for Responding
The author, who previously worked for Tennessee Fair Housing Council, has investigated complaints involving companion animals including snakes, rabbits, hamsters, cats and dogs; requests for accessible parking spots and wheelchair ramps; non-renewal of a tenant in a protected class based on complaints of a barking dog; accusations that a potential renter who was African American was not provided a tour of a model apartment; a hoarder that was being evicted based on excessive clutter and a claim that a prospective tenant was told that a property did not allow children. HUD will investigate virtually every type of complaint. Often, complainants in Tennessee are represented by an attorney from legal aid or an organization like Tennessee Fair Housing Council, as both receive grants from HUD to combat housing discrimination.
Early Prevention: For larger property owners and multi-unit facilities, it is a good idea to provide annual training to avoid problems or misunderstandings and head off any settlement requirement that training take place. An ounce of prevention is truly worth a pound of cure, and many times a fair housing violation occurs simply because of a lack of understanding of what the law requires and prohibits.
Insurance: Owners should tender fair housing complaints to all applicable insurance providers. Keep in mind that coverage may be available which will specifically cover fair housing claims. Again, it’s better to be on the front end of this than the back end. Call your agent!
Individually named respondents: Case law provides a lot of leeway for HUD in this context, and there is no efficient means to weed out respondents early in the process. However, ownership in the form of a LLC or corporation may reduce the risk of “partners” or individual persons being named in complaints.
Be prepared to discuss settlement, early and often: As noted, HUD does not typically dismiss a complaint before trying to conciliate. You can never be certain what direction the investigator is leaning, so “nuisance” type settlements are, for better or worse, par for the course in many of these cases. Many times, conciliation can save you a lot of time, aggravation, and money. Ultimately, of course, if the facts are clear, your client can take its chances and insist on a finding.
Non-monetary relief: When conciliating, HUD investigators often request non-monetary relief, in addition to a monetary payment. This typically including training, changes in policies/procedure and postings on housing discrimination. Be prepared for this aspect of settlement.
Consent decrees: HUD is a party to all settlements. Read the small print. HUD may insist on a consent decree which allows it to retain jurisdiction over the matter. These proposed agreements may also mean that a second violation will result in a higher monetary penalty. “Settling” the first claim may be viewed as an admission, and not a release of claims without admitting liability, depending on the language of the agreement, causing any subsequent claim to be seen as a second violation. Read, read, read and read again…and seek legal counsel.
Above all, clients should understand that navigating HUD complaints takes patience. It is unproductive to be emotional about being accused of fair housing discrimination when sometimes it is simply part of doing business in the housing and rental property business.
Have Questions or Just Want to Know More?
You’re welcome to contact the author anytime: Mitzi Hall may be reached via email at email@example.com or by phone at 615-815-1758.