Unlawful Steering and Big Dollar Payouts

Most Landlords, Property Managers/Owners and Real Estate Agents are well aware of the federal Fair Housing Act (“FHA”) and its prohibitions against “steering”. With only a few narrow exceptions, Landlords, Property Managers and other housing professionals may not attempt to steer a prospect toward or away from a particular unit or area on the basis of the prospect’s protected class such as race, religion, disability, familial status and national origin. However, as recently published HUD complaints demonstrate, allegations of illegal “steering” still abound in housing and penalties can be extremely high. So what does illegal steering really look like? Read on.

Last month (July 2017), a Massachusetts community reached a settlement with the Department of Housing and Urban Development (“HUD”), agreeing to set up a $70,000 settlement fund for victims to resolve allegations of serious and ongoing unlawful steering. HUD claimed that the community discriminated against “persons of South Asian descent” by steering them to “certain buildings” within the 224-unit complex. According to the HUD complaint, these incidents of unlawful steering occurred over a 5-year period, from 2009 through 2014.  Significant to this case was a finding that this same community was previously accused of steering “applicants with children” to certain buildings. That earlier HUD case was settled in 2015.

Allegations of unlawful steering have also been made much closer to home. In December of 2016, HUD announced a settlement of a complaint against a Colorado community accused of numerous instances of unlawful steering based on family status and disability. The HUD complaint alleged that the owners and manager implemented an illegal “no kids” policy and engaged in an ongoing and systematic enforcement of this policy. According to the complaint, the onsite manager repeatedly told prospects and/or testers (posing as prospects) that they “do not rent to children,” that there are “no kids” in the complex, and that “we don’t accept children.” HUD also alleged that a tester posing as being hearing impaired was told that “we don’t allow service animals” and “If you’re deaf, I don’t think this is the place for you.” The final settlement required, among other terms, the owners and manager to pay $70,000 to the victims and the complaining Fair Housing group.

In August of 2016, another Colorado community paid $75,000 to settle yet another HUD complaint involving allegations of systematic and unlawful steering. In this case, the Fair Housing group’s complaint alleged that the property manager repeatedly told prospects and/or testers that ”families with children” were generally placed in the rear building and that the property manager did not make units available in the front building to “those with children.” This practice effectively segregating families with children from those without children. In this situation, the $75,000 settlement paid by owners and managers was allocated with $25,000 going into a victims’ settlement fund, $5000 for civil penalties and $45,000 to the Fair Housing organization which initiated the complaint.

All the above cases involve high payouts arising from systematic and ongoing unlawful steering and discrimination. They don’t involve an allegation of a single violation or simple property manager, owner or leasing agent mistakes; yet, don’t be misled. Isolated incidents of alleged steering frequently can and do lead to HUD and Colorado Civil Rights Division (“CCRD”) complaints. Often times property managers with good intentions simply fail to understand occupancy standards, the application of occupancy standards to real life situations, and the applicability of exceptions.  Other situations may involve more intentional or nefarious motives.

While the settlement payouts for isolated incidents are typically much  less that in the above-cited cases, it is important to know that Fair Housing organizations are aggressively testing and actively seeking to hold  “bad Landlords” accountable. 

Fair Housing laws and regulations, and interpretations of the same are in a constant state of update.  In order to avoid protracted and expensive Colorado Department of Regulatory Agencies (“DORA”), HUD and other proceedings, the expenditure of significant amounts on attorney’s fees and costs, and substantial payouts, you must stay up to date. Among many other issues, it is crucial that you and your staff understand the new HUD policies on criminal screening, the more recent interpretations of the Keating memo on occupancy standards, and the questions you may or may not ask regarding an ESA dog. 

For more information on Fair Housing laws or questions, please contact Debbie Wilson at dlwilson@sbwp-law.com. For more information on upcoming Fair Housing classes and training, please contact Lisa Godbehere at the Apartment Association at lisa@aamdhq.org.