Avoiding Fair Housing Act (FHA) Violations Involving Alleged Wrongful Conduct

By Lisa Scoble posted 06-15-2021 11:52 AM


Avoiding Fair Housing Act (FHA) Violations Involving Alleged Wrongful Conduct

With the end to the moratorium on evictions due to COVID-19 coming soon,1 fair housing laws may be tested in a variety of situations. Potential issues may relate to the millions of renters who fell behind in their payments because of COVID-19. For instance, how will landlords respond to renters who are still behind even after they receive rental assistance? Or what if a renter had COVID-19 and asks for more time as a “reasonable accommodation” to get caught up? On the flip side, if a renter never suffered from COVID-19, they may have a more difficult time evading eviction. All this remains to be seen, assuming the ban will be lifted in June. However, the best practices for navigating fair housing laws will not change.

In this real-world scenario, a property management company denied a renter’s “reasonable accommodation” request and placed the company, and possibly the landlord, at risk.
An unlawful detainer action seeking possession and related damages was brought by a property management company against a tenant. The property management company stated that the tenant and/or his family members engaged in conduct that disturbed and/or threatened the other tenants in the complex and the family’s tenancy would be terminated. The tenant and his children were disabled and the tenant maintained that his family was entitled to a reasonable accommodation in order to continue their tenancy.
The tenant had developed complications from back surgery in 2001. A vena cava filter was implanted in his body to minimize the risk of stroke which prevented him from working. Additionally, the tenant’s son had a diagnosed mental disability and the tenant’s daughter suffered from bipolar disorder. There were multiple complaints to the property management company regarding disturbances, including yelling, screaming, and fighting from the tenant’s unit. The property management company submitted several notices of intent to terminate the tenancy. In response, the tenant asked the property management company to withdraw the notices as a reasonable accommodation due to his family’s disabilities. The property management company refused the reasonable accommodation proposed.
The property management company knew of the tenant’s son’s disability and failed to make the reasonable accommodation and withdrawal of notices as requested. There was no danger to other tenants in the complex as alleged and, as such, no reasonable accommodation would place other residents at risk.
The court ruled in favor of the tenant, determining he was entitled to remain in the unit and could claim attorney’s fees and costs.
If the property management company had made reasonable accommodations, litigation would have been avoided. At the very least, if the property management company had conducted an “interactive dialogue” with the tenants/plaintiffs regarding possible accommodations, the property management company’s liability may have been limited as a result of the FHA violation. The FHA has been applied by courts across the country to individuals, corporations, associations, and others involved in the provisions of housing and residential lending, including property owners, housing managers, homeowners and condominium associations, lenders, real estate agents, and brokerage services. There is no question that FHA law applies to property managers just as it applies to any property owner, particularly because in almost every instance, a property manager will also be a real estate licensee.

Furthermore, if there is a written property management agreement, the landlord would be vicariously liable when a property manager violates the Fair Housing Act. It is very important for property managers to understand fair housing and what classes are protected under the law.

The key to avoiding risk and loss is to know the law and use best practices in following it. Admittedly, COVID-19 has placed us in uncharted territory, but real estate professionals should remain committed to fair housing for all. As the nation continues to open up and bans are lifted, the best advice is to consult with your insurance broker or lawyer if a fair housing situation arises, whether it is related to COVID-19 or not.

For more information about E&O coverage and other risk management topics, visit pearlinsurance.com.

1Update on moratorium on evictions: The National Association of REALTORS (NAR) has more recently pushed for government officials to end the eviction bans so the industry can start working on a path forward for all parties involved. A U.S. District Court judge for the District of Columbia recently tried to end the Center for Disease Control and Prevention (CDC) ban on evictions after ruling that it was unlawful. The motion was quickly stymied by an appeal filed by the U.S. Department of Justice (DOJ).

Grice, Jordan, “Foreclosure and Eviction Moratorium End in Sight, What’s Next?”, RISMedia, 2021.

This article was produced in conjunction with AXA XL and is not to be taken as legal advice.