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There are several significant deadlines in the Oregon Legislature that start to willow down the life span of legislative proposals. The first of these deadlines was last Friday, April 7th. As of midnight on last Friday any bill in a committee in the chamber of origin (Senate bills in the Senate and House bills in the House) must be scheduled for a hearing and work session or the bill will not be considered any further during this legislative session. The exceptions to this rule are bills in Revenue Committees, Rules Committees and Ways and Means Committees which stay open the duration of the legislative session. The remaining bills will need to move out of committees by April 18th.

A number of bad legislative bills that MHCO has been fighting were stopped by last week's legislative deadline. However there are three bills that remain 'alive' that are of great concern:

HB 2004A: Prohibits landlord from terminating month-to-month tenancy without cause after first six months of occupancy except under certain circumstances with 90 days' written notice and payment of [relocation expenses] amount equal to one month's periodic rent. Provides exception for cer- tain tenancies for occupancy of dwelling unit in building or on property occupied by landlord as primary residence. Makes violation defense against action for possession by landlord. Requires fixed term tenancy to become month-to-month tenancy upon reaching specific ending date, unless tenant elects to renew or terminate tenancy. Requires landlord to make tenant offer to renew fixed term tenancy. [Repeals statewide prohibition on city and county ordinances controlling rents.] Permits city or county to implement rent stabilization program for rental of dwelling units. This bill passed the Oregon House and is now being considered in the Senate.

HB 2008: Requires landlord of manufactured dwelling park to pay tenant necessary relocation costs or applicable manufactured dwelling park closure penalty, as determined by Office of Manufactured Dwelling Park Community Relations, upon closure of park to convert to other use. Requires owner of manufactured dwelling park to give notice of final sale to office upon sale of park. Prohibits landlord from terminating without cause, unless under certain circumstances with 90 days' written notice, month-to-month tenancy consisting of rental of manufactured dwelling of float- ing home owned by landlord on space in facility. Requires fixed term tenancy consisting of rental of manufactured dwelling or floating home owned by landlord on space in facility to become month-to-month tenancy upon reaching specific end date, unless tenant elects to renew or terminate tenancy. Requires landlord to make tenant offer to renew fixed term tenancy. Requires office to produce materials to inform tenants of rights and adopt rules to require landlords to post materials in manufactured dwelling park public spaces. Directs office to establish and administer landlord-tenant dispute resolution program. Requires office to submit annual report on progress of program to interim committees of Legislative Assembly related to housing and human services for five years. Authorizes office to impose penalties for violations of landlord-tenant law against landlords of manufactured dwelling parks. Scheduled for a legislative work session on Thrusday.

HB 3331: Directs Office of Manufactured Dwelling Park Community Relations to establish and administer landlord-tenant dispute resolution program for disputes arising from notices of certain rent in- creases. Scheduled for legislative work session on Thursday.

We will be sending updates on the status of these three bills as they move through the legislative process. We are expecting significant amendments to HB 2008 but not enough to change MHCO's opposition. We are also expecting significant amendments in the Senate on HB 2004A. Again, the amendments will likely not change MHCO's opposition.

MHCO was successful in negotiating a landlord-tenant coalition bill (SB 277). This bill will be significantly amended on Wednesday in the Senate. We were also successful in exempting manufactured home communities from HB 2511. Obviously, all the bad bills left behind so far this session are a success - but we still have a lot work ahead. 

We have reached the halfway point of the 2017 Legislative Session. Unlike past legislative sessions this one looks to be a ugly and nasty fight to the end in July.    

A detailed list of bills currently being tracked by MHCO is attached - just click above the title.  

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) bans housing discrimination against individuals with disabilities, including the refusal to make reasonable accommodations in rules, policies, practices, or services when they’re necessary to provide individuals with disabilities an equal opportunity to use and enjoy their home at the community.

The reasonable accommodation provisions come into play whenever an individual with a disability wants to use an assistance animal in communities that either prohibit or impose restrictions or conditions on pets at the community. Like all reasonable accommodation requests, the determination of whether an individual has a disability-related need for an assistance animal involves an individualized assessment, according to HUD.

Federal fair housing law broadly defines “disability” to mean physical or mental impairments that substantially limit one or more major life activities. That covers a wide variety of physical and psychological impairments—many of which aren’t obvious or apparent—as long as the impairment is serious enough to substantially limit a major life activity, such as seeing, hearing, walking, or caring for oneself.

Assistance animals are not pets under fair housing law, according to HUD. They’re animals that work, provide assistance, or perform tasks for the benefit of a person with a disability, or provide emotional support that alleviates one or more identified symptoms or effects of a person’s disability. You can’t charge an extra fee or pet deposit as a condition of granting a reasonable accommodation for an assistance animal.

Don’t get confused by the different rules under the Americans with Disabilities Act (ADA), which governs the types of animals used by individuals with disabilities in places that are open to the public, such as restaurants, hotels, and other venues. With one limited exception, the ADA permits only individually trained service dogs—and excludes emotional support animals.

But the FHA, which governs multifamily housing communities, is much broader than that. Fair housing law allows not only service dogs, but also any type of animal that provides assistance or emotional support to an individual with a disability. Breed, size, or weight limitations may not be applied to an assistance animal, according to HUD. Assistance animals don’t have to be individually trained or certified—and they all have the same legal standing—regardless of what type of assistance they provide to an individual with a disability.

8 RULES FOR HANDLING REQUESTS

FOR ASSISTANCE ANIMALS

Rule #1: Adopt Pet Policy Subject to Exceptions for Assistance Animals

Fair housing law doesn’t prevent you from having a pet policy—as long as you don’t use it to keep out assistance animals. Some communities ban pets altogether, while others place limits on the number, type, size, or weight of pets and impose conditions such as extra fees, pet deposits, or additional rent charges. Whatever your policy on pets, it’s unlawful to deny an exception for an assistance animal needed by an individual with a disability to fully use and enjoy the community.

Example: In July 2019, HUD charged a Maine community and one of its agents with discrimination for denying a veteran with disabilities the right to keep his assistance animal. In his HUD complaint, the veteran alleged that he called the community in response to an ad on Craigslist. When he told the agent that he had a disability-related need to live with his assistance dog, the agent allegedly responded, “absolutely not,” and she regretted allowing a prior tenant to live with his assistance dog because other tenants then wanted to get pet dogs.

“No person with a disability should be denied the accommodation they need, especially individuals who served in the Armed Forces to defend our freedom,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement. “HUD will continue to work to ensure that housing providers meet their obligation to comply with this nation’s fair housing laws.”

Rule #2: Don’t Make Snap Decisions About Requests for Assistance Animals

Anytime someone asks for an exception to your pet policy to keep an assistance animal, you should treat it as you would any other request for a reasonable accommodation. The reasonable accommodation rules kick in anytime anyone says he needs or wants something—including an assistance animal—because of a disability. The law doesn’t require that a request be made at a particular time or in a particular manner. The person doesn’t have to mention fair housing law or use the words “reasonable accommodation.”

When you receive a request for an assistance animal, HUD says there are two relevant questions:

1. Does the person seeking to use and live with the animal have a disability—that is, a physical or mental impairment that substantially limits one or more major life activities?
2. Does the person making the request have a disability-related need for an assistance animal? In other words, does the animal work, provide assistance, perform tasks with services for the benefit of a person with a disability, or provide emotional support that alleviates one or more of the identified symptoms or effects of a person’s existing disability?

If the answer to both questions is “no,” then HUD says that fair housing law doesn’t require you to make an exception to your pet policy and the reasonable accommodation request may be denied.

If the answer to both questions is “yes,” however, you’re required to make an exception to your pet policies to permit an individual with a disability to live with and use an assistance animal at the community, unless doing so would impose an undue financial or administrative burden or would fundamentally alter the nature of the community’s services.

The request may also be denied if the animal is a direct threat to your property or the health and safety of others. But HUD warns that you can’t make that decision based on speculation about the animal’s size or breed—you have to look into the specifics of the particular animal involved. It can get complicated, so don’t make snap decisions about whether to bar an animal on that basis without reviewing all the facts.

Rule #3: Request Documentation When Needed to Evaluate Request

Don’t deny a request just because you’re uncertain about whether the person seeking the accommodation has a disability or a disability-related need for an assistance animal. Though fair housing law generally forbids housing providers from making disability-related inquiries, there’s an exception for reasonable accommodation requests when either the disability—or the disability-related need for the requested accommodation—isn’t obvious or apparent.

Just remember: You can’t ask questions about an applicant’s disability or disability-related need for an assistance animal if both are known or readily apparent. The classic example is a request by a blind or visually impaired applicant to keep a guide dog. Since both the disability and the need for the animal are readily apparent, you can’t ask for documentation about the applicant’s disability or disability-related need for the dog.

You may request information from a resident with a known or obvious disability—but only if his need for the assistance animal isn’t readily apparent. As an example, federal guidelines point to a request by an applicant who uses a wheelchair to keep a dog as an assistance animal. The applicant’s disability is readily apparent, but the need for the assistance animal isn’t obvious, so you can ask the applicant to provide information about the disability-related need for the dog—as long as you don’t go overboard by asking for too much information.

Rule #4: Ask for Verification If Resident Doesn’t Have Apparent Disability

Be careful about how you handle requests for assistance animals from applicants or residents who don’t have an obvious or apparent disability. Under fair housing law, all individuals with disabilities are equally protected—whether they’re physical or mental, obvious or not–so don’t let outward appearances affect how you treat them.

If the resident’s disability isn’t readily observable, you may ask for reliable disability-related information that’s necessary to verify that the resident has a disability that qualifies under the FHA—that is, a physical or mental impairment that substantially limits one or more major life activities—and has a disability-related need for the animal. You can’t ask the resident for information about what his disability is or what the animal does to assist him—only for confirmation that there is a disability and that the animal is needed because of that disability.

In general, verification may come from a doctor or a medical professional, peer support group, or reliable third party in a position to know about the individual’s disability—even the resident himself, under certain circumstances. But you can’t ask applicants or residents for access to medical records or medical providers—or for detailed or extensive documentation about their physical or mental impairments.

For example, HUD says that communities may ask applicants who want a reasonable accommodation for an assistance animal that provides emotional support to provide documentation from a physician, psychiatrist, social worker, or other mental health professional that the animal provides emotional support that alleviates one or more of the identified symptoms or effects of an existing disability. Such documentation is sufficient if it establishes that an individual has a disability and that the animal in question will provide some type of disability-related assistance or emotional support, according to HUD.

Editor's Note: For model forms you can use to verify an applicant or resident's need for an assistance animal, see “Use Forms to Verify Resident’s Need for  Assistance Animal,” which appeared in our June 2018 issue.

Rule #5: Consider Requests for Emotional Support Animals

Treat requests for emotional support animals the same as any other request for a service dog or any other type of assistance animal. Fair housing law allows people with disabilities to have assistance animals that perform work or tasks, or that provide disability-related emotional support.

Example: In April 2019, the Justice Department sued the owner and property manager of a seven-unit rental property in New York City for refusing a reasonable accommodation to allow a resident with psychiatric disabilities to live with an emotional support German Shepherd in his unit. According to the complaint, the resident was a retired law enforcement officer and September 11th first responder who required an emotional support dog to assist him with his disabilities. The complaint alleged that the community sought to evict him for living with an emotional support dog and, after discontinuing the eviction action in which each side was supposed to pay its own attorney’s fees, the community allegedly retaliated and harassed him by billing him for its attorney’s fees related to its unsuccessful eviction attempt [U.S. v. Higgins, April 2019].

Example: In March 2019, the owner and property manager of a 232-unit housing cooperative in New York City agreed to pay $70,000 to settle allegations that they violated fair housing law by refusing to allow a resident with disabilities to keep an emotional support beagle in his unit. The Justice Department filed the complaint, alleging that the resident had disabilities and requested a reasonable accommodation to keep an assistance dog in his unit. According to the complaint, the community effectively denied the request by issuing a notice of default stating that he violated his lease by harboring a dog in his unit. A few months later, the complaint alleged that the community notified him that his tenancy would be terminated because he kept a dog in his unit [U.S. v. 118 East 60th Owners, Inc., March 2019].

Rule #6: Don’t Put Too Much—or Too Little—Stock in Online Certifications

Knowing the rules on disability verification is essential to avoiding the common mistakes that lead to complaints involving requests for assistance animals. It’s particularly important now that so many applicants or residents can go online and find a quick “certification” process to say their dog is a certified assistance animal.

Example: In November 2018, a court dismissed claims against a Florida homeowners association for denying a resident’s request for an assistance animal. In his complaint, the resident alleged that he was disabled as a result of a 2009 auto accident and bought a Rottweiler puppy in 2017 to serve as a service dog allegedly on the advice of his doctor. When he received a notice of violation stating that Rottweilers weren’t permitted, the resident said he informed the community that the puppy was a service animal. Instead of completing a medical release and form to verify his accommodation request, he allegedly produced service dog identification cards purchased online, his handicap parking placard, and copies of his disability checks. Allegedly, the community denied his reasonable accommodation request because he didn’t provide documentation of his disability or need for a service dog. 

He sued, but the court dismissed the case because the resident failed to prove that he had a disability under fair housing law. The only information about his disability was in his complaint. Although he alleged permanent mobility impairments from his 2009 car accident, he failed to present evidence of his injuries or limitations. And the community presented photos of him riding a scooter, and standing and walking unaided, which contradicted his allegations of disability [Fitzsimmons v. Sand & Sea Homeowners Association, November 2018].

When an applicant provides you with an online certification that he needs an assistance animal, it’s necessary to determine whether it meets the requirements that it’s reliable and from someone familiar with the applicant’s disability. Don’t automatically assume that an online certification wasn’t issued by any recognized group, or a medical or mental health provider, and deny the request.

You still have the obligation to consider, respond, and act on the request—even when you suspect that the online verification doesn’t provide you with all the information you need to act on the accommodation request. Unless the applicant has an obvious disability, you may request confirmation from her treating mental or medical health professional to verify that the applicant is under the provider’s care and treatment and that the provider has diagnosed a medical or mental condition that renders the patient disabled. You may also request confirmation from the treating doctor or mental health provider that the animal is prescribed to assist with the disability.

If the applicant or resident is unwilling to cooperate or obtain the proper medical or mental health provider’s assistance in verifying the information, then you may have grounds for denying the request. But this is a difficult area, so it’s important to get legal advice before taking any adverse action.

Rule #7: Consider Requests for Dogs Otherwise Excluded Under Pet Policies

Carefully consider requests for assistance animals—even if it’s for an animal that’s generally prohibited under your pet policies. It’s common for communities to allow only certain types of pets or to exclude animals based on their size or breed. But remember—these limits don’t apply to assistance animals. HUD says that breed, size, and weight restrictions may not be applied to an assistance animal.

Example: In February 2019, the owner and manager of an apartment building in Manhattan agreed to pay $100,000 to settle allegations of disability discrimination for refusing to rent a unit to an applicant with a psychiatric disability and her fiance because she had a large assistance animal.

According to the complaint filed by the Justice Department, the couple expressed interest in renting a unit, but they had a “service animal” that was “probably over the permitted weight limit” for the building. After they submitted forms requesting a reasonable accommodation, the manager allegedly notified them that the community would permit them to have a dog up to 50 pounds as a reasonable accommodation but their current dog—a 120-pound Cane Corso—was too large, so it would be best if they didn’t pursue their application for an unit in the building [U.S. v. Glenwood Management, February 2019].

It can get complicated when it comes to breed restrictions. Many communities have policies restricting certain dog breeds, most notably pit bulls, but HUD says that breed restrictions don’t apply to assistance animals. To comply with fair housing law, you must assess whether the particular animal in question poses a direct threat; otherwise, you may be accused of denying a reasonable accommodation by excluding an assistance animal based on its breed.

It’s another matter if your community is subject to a local ordinance banning pit bulls or other “dangerous breeds.” If allowing the dog would violate local law, then you may have grounds to deny the request, but this is another gray area where it’s a good idea to get legal advice before taking action on the request.

Example: In April 2019, the Nebraska Supreme Court ruled against a resident who claimed that the city violated fair housing law by denying his reasonable accommodation request to keep his pit bull as an emotional support animal despite its ordinance banning pit bulls and other “dangerous dogs.”

The lawsuit was filed by a resident who was partially paralyzed and had a pit bull as an emotional support animal. That same year, the city adopted an ordinance banning pit bulls and other dangerous dogs but grandfathered in dogs registered with the city before the law took effect. The resident failed to register the dog on time, so an enforcement officer said he’d have to get rid of the dog.

After obtaining documentation from his doctor, the resident sued the city for violating fair housing law. Rejecting the city’s argument that it was exempt from the FHA, the court issued an order that the ordinance was invalid as applied to the resident’s retention of the dog in his home.

On appeal, the state’s highest court reversed in part, ruling that the resident failed to prove that the requested accommodation was necessary. Assuming that he needed an emotional support dog, he failed to prove that other dogs not covered by the ordinance couldn’t provide comparable therapeutic benefit with regard to his disability. Fair housing law didn’t give him a right to his preferred option [Wilkinson v. City of Arapahoe, April 2019].

Rule #8: Don’t Ban Assistance Animals from Common Areas

Don’t impose unreasonable limits that prevent residents with disabilities from bringing their assistance animals into common areas. HUD says that residents with disabilities may use assistance animals in all areas of the premises where persons are normally allowed to go unless doing so would impose an undue financial and administrative burden or would fundamentally alter the nature of your services.

Example: In February 2019, a court ruled that a Nevada homeowners association had to pay a couple $635,000 for refusing to grant the wife’s disability-related reasonable accommodation request to bring her assistance animal, a Chihuahua, into the clubhouse.

The court ruled that the FHA applied because access to the clubhouse was necessary for the couple’s enjoyment of their home. The dog qualified under the ADA as an assistance animal because it assisted the wife with acute pain attacks and with retrieving her walker. The dog was not disruptive, threatening, or harmful to the other residents in the community or in the clubhouse, so the accommodation to allow the dog to accompany the wife into the clubhouse was clearly a reasonable accommodation of the wife’s disability.

The court assessed punitive damages against some of the parties involved in denying the wife’s accommodation requests. Among other things, the court said they:

• Continued, in a harassing and malicious manner, to request documentation about the wife’s need for the dog’s assistance even after sufficient documentation was provided regarding her disability and the ways in which the dog assisted her;
• Actively and wantonly prevented the couple from using the clubhouse once documentation was provided;
• Sent or directed to be sent communications on behalf of the board portraying the couple as litigious and untruthful and knew that these communications would contribute to a hostile, threatening, and intimidating living environment; and
• Failed to discourage other residents from harassing and threatening the couple at open meetings and through anonymous letters.

The court further found that they acted with personal animus toward the couple, which fueled the antagonism among the community [Sanzaro v. Ardiente Homeowners Association, LLC, February 2019].

Nevertheless, you don’t have to tolerate bad behavior by individuals with disabilities—or their assistance animals—when they’re in common areas. You may expect them to have their assistance animals under their control, for example, by requiring them to be leashed unless doing so would interfere with the animal’s ability to perform disability-related tasks. You may establish rules to require residents with assistance animals to pick up and dispose of the animal’s waste and to hold them accountable if the animal becomes disruptive or acts aggressively toward other residents.

• Fair Housing Act: 42 USC §3601 et seq.

The marketplace for income property financing has benefited greatly from shifts in the economy. Volatility forces commercial lenders to gravitate towards lower risk, stable, income-producing real estate. Manufactured home communities are increasingly high on their lists, since the cash flow is consistent and demand for affordable housing is strong.

Numerous institutional and private owners of manufactured home communities and other commercial real estate have taken advantage by locking in historically low fixed rate loans. In several cases, refinancing existing loans with prepayment penalties still made economic sense given the savings realized with today's low interest rate financing. If you've been considering a refinance to lower expenses, access additional capital to fund overdue projects, or facilitate additional acquisitions, it's a unique time to take another look at the programs available in today's market.

Most fixed rate lenders price their loans based on US Treasury yields. Many borrowers may be focusing on rising benchmark interest rates, however US Treasury yields today are lower than on January 1, 2016, and at the same time last year. As of March 2, 2016 the 10 year US Treasury yield was 1.84%, compared to one month prior at 1.97%. The average during 2015 was 2.14%. The 10 year US Treasury yield began 2014 at 3.00%. To provide some perspective, below is the average yield on the 10 year US Treasury during the last 5 decades:

1961 - 1969: 4.73%

1970 - 1979: 7.50%

1980 - 1989: 10.59%

1990 - 1999: 6.67%

2000 - 2009: 4.46%

If you believe that ultimately Treasury yields have to return to these averages, today's low interest rate environment offers an extraordinary opportunity to evaluate your long term financing objectives.

Having endured the various economic ups and downs over the past 15 years while working in finance, I can attest that the capital markets for commercial real estate today are healthy and more judicious than prior to the credit crisis of 2008-2009. The pool of varying capital sources is deep, and lender and investor demand for real estate transactions is as strong as we've seen. According to Mortgage Bankers Association, total US commercial real estate loan origination volume reached $497 Billion in 2015, up 24% over the $400 Billion originated in 2014. Over $1 Billion in commercial real estate loans will be maturing daily from 2016 through 2018, and the necessary lender appetite is present to service this need. Owners of manufactured home communities will benefit from this activity, as the debt market for MHC's has expanded in recent years and lenders are seeking to deploy capital on lower risk housing assets.

An Overview of Today's Community Financing Options:

The vast majority of commercial real estate lenders are seeking to meet or exceed their 2015 loan originations volume in 2016. Real estate capital sources in the marketplace are generally very optimistic about lending prospects in the US. More lenders are coming to the realization that manufactured home communities provide a highly stable cash flow superior to other asset classes, with returns that are typically more favorable when compared to conventional multi-housing properties in most markets.

Fannie Mae and Freddie Mac are both Government Sponsored Enterprises, or GSE's, and are charged with ensuring that capital is available to providers of multifamily housing, including manufactured housing. The GSE's are established, reliable providers of non-recourse financing for higher quality MHC's. Fannie Mae can offer fixed rates as long as 20 years, whereas Freddie Mac typically offers fixed rates of five, sever, or 10 years, with up to 30 year amortizations. Both GSE's have the ability to offer supplemental financing, or additional loan proceeds, to their own existing loans as the property's cash flow increases.

Life insurance companies continue to be an excellent source of non-recourse financing for MHC's, often beating out the GSE's on pricing and flexibility of lean structure. Since they are "on-book" or "portfolio" lenders, life companies can offer unique capabilities such as locking your interest rate at application, as well as various customized combinations of loan terms, amortizations, and prepayment options. Similar to the GSE's, life companies can offer forward rate lock options, allowing a borrower to lock in a loan commitment and fixed rate as far out as 12 months in advance of funding.

Both the GSE's and life insurance companies are offering interest-only payment periods, up to the full loan term for more moderate leverage.

An increasing number of commercial and regional banks are also targeting MHC lending. Bank loan features for MHC's include 30 year fully-amortizing loan terms, with low fixed rates for three to 10 years. Some banks can offer non-recourse financing on MHC's at lower leverage points.

CMBS/Conduit lenders provide a non-recourse financing option for owners with communities that would not be considered by the GSE's or life insurance companies. Another alternative is the emergence of several new Debt Funds. These are portfolio lenders that offer higher-leverage specialty and bridge financing, and are best suited for non-stabilized assets and short term turnaround transactions.

So which lender is right for your specific needs? Your selections depends on the profile, age, quality, and location of your community, as well as your loan feature preferences and financing objectives. The good news is that the number of "go-to" sources for MHC financing continues to deepen, as more lenders have taken note that MHC's provide a reliable, low-risk investment.

Zach Koucos is a Director at HFF and is responsible for originating commercial real estate financing throughout the U.S., with a specialized practice in MHC and RV Resort financing. Zach can be reached at: 858-812-2351 Phone; 858-552-7695 fax; and email: zkoucos@hfflp.com. He can also be reached on the web at hfflp.com.

The marketplace for income property financing has benefited greatly from shifts in the economy. Volatility forces commercial lenders to gravitate towards lower risk, stable, income-producing real estate. Manufactured home communities are increasingly high on their lists, since the cash flow is consistent and demand for affordable housing is strong.

Numerous institutional and private owners of manufactured home communities and other commercial real estate have taken advantage by locking in historically low fixed rate loans. In several cases, refinancing existing loans with prepayment penalties still made economic sense given the savings realized with today's low interest rate financing. If you've been considering a refinance to lower expenses, access additional capital to fund overdue projects, or facilitate additional acquisitions, it's a unique time to take another look at the programs available in today's market.

Most fixed rate lenders price their loans based on US Treasury yields. Many borrowers may be focusing on rising benchmark interest rates, however US Treasury yields today are lower than on January 1, 2016, and at the same time last year. As of March 2, 2016 the 10 year US Treasury yield was 1.84%, compared to one month prior at 1.97%. The average during 2015 was 2.14%. The 10 year US Treasury yield began 2014 at 3.00%. To provide some perspective, below is the average yield on the 10 year US Treasury during the last 5 decades:

1961 - 1969: 4.73%

1970 - 1979: 7.50%

1980 - 1989: 10.59%

1990 - 1999: 6.67%

2000 - 2009: 4.46%

If you believe that ultimately Treasury yields have to return to these averages, today's low interest rate environment offers an extraordinary opportunity to evaluate your long term financing objectives.

Having endured the various economic ups and downs over the past 15 years while working in finance, I can attest that the capital markets for commercial real estate today are healthy and more judicious than prior to the credit crisis of 2008-2009. The pool of varying capital sources is deep, and lender and investor demand for real estate transactions is as strong as we've seen. According to Mortgage Bankers Association, total US commercial real estate loan origination volume reached $497 Billion in 2015, up 24% over the $400 Billion originated in 2014. Over $1 Billion in commercial real estate loans will be maturing daily from 2016 through 2018, and the necessary lender appetite is present to service this need. Owners of manufactured home communities will benefit from this activity, as the debt market for MHC's has expanded in recent years and lenders are seeking to deploy capital on lower risk housing assets.

An Overview of Today's Community Financing Options:

The vast majority of commercial real estate lenders are seeking to meet or exceed their 2015 loan originations volume in 2016. Real estate capital sources in the marketplace are generally very optimistic about lending prospects in the US. More lenders are coming to the realization that manufactured home communities provide a highly stable cash flow superior to other asset classes, with returns that are typically more favorable when compared to conventional multi-housing properties in most markets.

Fannie Mae and Freddie Mac are both Government Sponsored Enterprises, or GSE's, and are charged with ensuring that capital is available to providers of multifamily housing, including manufactured housing. The GSE's are established, reliable providers of non-recourse financing for higher quality MHC's. Fannie Mae can offer fixed rates as long as 20 years, whereas Freddie Mac typically offers fixed rates of five, sever, or 10 years, with up to 30 year amortizations. Both GSE's have the ability to offer supplemental financing, or additional loan proceeds, to their own existing loans as the property's cash flow increases.

Life insurance companies continue to be an excellent source of non-recourse financing for MHC's, often beating out the GSE's on pricing and flexibility of lean structure. Since they are "on-book" or "portfolio" lenders, life companies can offer unique capabilities such as locking your interest rate at application, as well as various customized combinations of loan terms, amortizations, and prepayment options. Similar to the GSE's, life companies can offer forward rate lock options, allowing a borrower to lock in a loan commitment and fixed rate as far out as 12 months in advance of funding.

Both the GSE's and life insurance companies are offering interest-only payment periods, up to the full loan term for more moderate leverage.

An increasing number of commercial and regional banks are also targeting MHC lending. Bank loan features for MHC's include 30 year fully-amortizing loan terms, with low fixed rates for three to 10 years. Some banks can offer non-recourse financing on MHC's at lower leverage points.

CMBS/Conduit lenders provide a non-recourse financing option for owners with communities that would not be considered by the GSE's or life insurance companies. Another alternative is the emergence of several new Debt Funds. These are portfolio lenders that offer higher-leverage specialty and bridge financing, and are best suited for non-stabilized assets and short term turnaround transactions.

So which lender is right for your specific needs? Your selections depends on the profile, age, quality, and location of your community, as well as your loan feature preferences and financing objectives. The good news is that the number of "go-to" sources for MHC financing continues to deepen, as more lenders have taken note that MHC's provide a reliable, low-risk investment.

Zach Koucos is a Director at HFF and is responsible for originating commercial real estate financing throughout the U.S., with a specialized practice in MHC and RV Resort financing. Zach can be reached at: 858-812-2351 Phone; 858-552-7695 fax; and email: zkoucos@hfflp.com. He can also be reached on the web at hfflp.com.

Tip: Although Form 55 is only for use when there is disrepair or deterioration to the exterior of the home itself, the definition of a manufactured dwelling in ORS 90.100 includes “an accessory building or structure,” and that term includes sheds and carports and “any portable, demountable or permanent structure”. Accordingly, even though the damage or deterioration may relate to accessory buildings or structures – and not to the home itself – they too are subject to the new law.

30-day and 60 Repair Periods.  If the disrepair or deterioration to the exterior of the home or related structures creates a risk of imminent and serious harm to dwellings, homes, or persons in the Community (e.g. dangerously unstable steps, decking or handrails), there is a 30-day period to repair.

For all other (i.e. non-dangerous) conditions, the minimum period to cure is now 60 days.  As before, the new Form 55 provides a place for landlords and managers to specifically describe the item(s) in need of repair.

Trap: If there is imminent risk of harm, and the landlord/manager intends to give the tenant 30 days rather than 60 days, SB 277A requires that they not only describe the item(s) in disrepair, but also describe the potential risk of harm.  There is little question but that the failure to do so would invalidate the notice. The new Form 55 prompts users to describe both the violation and the potential risk of harm.

Tip: The new Form 55 contains a prompt at several places to attach additional pages, documents or photos, if doing so would be helpful in identifying the disrepair or deterioration, and the necessary repair. Remember, you cannot expect the tenant to be a mind reader – just because you know the nature of the problem and the appropriate repair, does not mean the tenant is on the same page. If there is any ambiguity in the notice, a court would likely rule in favor of the tenant. Why? Because the landlord/manager filled out the Notice and had the ability at that time to draft it with sufficient clarity.

Service of the Notice.  Most landlords and managers are familiar with the various methods of effecting service of notices. However, if in doubt, check the statutes. They are contained at ORS 90.155 (Service or delivery of written notice) and ORS 90.160 (Calculation of notice periods).  You can never be too careful; a notice giving a single day less than legally required, can result in the case being thrown out.

Statutory Definitions. The new ORS 90.632 defines “disrepair” and “deterioration”, and for the most part, they are quoted in MHCO’s new Form No. 55:

“Disrepair” means being in need of repair because a component is broken, collapsing, creating a safety hazard or generally in need of maintenance.  It also includes the need to correct a failure to conform to applicable building and housing codes at the time: (a) Of installation of the manufactured dwelling or floating home onthe site, or (b) The improvements to the manufactured dwelling or floating home were made following installation on the site.

“Deterioration” includes, without limitation, such things as a collapsing or failing staircase or railing, one or more holes in a wall or roof, an inadequately supported window air conditioning unit, falling gutters, siding or skirting, or paint that is peeling or faded so as to threaten the useful life or integrity of the siding. Deterioration does not include aesthetic or cosmetic concerns.

Trap:  Note that the definition of “deterioration” refers to “…paint that is peeling or faded so as to threaten the useful life or integrity of the siding.” (Underscore added.)  Before requiring a tenant to paint their entire home, it might be prudent to confer with a qualified painter who, if necessary, would be prepared to testify that the poor condition of the paint would likely threaten the useful life or integrity of the siding (at least as to the affected  area). This could avoid arguments in the future about whether the entire home or structure actually needed to be repainted.  In any event, management should be careful when issuing Form 55 to make sure that: (a) It is not issued for minor repairs bordering on the cosmetic, and (b) Required repairs are not overly burdensome or broad. For example, if one side of the home is exposed to the weather and in need of repainting, there may be little reason to insist that the resident repaint the entire home.

Necessary Repairs.  As before, SB 277A requires that management specifically describe what repairs are required to correct the disrepair or deterioration. In the new Form 55 we have included instructions both to the Cause section of form, and also to the Necessary Repairs section. And don’t forget to attach additional pages, documents or photos, if it might be helpful; the more illustrative examples of what is wrong with the home and what repairs are necessary, the less room there is to argue about it later.

Right to Extension of Time.  There are three circumstances in which a resident may request an extension of the 60-day compliance deadline. Note however, as discussed above, there is no right to any extension if the adverse condition would pose a risk of serious harm.

• Additional 60 days. If the necessary repairs involve exterior painting, roof repair, concrete pouring or similar work, and the weather prevents that work during a substantial portion of the existing 60-day periodto cure;
• Additional 60 days.  If the nature or extent of the correction work is such that it cannot reasonably be completed within the 60-day cure period due to the type and complexity of the work and the availability of necessary repair persons;
• Additional 180 Days (Six Months). If the disrepair or deterioration existed for more than the preceding 12months with the landlord’s or manager’s knowledge, or rent had been accepted over that time.

Tip: The law requires the tenant to make a written request for an extension of time if it is sought in a reasonable amount of time prior to the last day of the 60-day compliance period. There are two issues, however: (a) How long an extension is the tenant asking for – 30 days, 40, 50, or 60? (b) Obtaining an extension also extends the deadline for compliance.  An oral extension does not nail down the additional time in writing and may not identify the new deadline. Accordingly, landlords and managers should insist on a written request from their tenants and should consider putting in writing: (a) The amount of time granted; and, (b) The new deadline. That way there can be no confusion about the length of the extension and the outside date that compliance must be completed.

Issue: Does SB277A contemplate that following the request for a 60-day extension, management may agree to less? Possibly, since new law provides that the need for the extra time must be due to certain conditions that prevent that work from occurring during a substantialportion of the existing 60-day period. If confronted with this situation, management should consult with legal counsel.

Notice of Correction. If the tenant performs the necessary repairs before the end of the compliance date, or extended compliance date, they have the right to give the landlord/manager a written notice that the issues have been corrected. There is no fixed time for management’s response as to whether the repairs have been satisfactorily andtimely performed; it is sufficient if it is within a reasonable time following the tenant’s written notice. However, if a tenant gives this notice to management at least 14 days prior to the end of the completion deadline, or extended deadline, their failure to promptly respond is a defense to a landlord’s termination of tenancy.

Sale of Home; Prospective Purchasers. Prior to enactment of SB 277A, Oregon law permitted a tenant to sell their home while the disrepair/deterioration notice was outstanding, permitting the landlord/manager to give a copy of it to the new perspective purchaser, and providing that the sale would not automatically extend the compliance period. Essentially, the new tenant stepped into the shoes of their seller, and became subject to the same notice and time periods.

The practical result of this protocol was that as between the tenant and the prospective purchaser, they could negotiate any price reductions for the necessary work, and the new rental agreement would contain a provision requiring that it be completed within the time prescribed in the original notice, or a permitted extension.  That is no longer the case under the new law.

SB 277A now provides that at the time of giving a prospective purchaser the application and other park documents, the landlord/manager must also give them the following:

• Copies of any outstanding notices of repair or deterioration issued under ORS 90.632;
• A list of any disrepair or deterioration of the home;
• A list of any failures to maintain the Space or to comply with any other provisions of the Rental/LeaseAgreement, including aesthetic or cosmetic improvements; and
• A statement that the landlord/manager may require a prospective purchaser to complete the repairs,maintenance and improvements described in the notices and lists provided.

Tip: Note that the new law combines not only ORS 90.632 notices relating to damage and deterioration of the home or structures, but also a list of failures to maintain the space and other defaults, including aesthetic or cosmetic improvements. This may or may not include 30-day curable notices under ORS 90.630 for failure to maintain the space. But in both cases (i.e. defaults relating to structures, and those relating to the space), the new tenant appears to get the six-month period to comply.

This represents and interesting shift in Oregon law, and possibly for the better. Many parks historically gave “resale compliance notices” to tenants who were placing their homes up for sale. However, until now, there was some question whether a landlord could “require” as a condition of resale, that the existing tenant make certain repairs – absent having first sent a 30-day notice.[1]Now, under the new version of ORS 90.632, it appears landlords may make that list, and let the tenant/seller know that unless the work is completed before sale, it will be given to the tenant’s purchaser upon application for tenancy.

So, if the landlord/manager accepts a prospective purchaser as a new tenant, and notwithstanding any prior landlord waivers of the same issue(s), the new tenant will be required to complete the repairs, maintenance and improvements described in the notices and lists.

Under Section (10) of the revised statute, if the new tenant fails to complete the repairs described in the notices within six months from commencement of the tenancy, the landlord “may terminate the tenancy by giving the new tenant the notice required under ORS 90.630 or ORS 90.632.”  This appears to say that a new tenant who fails to complete the items addressed in the notices and lists within the first six months, will thereafter be subject to issuance of a curable 30-day or 60-day notice to complete the required repairs. Accordingly, this is how the new MHCO Form 55 will read.

What if the landlord had already given the seller a written notice under one of these two statutes, but the compliance period had not yet run at the time of sale? The new statute does not carry over the unused time to the new tenant/purchaser, since under the new law, they will have received essentially the same information upon application, and will now have six months to complete.

Tip: Nonetheless, it is still a good idea to give a detailed 90.632 notice to a tenant before sale. That way, the very same repair issues will be in front of the landlord, existing tenant and prospective purchaser at the same time. It will now become a matter of negotiation between tenant/seller and tenant/buyer as to who will perform the repairs, and when.

Repeat Violations. If one or more of the items that caused issuance of a 30-day or 60-day notice under ORS 90.630 or 90.632 recurs within 12 months after the date of issuance of that notice, the tenancy may be terminatedupon at least 30 days’ written notice specifying the violation(s) and the date of termination of tenancy. In such case, correction of the disrepair or deterioration will not prevent a termination of the tenancy.

Miscellaneous. As under the prior law, a copy of the disrepair and deterioration notice may be given by thelandlord/manager to any lienholder of the tenant’s home.

And during the period of time provided for the tenant to make the necessary repairs, they are still required to payrent up to the termination date appearing in the notice, or, if applicable, any permitted extension period.

Trap: If the rent tendered by the tenant covers days that extend beyond the deadline for compliance, or any permitted extension thereof, it should be returned to them within ten (10) daysafter receipt, pursuant to ORS 90.412(3). This will avoid a waiver of termination of the tenancy described in the notice, should the tenant fail to timely perform the required work.

Conclusion.  Members will see that due to the added complexities of ORS 90.632 (e.g. risk of harm vs. non-risk of harm violations, added detail for explanations, prospective tenant disclosures with application, etc.) the new Form 55 is longer than before. However, despite the added length, we believe it remains user-friendly. 

[1] This is because ORS 90.510(5)(i) provides that the rental or lease agreement for new tenants must disclose “(a)ny conditions the landlord applies in approving a purchaser of a manufactured dwelling or floating home as a tenant in the event the tenant elects to sell the home. Those conditions must be in conformance with state and federal law and may include, but are not limited to, conditions as to pets, number of occupants and screening or admission criteria;

Answer. ORS 90.531 - 90.543 consists of a series of statutes that permit landlords to convert utility charges from base rent to a program passing them on directly to residents. ORS 90.533 expressly permits garbage collection costs to be converted to a pass-through program. In summary, it provides as follows:

1. Unilateral Amendment. You must first unilaterally amend your rental or lease agreements to remove the cost of garbage collection from your base rent and have it billed to residents by your garbage provider. You do not need tenant consent to make this amendment.

1. 180-Day Notice. You must give not less than 180 days' written notice to each resident, before converting to a garbage pass-through billing program.

1. Reduction of Rent. You are required to reduce your base rent at the time of the first billing under the new program. The rent reduction may not be less than an amount reasonably comparable to the amount of the rent previously allocated to the garbage services averaged over at least the preceding twelve (12) months. Landlords may not convert to this program sooner than one year after giving notice of a rent increase, unless the rent increase is an automatic increase provided for in a fixed term rental agreement (i.e. a lease) entered into one year or more before the conversion.

1. Twelve Months' Garbage Billing Records. Before you may first bill the residents under the new program, you must provide them with written documentation from the garbage provider showing your cost for the service during at least the twelve (12) preceding months.

1. Prohibition on Subsequent Rent Raises. During the six months following your conversion to a garbage pass-through billing program, you may not raise the rent to recover any costs of conversion to the program.

1. Common Areas. At the same time you convert to the pass-through program, you may also unilaterally convert the billing for common areas to a pro rata method that divides the cost based on the number of occupied spaces in the facility. don't forget to address this in the unilateral amendment!

Answer. ORS 90.531 - 90.543 consists of a series of statutes that permit landlords to convert utility charges from base rent to a program passing them on directly to residents. ORS 90.533 expressly permits garbage collection costs to be converted to a pass-through program. In summary, it provides as follows:

1. Unilateral Amendment. You must first unilaterally amend your rental or lease agreements to remove the cost of garbage collection from your base rent and have it billed to residents by your garbage provider. You do not need tenant consent to make this amendment.

1. 180-Day Notice. You must give not less than 180 days' written notice to each resident, before converting to a garbage pass-through billing program.

1. Reduction of Rent. You are required to reduce your base rent at the time of the first billing under the new program. The rent reduction may not be less than an amount reasonably comparable to the amount of the rent previously allocated to the garbage services averaged over at least the preceding twelve (12) months. Landlords may not convert to this program sooner than one year after giving notice of a rent increase, unless the rent increase is an automatic increase provided for in a fixed term rental agreement (i.e. a lease) entered into one year or more before the conversion.

1. Twelve Months' Garbage Billing Records. Before you may first bill the residents under the new program, you must provide them with written documentation from the garbage provider showing your cost for the service during at least the twelve (12) preceding months.

1. Prohibition on Subsequent Rent Raises. During the six months following your conversion to a garbage pass-through billing program, you may not raise the rent to recover any costs of conversion to the program.

1. Common Areas. At the same time you convert to the pass-through program, you may also unilaterally convert the billing for common areas to a pro rata method that divides the cost based on the number of occupied spaces in the facility. don't forget to address this in the unilateral amendment!

Answer:  Unfortunately, Oregon’s “3-strikes rule” only applies to mobile home park tenants who own their homes.  It allows parks to issue a non-curable, 30-day eviction notice to mobile home tenants if they accumulate three or more 10-day nonpayment notices within a 12-month period.  The rule does not apply to RV tenants or to tenants in park-owned homes.

There is a “modified” 3-strikes rule that might work, but it requires the park to enter into fixed-term rental agreements with RV tenants instead of the typical month-to-month agreements.  Under ORS 90.427 (7), a fixed term tenancy can be terminated and does not become a month-to-month tenancy at the end of the term if the tenant commits three or more violations within the preceding 12 months (i.e., receives three or more 10-day notices).  However, this option requires the landlord to issue written warnings with specific statutory language each time the tenant commits a violation.  It also requires a 90-day termination notice correlating with the end of the fixed term.  Since this “modified” 3-strikes rule requires fixed-term tenancies, considerable paperwork, and special forms, it is not the ideal option.

A better option is to use month-to-month rental agreements and never allow any RV tenant to stay in the park for more than 12 months.  Since RV tenants can be evicted with a 30-day,

no-cause termination notice during their first year of occupancy, this gives you the option of giving a 30-day notice if the tenant starts falling behind on rent.  Conversely, it also requires you to issue 30-day notices to anyone approaching 12 months living in the park.  This might be contrary to your park’s business model if you rely on keeping long-term residential RV tenants rather than short-term tenants.

(CAVEAT: The cities of Portland, Eugene, and Milwaukie require 90-day notices within the first year of occupancy, not 30-day notices.  Portland and Eugene also impose “relocation assistance” payments to tenants.  Consult an attorney before issuing no-cause notices in these cities.)

For RV tenants who have lived in the park for more than one year, the park’s options are limited.  The best you can do is regularly issue 10-day nonpayment notices every month to keep tenants paying rent on time.  If they don’t pay by the 10-day deadline, file in court and try to get them to agree on a stipulated court move-out agreement at the 1st court appearance hearing.  If that doesn’t work, keep issuing 10-day nonpayment notices every month.  Also keep up the pressure by issuing 30-day notices every month for nonpayment of late fees and utilities (MHCO Form 205).

Mark L. Busch, P.C., Attorney at Law, Cornell West, Suite 200, 1500 NW Bethany Blvd., Beaverton, Oregon 97006; Phone: 503-597-1309; Web:  www.marklbusch.com

Editor's Note:  As we start the count down to the next full Oregon Legislative Session (2019) one of the biggest issues our industry faces is how to resolve conflict between residents and landlords.  Mediation is one of the answers and one that MHCO strongly encourages ALL owners and managers of manufactured home communities to pursue.  Today MHCO is introducing a new ad promoting mediation along with a long term commitment to providing quality articles and information on mediation.  The ad  provides a click thru to important information such as how to access mediation.  Mediation is FREE and should be one of the first tools you turn to when conflict arises in your community - whether it is between resident and resident or resident and landlord.  

Mediation: Tips for Effective Communication

1. Talk Directly. Assuming that there is no threat of physical violence, talk directly to the person with whom you have the conflict. Direct conversation is more effective than sending a letter, banging on the wall, or complaining to others.

2. Choose a good time. Plan to talk to the other person at the right time and allow yourselves enough tie for a thorough discussion of the issue. Don't start talking about the conflict just as the other person is leaving for an appointment, after you've had a terrible day, or right before you make dinner. Try to talk in a quiet place where you can both be comfortable and undistributed for as long as the discussion lasts.

3. Plan ahead. Think out what you want to say ahead of time. State clearly what the problem is and how it affects you.

4. Don't blame or name call. Don't blame the other person for everything or begin the conversation with your opinion of what should be done. Use responsible language (I statements such as I feel"

Don’t relax your focus once the holidays are over—religious discrimination claims could arise at any time of year. Fair housing law makes it unlawful to exclude or otherwise discriminate against applicants or residents because of their religion. If you explicitly or implicitly suggest that you have a preference for—or against—members of certain religious groups in the way you advertise, market, or operate your housing community, you could be accused of violating fair housing law.

This month, we’ll review the law and suggest eight rules to follow to help you avoid claims of religious discrimination during the holidays—and all year long. Then, you can take the Coach’s Quiz to see how much you’ve learned.

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) prohibits discrimination in housing based on a number of characteristics, including religion. Among other things, it’s unlawful to:

• Deny housing to anyone because of his religion;
• Steer or discourage anyone from living in your community because of his religion;
• Impose different terms or conditions because of his religion;
• Harass or retaliate against anyone because of his religion; or
• Make statements—oral or written—that indicate a preference for or against anyone because of his religion.

Taken together, these provisions prohibit communities from treating people differently based on their religious beliefs or practices. For example, you can’t show favoritism toward people who share your religious beliefs—or bias against those of other religious faiths.

Furthermore, you could run afoul of fair housing law by treating people differently simply because they do—or do not—attend religious services or identify with a religious faith. The FHA doesn’t define “religion,” but fair housing experts believe it’s broad enough to prohibit discrimination against individuals who are not affiliated with a particular religion or do not ascribe to particular religious beliefs.

Coach’s Tip: The FHA includes a narrow exemption that allows religious organizations, which own or operate housing for noncommercial purposes, to limit occupancy or give preferential treatment to members of the same religion, as long as membership in the religion is not restricted on account of race, color, or national origin.

FOLLOW 8 RULES FOR AVOIDING

RELIGIOUS DISCRIMINATION CLAIMS

Rule #1: Make Everyone Feel Welcome at Your Community

At the holidays—and all throughout the year—it’s important to make all prospects, applicants, and residents feel welcome, regardless of their religious beliefs or practices.

As communities have become more religiously and culturally diverse, your residents may celebrate a variety of religious holidays. Many celebrate Christmas or Hanukkah, while others may observe religious holidays that may be unfamiliar to you. Some celebrate cultural or spiritual occasions, such as Kwanzaa or the winter solstice, while others don’t celebrate any holidays at all. Regardless of whether or how they celebrate the holidays, all are protected from discrimination under the FHA—and can’t be treated differently because of their beliefs or practices.

Rule #2: Leave Religion Out of the Leasing Process 

Take a close look at your application policies and procedures to ensure that your community doesn’t exclude or otherwise discriminate against applicants based on their religious affiliation or beliefs.

Example: In July 2019, the Justice Department announced a settlement in a fair housing case alleging that a Michigan community discriminated on the basis of religion by prohibiting non-Christians from owning homes at the summer resort community.

In its complaint, the Justice Department alleged that a nonprofit municipal association owned the community’s land and leased lots to members who owned the cottages built on those lots. Specifically, the complaint alleged that from 1986 to 2018, the association’s bylaws required that in order to become a member of the association and thus eligible to own a cottage, an individual must, among other things, be “of Christian persuasion” and obtain a letter of recommendation from the pastor (or designated leader) of the church the individual attends.

Under the settlement, the association agreed to amend its bylaws, articles of association, and membership application materials to eliminate the religious restriction on membership [U.S. v. The Bay View Association of the United Methodist Church, Michigan, July 2019].

Rule #3: Make Sure Advertising and Marketing Practices Don’t Suggest Religious Preference

Check to ensure that your advertising and marketing practices and materials don’t suggest a preference for or against anyone based on her religion.

Under the FHA, it’s unlawful to make, print, or publish any notice, statement, or advertisement that indicates any preference, limitation, or discrimination based on race, color, religion, sex, disability, familial status, or national origin. According to federal regulations, you may not use “words, phrases, photographs, illustrations, symbols or forms which convey that dwellings are available or not available to a particular group of persons because of…religion.” According to HUD, that means that advertisements may not include explicit preferences—such as “Christian community”—or limitations—such as “No Jews.” It’s also unlawful under the FHA to advertise that you prefer only those who are members of an organized religion.

Don’t forget: Fair housing law doesn’t require proof of discriminatory intent to establish liability for making discriminatory statements. Instead, the focus is on whether the statement would suggest an unlawful preference to an “ordinary reader or listener.” Even if you don’t intend to discriminate against applicants or residents based on their religion, you could unintentionally suggest you have such a preference for members of one religion over another. Though unlikely, by itself, to lead to a fair housing complaint, evidence of an implied preference could be used against you if there is other evidence of religious discrimination.

For example, HUD has said that advertisements of descriptions of the housing community, such as “apartment complex with chapel,” or services, such as “kosher meals available,” do not on their face state a preference for persons likely to make use of those facilities and are not violations of the FHA. But that doesn’t mean that you should emphasize religious amenities, such as your community’s proximity to a particular church or other house of worship, according to fair housing experts, who warn that they may suggest a preference for members of that faith. 

HUD observes that in some cases, the name of the housing community—such as the “Roselawn Catholic Home”—or use of a religious symbol—such as a cross—in an advertisement could indicate a religious preference. Nevertheless, HUD says that it won’t be considered a fair housing violation if the ad includes a disclaimer to indicate that the housing community doesn’t discriminate on the basis of race, religion, and other protected characteristics. In most cases, however, fair housing experts caution against use of religious symbols in your advertising or marketing materials unless there are special circumstances such as, for example, when it’s part of a registered trademark or logo.

Rule #4: Aim for Inclusiveness During the Holiday Season

This time of year, many communities put up decorations, send greetings, or host festivities to promote good cheer. There’s nothing wrong with decorations and festivities to mark the holiday season, as long as they don’t appear to be promoting a particular religion or religious holiday. It’s unlawful to express a preference for—or against—anyone based on religion, so celebrating only one religious holiday—to the exclusion of others—could lead to a fair housing problem.

You can’t go wrong with secular messages, such as “Seasons Greetings” or “Happy Holidays,” and seasonal displays featuring lights, evergreens, icicles, and snowflakes. You can even include pictures of Santa Claus and signs that say, “Merry Christmas,” which have been recognized by HUD as secularized terms and symbols that don’t violate fair housing law.

When it comes to decorating common areas, it’s sometimes hard to know where to draw the line between religious and secular and symbols. Our experts warn against putting up nativity scenes, but opinions were mixed with respect to menorahs and Christmas trees. Some experts say that communities should avoid using them and any other decorations with religious connotations when decorating common areas. Others suggest calling it a “Holiday tree” and decorating it with seasonal, nonreligious lights and ornaments. Still others say menorahs and Christmas trees have become secularized—like “Merry Christmas” and Santa Claus—so it’s fine for communities to include them among other holiday decorations with other nonreligious, seasonal themes.

Coach’s Tip: Many communities hold parties and other special events during the holidays. While such events are a great amenity for your residents, make sure that the events are not religious or used to promote a particular holiday. Fair housing experts warn against calling it a Christmas party or playing Christmas carols with religious themes. Instead, keep the celebration neutral by calling it a holiday party or winter celebration and playing music celebrating winter themes. Invite all residents, regardless of their religious affiliations. Make sure residents know all are welcome but avoid any impression that they must attend holiday events.

Rule #5: Allow Residents to Display Religious Decorations Inside Their Units

Most of our fair housing experts warn against allowing residents to decorate lobbies, hallways, and other common areas since it’s up to the community to maintain them in a religiously neutral manner. Inside their units, however, residents should be allowed to display holiday decorations, including personal religious items, as long as they are in keeping with community rules.

It can get more complicated when dealing with holiday decorations on the unit’s front door, and unit interiors that are visible from outside, such as windows, patios, and balconies. As a general rule, communities have the right to enforce rules related to the appearance of those areas, but the rules must apply consistently to religious and secular objects alike. Some communities allow residents to hang religious decorations on their front doors and windows, while others have rules banning decorations of any kind in outdoor areas.

But be careful: Taking a hard line against outside decorations whatsoever may be effective, but it could trigger a complaint that the community is interfering with a resident’s religious rights.

Example: Earlier this year, a court overturned a jury verdict in a dispute between an Idaho couple and a homeowners association involving their Christmas display. The dispute dates back to 2015, when the couple notified the HOA that they intended to buy a home in the subdivision and needed a quick answer about whether the board would oppose use of the property for their Christmas program. The homeowners’ stated reason for hosting the Christmas program was to support various charities and engage in ministry.

In response, the HOA indicated that the program would violate certain community rules and pointed out that some residents were non-Christians or of other faiths. The HOA said it didn’t intend to discourage the couple from becoming part of the community, but it didn’t want to become entwined in expensive litigation to enforce longstanding rules and fill the neighborhood with hundreds of people and possible “undesirables.”

The couple bought the home and in 2015, and in 2016 they hosted the Christmas program, which involved decorating the exterior of the home with 200,000 lights, a nativity scene with a live camel, and characters in costume. Commercial busses were used to transport people to and from the program; the busses were parked in front of their home and adjacent properties. Many other people drove to the event and parked throughout the neighborhood. Hundreds of people attended the program on a nightly basis; in total, thousands attended over each five-day period.

Facing opposition from neighbors, the homeowners sued the HOA, accusing the community of discrimination and harassment against them because they were Christian. After a series of proceedings, the case went to a jury, which sided with the homeowners and awarded them $75,000 in compensatory and punitive damages.

In the latest ruling, the court overturned the verdict, ruling that the jury was unfairly prejudiced by evidence of alleged threats made by neighbors because of the Christmas program. The ruling is pending an appeal [Morris v. W. Hayden Estates First Addition Homeowners Association, Inc., Idaho, April 2019].

Coach’s Tip: As an alternative to a blanket rule banning any outside decorations, some communities permit residents to put up decorations related to holidays and other occasions—both religious and secular—on the doors and windows of their units, or on outdoor patios and decks, subject to size and space limitations. If you go that route, it’s a good idea to impose time limits to require removal of the items within a certain period after the related event.

Rule #6: Treat Residents Consistently—Regardless of Religion

Adopt policies and practices to ensure that your community doesn’t treat residents differently based on their religious affiliation or beliefs. The FHA bars communities from discrimination in the terms, conditions, or privileges of rental of a dwelling—such as higher fees or more onerous lease terms—or the provision of services or facilities at the housing community—such as withholding or delaying maintenance services—on the basis of religion. The law also prohibits communities from steering applicants to certain areas within the community because of their religion. Make sure that your entire staff understands that they may not give preferential treatment to members of their religion or less favorable treatment to members of other faiths.

It’s also unlawful to hold residents to different standards of conduct just because they are members of a particular religion. In the aftermath of the 9/11 attacks, for example, HUD warned that a housing community could be accused of religious discrimination if it acts improperly in response to complaints from neighbors about Muslim residents. While communities must be responsive to complaints from residents, HUD says that you should take action against residents only when based on legitimate property management concerns. As an example, HUD cites a neighbor’s complaint about a Muslim resident’s weekly meeting of Muslim men, whom the neighbor says appear to be “unfriendly” and might be “up to something.” If the visitors don’t disturb other residents in their peaceful enjoyment of the premises, HUD says that the housing provider could face a discrimination complaint if it asks the resident to refrain from having Muslim guests without evidence of any violation of established community rules.

Rule #7: Allow Equal Access to Your Common Areas

Allow your residents equal access to the community’s common areas, including amenities, without regard to religion and other protected characteristics. HUD regulations state that it’s unlawful to limit use of the privileges, services, or facilities associated with a dwelling based on race, color, religion, sex, disability, familial status, or national origin.

For example, some communities allow residents to use the community’s common room for family parties and similar functions. If you allow residents to reserve the room for various types of activities, then you must make it available to residents regardless of whether they want to use it for secular or religious purposes. It’s unlawful for communities to allow residents to reserve the room for card games and other social events, but to deny it to a resident who wants to use the room for a prayer meeting, according to the Justice Department.

And all residents must have equal opportunity to use amenities, regardless of their religious or cultural background. If you permit a resident to hold a Christmas party in the room, then you must allow a Jewish resident to use the room for a Hanukkah party.

On the other hand, be careful that any religious accommodations don’t infringe on the rights of others to use and enjoy your common areas. You could face a discrimination claim if you restrict access to your amenities to accommodate religious practices of a majority of your residents in a way that denies equal access to other residents.

Example: In April 2019, an appeals court ruled that a New Jersey condo community’s pool schedule discriminated against women in violation of fair housing law. Roughly two-thirds of the residents of the 55-plus community were Orthodox Jews. To accommodate Orthodox principles regarding modesty, the community adopted rules for pool use designating certain hours when only members of a single sex were allowed to swim. Though the number of hours for each sex was roughly the same, the large majority of hours in the evening were reserved for men.

The court concluded that the pool schedule discriminated in its allotment of different times to mem and women in addition to using sex as its criterion. The schedule allowed women to swim less than four hours after 5 p.m. on weeknights, compared with more than 16 hours for men. Women with regular-hour jobs had little access to the pool during the work week, and the schedule appeared to reflect particular assumptions about the roles of men and women [Curto v. A Country Place Condo. Assoc., Inc., New Jersey, April 2019].

Rule #8: Enforce Rules to Prevent Harassment By or Against Residents

Take steps to enforce rules to prevent religious harassment or other misconduct by or against residents. You shouldn’t be expected to police the behavior of your residents, but you should make it clear that bullying or any other forms of harassment based on protected characteristics won’t be tolerated.

If you receive a complaint from a resident about religious harassment by a neighbor, then it’s important to investigate and act swiftly to resolve the problem. Unless you take such complaints seriously, you could be accused of tolerating religious discrimination at your community. That could lead to a fair housing complaint and, depending on the circumstances, potential liability if a court finds that you knew about the neighbor’s religious harassment but didn’t do enough to stop it.

Example: Earlier this year, the Supreme Court let stand a ruling reinstating fair housing claims against an Illinois retirement community for harassment and retaliation. In her complaint, the resident alleged that she endured months of physical and verbal abuse by other residents because of her sexual orientation, and that despite her complaints, the community did nothing to stop it and in fact, retaliated against her because of her complaints. Further proceedings were needed to determine whether management had actual knowledge of the alleged harassment and whether they were deliberately indifferent to it [Wetzel v. Glen St. Andrew Living Community, Illinois, August 2018].

• Fair Housing Act: 42 USC §3601 et seq.