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You Make the Call: Did the tenant have a valid claim for refusing to make reasonable accommodations?

Answer: Yes

Ruling: The Pennsylvania federal court denied the landlord’s motion for summary judgment. To qualify for punitive damages, a plaintiff must show that a landlord’s denial of a reasonable accommodation “involves malicious intent or reckless or callous indifference” to the rights of others. The court concluded that the facts the tenant alleged were enough to allow a court to reach that conclusion and gave her the green light to try to prove those claims at trial [United States v. Dorchester Owners Ass’n, 2023 U.S. Dist. LEXIS 12432].

Takeaway: HUD Guidelines expressly state that you can’t make individuals with disabilities pay extra fees or deposits as a condition for receiving a requested accommodation. That includes charges for an assistance animal necessary to assist a person with a disability. In other words, if it’s reasonable for the applicant or tenant to have the animal, you must allow it without any additional charges. However, what you can do is hold the tenant responsible for any actual damage the animal does to the apartment after the lease ends. You can also hold the tenant accountable if the animal violates building rules, such as by creating a danger or nuisance to others in the building.

One decision can make a significant difference in monthly payments: whether to finance the mobile home with a personal property loan or a mortgage.

Personal property loans, known as chattel loans, have much higher interest rates than mortgages. To some owners of manufactured homes, refinancing chattel loans into mortgages could reduce monthly housing expenses.

Get the latest refinance rates

Refinancing a mobile home

To qualify for refinancing as a mortgage:

• The home must be on a permanent foundation that meets standards set by the Department of Housing and Urban Development.
• The manufactured home must be titled as real estate rather than as personal property.
• The homeowner has to own the land that the manufactured home is on. An important exception to this rule is explained below.

Big difference in interest rates

In 2012, about 68 percent of all manufactured-housing purchase loans were considered higher-priced mortgage loans, and many of them were chattel loans, according to the Consumer Financial Protection Bureau.

Interest rates on chattel loans range from 7 percent to 12.75 percent, says Ken Rishel, founder of Rishel Consulting Group in Chicago. The loans are usually for 15 or 20 years.

In contrast, the average rate for a 30-year fixed-rate loan has been well below 5 percent for all of 2014.

Rishel, whose company makes chattel loans of at least $5,000, says the interest rates are risk-based, and chattel loans are often the only choice for borrowers with poor credit. Chattel loans are the main option for owners whose mobile homes are not permanent foundations.

Converting to a new title

Some states have eased the process of converting a personal property title into a real estate title, making refinancing possible, says Marc J. Lifset, an attorney with McGlinchey Stafford in Albany, New York.

Lifset helped financial institutions lobby for the approval of that legislation in Alaska, Illinois, Iowa, Louisiana, Maryland, Missouri, Nebraska, North Dakota, Tennessee and Virginia.

"The legislation provides a clear definition of when the home is real estate and when it is not," he says. "It makes the process more certain. In many states, the definition was murky."

Getting a real estate title

A real estate attorney or title company can help with a title conversion as a first step to refinance. Owners of manufactured homes need to provide:

• A certificate of title to the home or a copy of the manufactured certificate of origin.
• The deed to the land where the home with the permanent foundation is located.

Once the owner has the real estate title in hand, the next step is to find lenders that provide mortgages on manufactured homes. The rest of the process is similar to closing a mortgage on any residential property.

Borrowing on leased land

Under some circumstances, owners of manufactured homes leasing a lot at a mobile home community can get mortgages -- even if they don't own the land beneath their feet.

The Federal Housing Administration offers a program known as Title I, designed for owners whose mobile homes are on a permanent foundation but are within a manufactured housing community.

Among the requirements for a Title 1 mortgage:

• The mobile home must be the borrower's primary residence.
• The home has to be on a rental site in a manufactured home park that conforms to FHA guidelines.
• The lease agreement must meet FHA standards.

It's not easy to find mobile home communities that meet the FHA's strict guidelines, says Rishel, whose company makes chattel loans in land-lease communities. "Not many landlords participate on the Title I program."

Few lenders offer Title I mortgages. One is 21st Mortgage, which is owned by Clayton Homes, one of the nation's largest manufacturers of mobile homes.

Costs of switching title

When a mobile home is titled as personal property, the owner pays personal property taxes. When it's titled as real estate, the owner pays real estate taxes. In many states, property taxes tend to be higher.

"The consumer has to do the math on how much they are going to save by lower interest rates, compared to how much more taxes they may be paying and what the closing costs are going to be" in a refinancing, Lifset says.

Another potential downside: If the owner has to build a permanent foundation to refinance a chattel loan, that expense has to be taken into account. Building a new foundation could cost $10,000 to $15,000, Rishel says.

"Refinancing is a valuable thing but for a limited number of people who live in manufactured homes," he says.

MHCO would like to thank Ken Rishel for providing this article:

Answer: The tenant application process is one of the least understood by landlords and managers. This lack of familiarity can result in significant liability to park owners. Here is a short primer:

Screening Criteria. The manufactured housing section of Oregon's landlord-tenant law provides that any conditions the landlord applies in approving a purchaser who will live in the community should be disclosed in the existing resident's rental or lease agreement.(1) Although those conditions must be in conformance with state and federal laws, there are no limitations or restrictions as to what criteria may be placed in the rental or lease agreement.

If you are changing your screening criteria for existing residents, you may be in violation of Oregon law, since those criteria are supposed to already be in the rental agreement, which, as you know, cannot be unilaterally amended by a landlord - subject only to specific exceptions.

MHCO's rental (Form 5A) and lease agreement (Form 5B) forms contain a number of criteria that landlords may impose, such as: (a) prior rental references; (b) unsatisfactory credit history or no credit history; (c) character references; (d) criminal history; (e) insufficient income to reasonably meet the monthly space rent and other expense obligations imposed by the rental or lease agreement; (f) the presence, number and size of pets; (g) age verification criteria if the park is a 55+ facility; (h) evidence of falsified or misleading material information; (i) refusal to sign a written lease or rental agreement; (j) additional occupants; and (k) adverse public record information.

Note that in 2013, the Oregon Legislature changed the law as it relates to "criminal history." Now, landlords and managers may not summarily reject a prospective tenant for "any" criminal history. Today, it is limited to:

- Pending criminal charges, or
- Prior criminal convictions, if they resulted from crimes that are:
o Drug-related;
o Against persons;
o Sexual in nature;
o Fraudulent in nature; or
o That could adversely affect the property, health, safety, or peaceful enjoyment of the landlord, landlord's agents, or tenants.

To remind landlords and managers, MHCO will be adding these clarifications to its rental and lease agreement forms. In the meantime, landlords and managers should adhere to the new limitations described above.

Although there may be other criteria that landlords and managers may wish to use when deciding whether to accept an applicant, the above list in the MHCO form is very comprehensive, and should be sufficient in imposing adequate guidelines when a resident wishes to sell their home on site. If you want to make a change by adding additional screening criteria, you may only do so for new residents coming into the community - not retroactively for existing residents.

Landlords and managers should become familiar with the criteria imposed in their rental agreements and rental application forms. Additionally, they should not rely upon the application information submitted to them without a thorough background check providing necessary verification. Although Oregon law imposes a 7-day or 10-day period (2) within which landlords have to respond to a submitted application, it does not prohibit landlords from imposing a longer period so long as the applicant agrees. Additionally, Oregon law expressly states that the 7-day or 10-day period does not commence if the application is incomplete or inaccurate. Accordingly, landlords and managers would be wise to immediately return any submitted application if it is incomplete - and upon discovering that the prospective tenant/purchaser provided inaccurate information, the application should also be returned. Accepting an incomplete application or continuing with the process after discovering that the applicant has provided incorrect information can result in an argument by the existing tenant or the new applicant that the landlord is intentionally delaying the process.

Conclusion. Landlords would have fewer tenant problems if they took more time during the screening process. This means resisting the temptation to fill a space quicker than the approval process actually takes. Unfortunately, the desire to have the rental flow commence quickly can result in the process becoming rushed. Landlords and managers should never allow the applicant to rush them. Nor should they ever permit an applicant to move into a home before the process has been completed and a new rental agreement signed. Lastly, fairness and uniformity in screening will help to avoid the ever-present liability that can occur under the federal and state Fair Housing laws when one applicant claims they were treated differently than another.

1 Although the law provides that the screening criteria must be in the rental or lease agreement, they may also be found in the rules and regulations. While there is no problem with this, other than redundancy, landlords should be careful to make sure that the criteria are the same. Similarly, the criteria may also be put in the Statement of Policy, but similar caution should be exercised to make them consistent. My approach is however, to avoid the risk of inconsistency by not repeating the same requirements in multiple documents. If one document gets changed and the others don't there will be an inconsistency.

2 The longer period exists if the tenant failed to give the landlord at least 10-days advance notice of intent to sell his/her home.

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) bans housing discrimination based on race, color, religion, sex, national origin, disability, and familial status.

There are two ways to prove a fair housing violation, Williams explained. The first and most common is to show intentional discrimination-what's known as disparate treatment. In these cases, the issue is whether people in similar situations were treated differently, and if so, whether that different treatment was due to that person's protected category.

The second is what's known as disparate impact. It's used to challenge a housing policy that on its face is neutral-that is, it doesn'tappear to favor one protected category over another-but when the policy is applied, it has a significantly negative impact or effect on one protected category. These cases are always based on statistical analyses using either national or local data, Williams said. It's this second category that was the focus of HUD's new guidelines on criminal background checks.

To illustrate why the use of criminal screening policies have been causing such concern, Williams cited a recent study showing racial disparities in the criminal justice system. According to the study, one in every three black males born today can expect to go to prison at some point in their lives; this compares with one in every six Latino males, and one in every 17 white males. "Racial minorities are more likely than white Americans to be arrested," according to the report. "Once arrested, they are more likely to be convicted; and once convicted, they are more likely to face stiff sentences." The conclusions of this and other similar studies have resulted in a bipartisan effort to improve the criminal justice system to remove this apparent racial bias.

Overview: HUD General Counsel Announcement

In a nutshell, HUD's new guidelines explain how the agency will evaluate fair housing claims based on the disparate impact that criminal background screening policies may have on racial and ethnic minorities. Williams explained the three-step process:

Step 1: The plaintiff must prove that a community's neutral criminal history screening process has a significant disparate impact on African Americans and Hispanics. The plaintiff could be an individual, an advocacy agency, a testing agency, or an enforcement agency like HUD or the Justice Department. To satisfy this step, the plaintiff needs statistics showing that African Americans are arrested and convicted of crimes at a significantly higher rate than whites using local or national statistics. In most cases, it's not difficult to provide these statistics. If the evidence ends, the plaintiff wins.

Step 2: Then it's up to the housing provider to identify a substantial, legitimate, nondiscriminatory business interest accomplished by the policy. One obvious reason is to improve safety and security, but HUD warns that bald assertions based on generalizations and stereotypes aren'tenough. It takes more than a personal preference to screen out all ex-offenders to justify a criminal screening policy-you'll need some statistical support for your policy. If the evidence ends, the housing provider wins.

Step 3: In the final step, the plaintiff gets another chance to win the case with proof that a different policy would meet the interests of the housing provider but do so with a much less discriminatory impact. This is where the content of your criminal history screening policy can be challenged unless the policy is narrowly tailored to meet the ultimate purpose of the policy-to protect safety, for example-without denying housing to many applicants with a criminal record who may not actually pose a risk to your property.

The bottom line: To defend your policy, you'll need to show that it accurately distinguishes between criminal conduct that indicates a demonstrable risk to residents' safety-and conduct that does not. For that, you'll need to consider statistics about recidivism-that is, the likelihood that a person convicted of a particular crime in the past is likely to be re-arrested for another crime in the future.

As an example, Williams cited a study showing that the likelihood of re-arrest following release from prison goes down over time. Although nearly half of the subjects were rearrested, it was much more likely to happen during the first few years after release. By the end of the eight-year study, arrest incidents dropped down to the point where the percentage of those re-arrested was close to anyone else-including those without a past criminal record.

Another example was a report on the kinds of crimes most often committed after release from prison. In that study, the most common felony resulting in a re-arrest was assault-at 24 percent-and the least were rape and homicide, at less than 2 percent each.

You don't have to become a criminal justice expert as long as you understand that disparate impact cases rise and fall on statistics, Williams said. These and many more studies are available to plaintiffs when challenging criminal history policies, so you should take them into account when reviewing your own policies.

TIME OUT!

Statutory Exemptions from Fair Housing Liability

When evaluating your criminal background screening criteria, consider the "statutory exemptions" from fair housing liability:

Manufacturing and distribution of drugs: Applicants with criminal convictions related to manufacturing and distribution of controlled substances as defined in Section 102 of the Controlled Substances Act can be excluded. Keep in mind, however, that a large percentage (30 percent of the entire U.S. prison population, according to FBI reports) has some type of criminal history based on drug offenses, so you should be careful when it comes to convictions for less serious offenses, such as drug possession.

Sex offender registries-lifetime registrants: Rejecting a registered sex offender (especially those who are required to register for life) is stated as a statutory exemption under the HUD tenant selection plan, Richer said. Many market-rate communities also accept this practice since there is a significant financial, safety, and reputational risk.

But beware: Sex offender registry websites in California, Nevada, and New Jersey have clauses prohibiting use of the sex offender registry information for housing eligibility. Even in those states, Richer believes that federally funded housing under HUD programs would probably still be eligible to use state registry information, but you should check with your attorney to confirm your company's position.

This is the first of four articles. Look for 'part 2' next week on MHCO.ORG.

Failure to make reasonable accommodations for a rental applicant or tenant with a disability is, perennially, the most common type of fair housing complaint, accounting for nearly 60 percent of all cases, according to HUD. Many, if not most of these complaints, involve assistance animals. So, that’s where we’ll start our analysis.

Spot the Discrimination Mistake

A landlord threatens to evict a tenant with disabilities for keeping a stray cat in her apartment in violation of the community’s no-pets policy. The tenant says the cat helps her cope with mental anxieties and asks for an exemption. The landlord says no because the cat has no special training or certification in assisting the disabled.

Pitfall: HUD and the U.S. Department of Justice (DOJ) interpret the federal Fair Housing Act (FHA) duty to make reasonable accommodations as requiring exemptions to no-pet policies necessary to enable individuals with disabilities to keep “assistance animals” that directly assist with a disability-related need. “Assistance animals” include dogs or other common domestic household animals that do work, perform tasks, provide assistance, and/or provide therapeutic emotional support for individuals with disabilities. Significantly, assistance animals need not have any specific certification or training. By contrast, under the Americans with

Disabilities Act (ADA) duty to accommodate applies onlyto “service animals” trained to do work or perform tasks for the benefit of an individual with a disability.

Thus, while the refusal of the landlord in our scenario to accommodate the stray cat might have been okay under the ADA, it violated the FHA.

Example: A Pennsylvania federal court ruled that the DOJ had a legally valid claim against a landlord that took the same position as the landlord in our scenario, and allowed the case to go to trial [United States v. Perry Homes, Inc., 2022 U.S. Dist. LEXIS 87064, 2022 WL 3021040].

Solution: Keep in mind that neither assistance animals nor service animals count as pets and that, unless the ADA applies, you must accommodate both to the point of undue hardship. You may, however, ask for information about the relationship or connection between the disability and need for the assistance animal to the extent the disability is non-observable and/or the animal provides therapeutic emotional support. In addition, you don’t have to accept an assistance or service animal that would create an unreasonable risk of harm, injury, or damage to property.

And don’t be thrown off by what the resident says or when he says it. Whenever a resident raises a disability-related reason for violating the lease or community rules, you should treat it as a reasonable accommodation request. Under the FHA, an applicant makes a request for a reasonable accommodation whenever he makes clear that he is requesting an exception, change, or adjustment to a rule, policy, practice, or service because of a disability. The law doesn’t require that requests for reasonable accommodations be made in a particular manner or at a particular time.

Don’t dismiss it as an excuse or ignore the resident’s request for an exception to the rules simply because he doesn’t appear to be disabled. The law covers a variety of physical and mental impairments, characterized by few, if any, obvious symptoms to suggest that a particular person qualifies under the FHA’s disability-related provisions. Federal guidelines permit you to request additional information necessary to evaluate the request if either the disability or the need for the requested accommodation isn’t readily apparent.

Even when you have solid evidence that a resident has violated the lease or your community’s rules, he may try to turn the tables by questioning your motives. Unless you’ve applied the rules fairly and consistently, you could suddenly find yourself on the defense if it looks as though you’re acting in a discriminatory manner.

For example, the resident may argue that you took a hard line against him for breaking the rules only because he was a member of a protected class, and his claim could get some traction if he can show that you allowed other residents—who did not share his protected characteristic—to get away with the same or similar infractions. Evidence of inconsistent enforcement of your rules could lead a court to conclude that his violation of the rules wasn’t the real reason for evicting him, but merely an excuse to cover up unlawful housing discrimination.

Avoid the temptation to bend the rules for some people, but not for others, just because you happen to be friends with them or you think they’re nice people. You may not intend to discriminate against anyone, but treating some residents better than others may give the impression that you have discriminatory reasons for holding other residents to higher standards.

By Elliot Njus | The Oregonian/OregonLive

Rent increases will be capped at 9.9% through 2020, the first full year Oregon’s new rent control law will be in effect, state economists announced Wednesday.

The Oregon Legislature this year passed Senate Bill 608, which imposed the nation’s first statewide rent control policy. The law caps rent increases at 7% plus the rate of inflation for the urban West. For 2019, that number came to 10.3%. 

Not all rentals are subject to the policy. The rent cap doesn’t apply to buildings that are less than 15 years old — an attempt to avoid a damper on housing construction — nor to government-subsidized rents. Landlords may raise rent without any cap if tenants leave of their own accord. 

Typical rents across Oregon are rising at a far slower rate than what’s allowed under the cap. 

But lawmakers who supported the policy said it would avert the biggest rent hikes that functioned as de facto evictions. Such increases, in which rents sometimes doubled or more, grabbed headlines in recent years, frequently after apartment buildings were sold to a new owner. 

The new law also requires most landlords to cite a cause, such as failure to pay rent or other lease violation, when evicting renters after the first year of tenancy.

Some “landlord-based” for-cause evictions are allowed, including the landlord moving in or a major renovation. In those cases, landlords are required to provide 90 days’ notice and pay one month’s rent to the tenant, though landlords with four or fewer units would be exempt from the payment.

-- Elliot Njus