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Fair Housing Testing - a tool used by enforcement officials and private fair housing organizations to ferret out unlawful housing discrimination. 

Fair housing testing involves paired testers—individuals with similar credentials but of different protected classes—who may contact your community by email, phone, your website, or by a site visit to check for differences in how they’re treated based on their race, national origin, or any other characteristics protected under federal, state, or local law.

Should you be worried that you could be targeted for fair housing testing? Not if you’re prepared—by ensuring your policies comply with fair housing law, treating all prospects fairly and consistently, thoroughly training your employees, and monitoring compliance on your own. Since it’s unlikely that you’ll know when an email, phone call, or a visit from a prospect is really from a fair housing tester, your best bet is to treat everyone contacting your community as if he or she is a fair housing tester.

In this issue, we’ll explain how fair housing testing works—and suggest seven rules to avoid problems if your community is ever subjected to fair housing testing. 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 because of race, color, religion, sex, national origin, familial status, or disability. In addition, many state and local fair housing laws ban discrimination based on source of income, sexual orientation and gender identity, and other characteristics.

HUD and the Justice Department are the federal agencies charged with enforcing the FHA; in states and local governments with fair housing laws substantially equivalent to the FHA, officials in those jurisdictions handle federal as well as state and local discrimination complaints. The law also allows individuals and private advocacy organizations to file a HUD complaint or file a lawsuit directly in federal court.

HUD continues to provide millions in funding to support a wide range of fair housing enforcement, education, and outreach activities. Earlier this year, HUD awarded $16.5 million to support dozens of fair housing organizations working to confront violations of fair housing law. These new grants are on top of the $23 million awarded by HUD to existing fair housing organizations last winter. Among other things, these grants allow the groups to provide fair housing enforcement through testing in the rental and sales markets, to file fair housing complaints to HUD, and to conduct investigations.

“HUD’s efforts to fight housing discrimination are force multiplied by local fair housing organizations across the country,” HUD Secretary Ben Carson said in a statement. “These grants allow our partners to carry out the important work of rooting out unfair policies and practices and enforcing our nation’s fair housing laws.”

Meanwhile, the Justice Department has its own fair housing testing program to identify and challenge cases involving a pattern or practice of housing discrimination. According to the department, the vast majority of lawsuits filed based on testing evidence involve allegations that individuals misrepresented the availability of rental units or offered different terms and conditions based on race, national origin, disability, or family status.

Fair housing testing may be triggered by a variety of circumstances. In complaint-based testing, it’s used to verify whether an individual who claims a particular community discriminated against him based on his race or other characteristic, has a legitimate complaint. If the results of testing support the individual’s claim, then the evidence gathered may be used in court or enforcement proceedings.

Example: In August 2019, the Fair Housing Center of Central Indiana (FHCCI) announced a settlement of a complaint alleging that a real estate management company’s occupancy policy at properties in Indiana and Illinois discriminated against families with children.

According to the complaint, it all started with a phone call by an Illinois woman looking for a two-bedroom unit at one of the company’s properties. Allegedly, a leasing agent told her that two-bedroom units were available, but upon learning that that she would be living there with her spouse and three children, the leasing agent allegedly said that a family of five couldn’t live in a two-bedroom unit and refused to even schedule an appointment for a viewing.

The woman contacted HOPE Fair Housing Center, a private fair housing organization, which launched an investigation into the community’s policies. A tester posed as a married woman seeking a two-bedroom apartment for her family of two adults and three children. Allegedly, an employee told her that the community couldn’t rent a two-bedroom unit to more than four people because of “fair housing laws.” That lead to a broader investigation involving fair housing testing at four other properties managed by the company in Illinois, allegedly yielding similar results.

During the course of its investigation, HOPE contacted the FHCCI to similarly investigate company’s properties in Indiana. Allegedly, FHCCI’s testing indicated that the company enforced the same two-person-per-bedroom policy in Indiana as the woman and HOPE encountered in Illinois.

The advocacy groups filed a HUD complaint, accusing the company of systemic discrimination against families with children by enforcing an occupancy policy of no more than two people per bedroom in each apartment, regardless of the unit’s square footage or whether that unit has a den, office, loft, or other feature that could provide an additional bedroom or living area for a child. HUD didn’t make a determination as to the validity of the allegations.

The company denied any wrongdoing but agreed to settle the case. Under the settlement, the company agreed to pay $60,000 in costs and damages, to change their occupancy policy so that the policy is no more restrictive than the applicable local occupancy code, and to train their employees and agents on fair housing laws and responsibilities, along with other terms to ensure compliance with fair housing laws.

Sometimes, testing isn’t triggered by a complaint, but conducted as part of a larger fair housing investigation. Testing may be initiated by a fair housing organization on its own or at the behest of federal, state, or local enforcement officials to check whether discriminatory policies or practices are a problem at one or more communities within a geographical area.

Example: In August 2019, a Virginia community agreed to settle a lawsuit brought by the ACLU, the ACLU of Virginia, and Housing Opportunities Made Equal of Virginia, Inc. (HOME), alleging that its criminal background screening policy discriminated against people on the basis of race.

The case dates back to 2017 when HOME conducted a series of tests to assess the types and severity of the barriers individuals with criminal histories face when seeking housing in Virginia. As part of this effort, the complaint alleged that HOME investigated the criminal records policy maintained at the community, including by reviewing application materials and conducting testing. 

According to the complaint, HOME conducted a series of tests, including phone calls and site visits involving HOME workers who posed as a potential tenant with a felony conviction applying for housing at the community. In each instance, an agent allegedly told the tester that because of the felony conviction, the tester’s application would automatically be rejected. 

Under the settlement, the community agreed to change its criminal record screening policy. The revised policy considers only specific categories of offenses, excludes misdemeanor convictions, and doesn’t treat people differently based on whether the applicant is on probation or parole. The policy also ensures individualized consideration for every applicant, allowing a prospect to share information as part of the application review process, including the facts or circumstances surrounding his criminal conduct, proof of rehabilitation efforts, and evidence of a good tenant or employment history before or after the conviction or conduct.

Also, as part of the settlement, the community agreed to train employees in fair housing and make a $15,000 donation to HOME to continue HOME’s systemic work to uncover and address housing discrimination. The community also will pay damages and attorney’s fees related to the matter.

7 RULES FOR BEING PREPARED FOR FAIR HOUSING TESTERS

Rule #1: Treat Everyone as a Possible Fair Housing Tester

On any given day, you’re likely to have many interactions with prospects, including phone calls, email inquiries, Internet communications, or visits to your community. They may be inquiries about advertised vacancies or the availability of certain types of units at the community.

Our fair housing experts warn that you may never know when one of these encounters is part of a fair housing test. That’s because enforcement agencies and fair housing organizations generally exercise caution in selecting and training fair housing testers.

In any given geographical area, local fair housing organizations may maintain a pool of trained fair housing testers, who are called upon infrequently to preserve their anonymity. In general, they’re volunteers who may receive a stipend for their time and travel. Because of the potential that they may be a party or witness in any resulting litigation, they’re likely to be screened for criminal history and any conflicts of interest. In fact, HUD enforcement officials go to great pains to safeguard the confidentiality of a tester’s identity. 

So even if you have an inkling that a particular prospect is a tester—because of the type of questions being asked, the way he carries himself, or the timing of similar contacts—you really can’t be sure if a given encounter is part of a fair housing test. Testers posing as prospects may call or email your office or visit the property to check for differences in treatment based on race, national origin, disability, familial status—or other characteristics protected under state or local laws.

So why take chances? Your best bet is to treat everyone contacting or visiting your community as if he or she were part of a fair housing test. Keep personal biases out of the leasing office and treat all prospects with professional courtesy, starting with the initial contact—whether online, in an email, on the phone, or during visits to your property.

Rule #2: Incorporate Fair Housing into Your Community’s SOP

Make compliance with fair housing an integral part of your community’s standard operating procedures. No doubt, you have numerous policies, practices, and procedures governing the marketing, leasing, maintenance, and other critical operations within your community. Many are based on business decisions, while others reflect legal requirements, such as landlord-tenant laws, health and safety codes, and other regulatory obligations.

Incorporating fair housing requirements serves both—it’s not only a legal requirement, but it’s a good business decision. Making your community available to any prospect who meets objective criteria to rent meets your legal obligations under fair housing laws. And by distinguishing your reputation as an equal housing provider, you’ll decrease the risk of being targeted for fair housing testing based on suspicions about discriminatory policies or practices.

Maintain a formal written fair housing policy, affirmatively stating that your community does not discriminate on the basis of race, color, religion, national origin, sex, disability, or familial status. Be sure to include any characteristics protected under state and local laws, such as sexual orientation, marital status, or source of income. Review your policies periodically, and revise them as necessary, to reflect changing rules or trends likely to be the subject of fair housing testing. Include your fair housing policy in your rental applications and leasing agreements, and post it in your office, alongside the fair housing poster required under HUD regulations. 

Coach’s Tip: HUD’s fair housing poster affirms that your community does business in accordance with the federal fair housing law. The poster is available on HUD’s website at https://www.hud.gov/sites/documents/FAIR_HOUSING_POSTER_ENG.PDF.

Rule #3: Watch What You Say in Your Advertising

Pay particular attention to your advertising and marketing policies to avoid triggering a fair housing investigation. Fair housing law bans discriminatory statements, including advertising, whether online or in other forms of media, so you should make sure your website, ads, brochures, and other media—whether in print or online—reflect your fair housing policy.

Fair housing organizations are actively monitoring online advertising for discriminatory statements, so you should avoid questionable phrases or buzzwords that suggest a preference for or against prospective renters based on characteristics protected under federal, state, or local law. For example, you shouldn’t use words or phrases that express a preference against members of protected groups—such as “no kids”—or a preference for others—such as “perfect for singles.” Federal fair housing law prohibits housing providers from denying or limiting housing to families with children under age 18, including refusing to negotiate, making discriminatory statements, and publishing discriminatory advertisements based on familial status.

Example: In August 2019, HUD charged the owners and manager of a Colorado condo community with refusing to rent to persons under 35 years of age in violation of the FHA, which prohibits discrimination based on familial status. According to HUD’s charge, the condo management team allegedly refused to rent a unit to a fair housing tester who claimed to have a 4-year-old child.

The case came to HUD’s attention when the Denver Metro Fair Housing Center filed a complaint alleging that the owners of the condominium complex discriminated against families with children when they posted ads in a local newspaper. HUD’s charge alleges that the ads described the complex as a “private, restricted adult … community” where renters must be 35 years or older. The charge further alleges that the condominium management team refused to rent a unit to a fair housing tester who claimed to have a 4-year-old child. The charge will be heard by a U.S. administrative law judge unless any party elects for the case to be heard in federal court.

Example: In April 2019, the owner of a Maine rental property and its rental agent agreed to pay $18,000 to settle allegations that they denied housing to families with children. The case came to HUD’s attention when Pine Tree Legal Assistance, Inc., filed a complaint accusing the owner and rental agent of discrimination based on familial status by refusing to negotiate with fair housing testers posing as families with children, posting discriminatory advertisements indicating that children weren’t allowed, and making discriminatory statements to fair housing testers.

“It’s hard enough for families to find places to live that meet their needs without being denied suitable housing because they have children,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement. “HUD is committed to working to ensure that housing providers comply with their Fair Housing Act obligation to treat all applicants the same, including families with children.”

Rule #4: Ensure Consistency in the Leasing Office

Focusing attention on the initial stages of the leasing process may also help you pass muster if your community is ever the subject of fair housing testing. At communities across the country, fair housing enforcement officials and advocacy groups are dispatching testers to check for differences in the way prospects are treated—in phone calls, emails, and site visits—based on protected class. Of course, differences don’t always mean discrimination, but it’s easy to jump to the conclusion that they do. That’s why it’s so important to avoid even the appearance of discriminatory intent in the way that prospects are treated.

Testing is often focused on differences in the information provided to prospects about the availability of units, so it’s important to ensure that leasing agents have accurate, up-to-date information about vacancies. The FHA makes it unlawful to discriminate against applicants for housing because of their race, color, national origin, religion, sex, familial status, or disability, including by providing different and false information about terms, conditions, and availability of rental properties.

Example: HUD recently approved a settlement between Housing Rights Center (HRC), a fair housing advocacy organization in Los Angeles, and a Virginia-based real estate investment trust company to resolve allegations that the company’s rental practices discriminated against applicants based on their race.

The case came to HUD’s attention when HRC filed a complaint alleging that the company, which operates numerous properties in the Los Angeles area, repeatedly provided more information about available units to white HRC fair housing testers who posed as prospective tenants than to black HRC testers. The company denied the allegations of racial discrimination but agreed to settle the case.

Under the settlement, the company agreed to pay $20,000 to the fair housing organization. In addition, its management and leasing staff who work with tenants at the subject property will attend fair housing training.

“Denying a rental application because of someone’s race not only robs them of a place to call home, it is also unlawful,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement. “Hopefully today’s settlement will convince other housing providers of the importance of meeting their obligation to comply with the nation’s fair housing laws.”

Similarly, be sure to give prospects the same information about the terms and conditions of tenancy, such as screening criteria, rental terms, security deposits and fees, and any other relevant information. Quoting more stringent lease terms or higher rental payments to prospects based on a protected characteristic is a violation of fair housing law.

Testers also may be looking for signs of unlawful steering—that is, guiding, directing, or discouraging prospects from living in your community or certain parts of the community based on a protected characteristic. For example, it’s a violation of fair housing law to tell Hispanic prospects that they would not be happy living in your community—or showing them only units in undesirable locations.

Example: In July 2019, HUD approved a $10,000 settlement between a California fair housing group and the agents and mortgage company for a California townhome community to resolve allegations of discrimination against African-American home seekers.

The case came to HUD’s attention when the Fair Housing Council of Riverside County (FHCRC) filed a complaint alleging that fair housing tests it conducted showed that real estate agents treated testers posing as African-American home seekers less favorably than testers posing as white home seekers. Specifically, FHCRC alleged that its tests showed that African-American testers were told that there were no homes available when there were and were required to meet tougher prequalification requirements than white testers. The community and its agents denied having engaged in any discriminatory behavior.

“A person’s race should never be a factor in determining whether they have the opportunity to obtain the housing of their choice,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement. “Today’s settlement represents HUD’s ongoing commitment to ensuring that individuals in positions to affect access to housing meet their obligation to comply with the Fair Housing Act.”

Rule #5: Provide Fair Housing Training to All Employees

All your employees, from your leasing staff to service workers in your maintenance, housekeeping, and landscaping operations, should receive periodic fair housing training. Although most testing efforts are addressed to your leasing office, interactions with any employee who interacts with the public could lead to a discrimination complaint, which in turn could trigger a fair housing test.

The training should cover the fundamentals of fair housing, including who is protected under federal law as well as any applicable state and local laws. It should also explain your community’s policies and what employees can and can’t do under fair housing law. Reinforce the importance of keeping personal biases out of the workplace and treating everyone at the community with courtesy and professionalism. Make sure employees understand the chain of command so they know where to go for help or to report any fair housing concerns or observations.

Managers should monitor how the leasing staff, particularly new employees, interacts with prospects on the phone, in site visits, and in Internet communications. Consider an open-door policy for management staff, so managers can hear what’s going on in the office—and encourage them to periodically sit in on phone calls or meetings with prospects and to tag along on tours.

Managers should reinforce good habits in employees, so good management means checking up from time to time on sales presentations, tours, applications, and so on, to see what staff members are doing. And it’s a good idea to have all employees sign an acknowledgement saying that they agree to abide by fair housing laws and that they understand that they may be monitored and recorded for training and compliance purposes.

Coach’s Tip: Our experts warn that you shouldn’t allow new hires to interact with the public without at least a basic understanding of fair housing law. Otherwise, they may inadvertently make well-intentioned, but inappropriate comments when answering the phone or meeting prospects. For example, an inexperienced employee could be overly curious about the nature of a prospect’s disability or cultural differences reflected in the prospect’s accent or appearance—just the type of conduct that could draw the attention of fair housing testers. For more information, see the Coach’s September 2019 lesson, “Fair Housing Boot Camp: Basic Training for New Hires.”

Rule #6: Shop Your Property

Shopping yourself—either by internal means or by hiring an outside shopping service—is one of the best ways to ensure that you won’t be caught off-guard from the results of a fair housing test. It’s an effective tool to monitor whether your employees are complying with fair housing laws and to identify any weaknesses—either in an employee’s performance or in the effectiveness of your training program.

You can do it informally, by asking people you know to pose as rental prospects, but many communities hire outside shopping services to contact the leasing office to monitor sales and marketing as well as fair housing issues.

Whatever means you use, it’s important to follow up to determine the root cause of any deficiencies detected during the shop. There could be a number of reasons why a leasing consultant may respond inappropriately to a shopper’s question. If it’s because the employee truly acted improperly, you should respond with disciplinary action. If the employee simply misunderstood fair housing requirements, you’ll know that the employee needs additional training.

Alternatively, the results of a shopping test may reveal a larger problem, for example, that your policy or training on a particular issue is unclear or incorrect. If that’s the case, you’ll have an opportunity to rectify the problem on your own—rather than having to address it after the fact if it surfaces for the first time during a fair housing test.

Rule #7: Keep Good Records

Good record keeping is important so you can respond accurately to complaints if, despite your best efforts, fair housing testing raises questions about seemingly discriminatory behavior. Retain records of all contacts, even if they don’t result in the rental of a unit or follow-up on initial inquiries. Keep copies of phone logs, guest cards, unit availability records, application forms and supporting documents, screening results, and any other document related to the application process.

It’s also important to keep good records to document when and how your community keeps track of available units. There’s a risk of a discrimination claim any time a prospect is told that there are no units available within a community. And it’s hard to defend against such claims if it turns out that the information was faulty, or if a prospect is turned away on the same day as another prospect was told that a unit was available. To ensure accurate, consistent responses to inquiries about available units, establish a process to document when units become available, and make sure everyone on your staff has up-to-date information.

Coach’s Tip: Keep your written records for as long as possible, so you can use them to defend yourself if you’re sued. Fair housing complainants have up to two years after the discrimination occurs to file in federal court or up to one year to file with HUD. And some prospects or testers may have up to six years to file a civil rights lawsuit. So it’s a good idea to check with your attorney before discarding old records.

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

Answer to Question 1: Generally, no. However, this isn'ta license to be rude to them. Let's start with the basics: If you are a legal 55+ community, you are not required to admit as residents, persons with children, i.e. those under the age of 18. If there are children in the community (perhaps before the facility converted to 55+, or simply because less than 20% of all spaces are occupied by persons with children), the park may do things that it could not do if it was a family park, such as prohibit children's Big Wheels and bicycles in the street. Generally, however, the best approach is to strive for 100% compliance with the 55+ laws in terms of occupancy. If you want to be a "safe" 55+ community, you will have rules that expressly say so; a rental/lease agreement that expressly says so; application and tenant home sale provisions that limit spaces to at least one occupant 55+; and generally hold yourself out in all advertising as a 55+ community. Of course, seniors are permitted to bring children (e.g. grandchildren, etc.) into the community, but the rules may place limits on the amount of time they may remain there.

Answer to Question 2: You need to go through the formal rule change process described in the statute. A rule that is not legally enacted, isn'treally an enforceable rule. However, you should immediately issue a written notice to all residents that based upon legal advice, those rules (identifying them) that appear to be discriminatory against children, will not be enforced. If you own a family park and are concerned that your rules may appear to "target" children, you should consult with your attorney for advice on how to proceed. Note that even if your rules don't appear to target children, if they, in fact, affect the activities of children more heavily than adults, they could still be deemed to be discriminatory (e.g. occupancy limits). And if you are a family park, but you have over 80% of the spaces occupied by at least one person age 55 or over, you should ask your attorney about "converting" to become a legal 55+ community. Until you do, even though 99% of the community's spaces are occupied by seniors, you're still a family park, and subject to the anti-discrimination laws protecting children.

Answer 1: Generally, no. However, this isn'ta license to be rude to them. Let's start with the basics: If you are a legal 55+ community, you are not required to admit as residents, persons with children, i.e. those under the age of 18. If there are children in the community (perhaps before the facility converted to 55+, or simply because less than 20% of all spaces are occupied by persons with children), the park may do things that it could not do if it was a family park, such as prohibit children's Big Wheels and bicycles in the street. Generally, however, the best approach is to strive for 100% compliance with the 55+ laws in terms of occupancy. If you want to be a "safe" 55+ community, you will have rules that expressly say so; a rental/lease agreement that expressly says so; application and tenant home sale provisions that limit spaces to at least one occupant 55+; and generally hold yourself out in all advertising as a 55+ community. Of course, seniors are permitted to bring children (e.g. grandchildren, etc.) into the community, but the rules may place limits on the amount of time they may remain there.

Answer 2: You need to go through the formal rule change process described in the statute. A rule that is not legally enacted, isn'treally an enforceable rule. However, you should immediately issue a written notice to all residents that based upon legal advice, those rules (identifying them) that appear to be discriminatory against children, will not be enforced. If you own a family park and are concerned that your rules may appear to "target" children, you should consult with your attorney for advice on how to proceed. Note that even if your rules don't appear to target children, if they, in fact, affect the activities of children more heavily than adults, they could still be deemed to be discriminatory (e.g. occupancy limits). And if you are a family park, but you have over 80% of the spaces occupied by at least one person age 55 or over, you should ask your attorney about "converting" to become a legal 55+ community. Until you do, even though 99% of the community's spaces are occupied by seniors, you're still a family park, and subject to the anti-discrimination laws protecting children.

EXECUTIVE RULE NO. 388 ADDENDUM

Declaration of Emergency-Additional Measures

Multnomah County/Portland. Effective immediately, Multnomah County (which includes the City of Portland) has issued a temporary moratorium on nonpayment of rent evictions caused by wage loss resulting from COVID-19.

To establish eligibility, affected tenants must:

1. Demonstrate a substantial loss of income, through documentation or other objectively verifiable means, resulting from the COVID-19 Pandemic (including County, State, and Federal restrictions imposed to mitigate its spread); and 

2. Notify their landlords on or before the day rent is duethat they are unable to pay rent due to a substantial loss of income as a result of the COVID-19 pandemic.

The Moratorium does not declare that rent is forgiven, or is not otherwise due on time. It merely imposes a hold on eviction proceedings where the nonpayment results from a verifiable and documented loss of income due to COVID 19. 

For example, a restaurant service worker who no longer has a job due to closure would likely be eligible under this Moratorium if timely notification is made to the landlord.

The Executive Rule clarifies that:

• Nothing in the Moratorium relieves tenants of liability for unpaid rent;
• Any deferred rent must be paid within six months after expiration of Oregon’s Declaration of Emergency;
• No late fees may be charged for rent that has been deferred due to the Moratorium;
• Landlord may not file for eviction due to unpaid rent deferred by the Moratorium.

Multnomah County Circuit Court hearings for eviction proceedings are suspended until April 30, 2020, or later.  So the question for landlords is how to proceed if there is a non-payment of rent for which the tenant has not sought, or has not qualified for, rent deferral under the Executive Rule? 

Should a 72-hour notice be sent? What happens if it is not paid? Can an eviction complaint be filed, even though the FED court is closed?

These are judgment calls up to each landlord. Much depends on the tenant. Is he/she a serial late-payer, in which case, this Moratorium might come as a welcome excuse for nonpayment.  In other cases, the tenant may be legitimately short of funds due to COVID-related job loss. In the former case, perhaps the 72-hour notice should be sent – after all, there is a non-curable right of termination when three such notices are sent within a rolling 12-month period. The same approach could be said about filing for eviction, even though the courts are currently closed.

For landlords of communities within Multnomah County/City of Portland, they should inform their tenants about the Moratorium, so they can apply for the Moratorium, i.e. rent deferral. Otherwise, if rent is not paid, a landlord is left to wonder about the cause. With non-communicative tenants, written notices are the only real alternative, even if landlords cannot act on them right now.  

The Rest of Oregon.Subject to jurisdictional changes in other cities or counties, at the current time,there are no abate/deferral of rent laws similar to those discussed above. However, residents elsewhere are seeking rent concessions, and some landlords may be willing to voluntarily cooperate. 

Accordingly, MHCO felt that the Multnomah County/Portland model had certain merits, since we felt it was better for landlords to adopt voluntary arrangements, such as partial payments consistent with ORS 90.417, versus having residents unilaterally paying reduced rent or nothing at all with no explanation.  Although we do not agree with the mandatory moratorium on non-payment of rent evictions, that issue is, for now, moot, since Oregon circuit courts are closed to such proceedings.

What MHCO is Doing.  We are creating two new forms to address rent deferrals. The first one is limited to communities located withinthe Multnomah County/City of Portland area (Form 13-A). The second one is similar to the first insofar as allowing deferred/partial payments, but apples to the rest of the state (Form 13-B).  Both forms have certain similarities, although Form 13-B gives more latitude to negotiate with tenants over the length of the repayment period. The Multnomah County/Portland Form 13-A mandates a 6-month term.

Final Note.  When using either form, it is important to remember that resident participation in both rent deferral programs is based upon several prerequisites:

1. The request and documentation must occur before the applicable rental period for which the relief is sought; 
2. There must be evidence of actual or impending “substantial loss of income”;
3.  The evidence must be in the form of “documentation” or through other “objectively verifiable means”; and
4. The loss of income must “result” from the COVID-19 Pandemic.  

Lastly, this is not to suggest that if a resident was in dire straits for reasons unrelated to COVID-19, landlords should not try to assist if possible. We’re all in this together.

COVID 19 - Nonpayment of Rent In Multnomah County/City of Portland And The Rest of Oregon

Declaration of Emergency-Additional Measures

Multnomah County/Portland. Effective immediately, Multnomah County (which includes the City of Portland) has issued a temporary moratorium on nonpayment of rent evictions caused by wage loss resulting from COVID-19.

To establish eligibility, affected tenants must:

1. Demonstrate a substantial loss of income, through documentation or other objectively verifiable means, resulting from the COVID-19 Pandemic (including County, State, and Federal restrictions imposed to mitigate its spread); and 

2. Notify their landlords on or before the day rent is duethat they are unable to pay rent due to a substantial loss of income as a result of the COVID-19 pandemic.

The Moratorium does not declare that rent is forgiven, or is not otherwise due on time. It merely imposes a hold on eviction proceedings where the nonpayment results from a verifiable and documented loss of income due to COVID 19. 

For example, a restaurant service worker who no longer has a job due to closure would likely be eligible under this Moratorium if timely notification is made to the landlord.

The Executive Rule clarifies that:

• Nothing in the Moratorium relieves tenants of liability for unpaid rent;
• Any deferred rent must be paid within six months after expiration of Oregon’s Declaration of Emergency;
• No late fees may be charged for rent that has been deferred due to the Moratorium;
• Landlord may not file for eviction due to unpaid rent deferred by the Moratorium.

Multnomah County Circuit Court hearings for eviction proceedings are suspended until April 30, 2020, or later.  So the question for landlords is how to proceed if there is a non-payment of rent for which the tenant has not sought, or has not qualified for, rent deferral under the Executive Rule? 

Should a 72-hour notice be sent? What happens if it is not paid? Can an eviction complaint be filed, even though the FED court is closed?

These are judgment calls up to each landlord. Much depends on the tenant. Is he/she a serial late-payer, in which case, this Moratorium might come as a welcome excuse for nonpayment.  In other cases, the tenant may be legitimately short of funds due to COVID-related job loss. In the former case, perhaps the 72-hour notice should be sent – after all, there is a non-curable right of termination when three such notices are sent within a rolling 12-month period. The same approach could be said about filing for eviction, even though the courts are currently closed.

For landlords of communities within Multnomah County/City of Portland, they should inform their tenants about the Moratorium, so they can apply for the Moratorium, i.e. rent deferral. Otherwise, if rent is not paid, a landlord is left to wonder about the cause. With non-communicative tenants, written notices are the only real alternative, even if landlords cannot act on them right now.  

The Rest of Oregon.  Subject to jurisdictional changes in other cities or counties, at the current time,there are no abate/deferral of rent laws similar to those discussed above. However, residents elsewhere are seeking rent concessions, and some landlords may be willing to voluntarily cooperate. 

Accordingly, MHCO felt that the Multnomah County/Portland model had certain merits, since we felt it was better for landlords to adopt voluntary arrangements, such as partial payments consistent with ORS 90.417, versus having residents unilaterally paying reduced rent or nothing at all with no explanation.  Although we do not agree with the mandatory moratorium on non-payment of rent evictions, that issue is, for now, moot, since Oregon circuit courts are closed to such proceedings.

What MHCO is Doing.  We are creating two new forms to address rent deferrals. The first one is limited to communities located withinthe Multnomah County/City of Portland area (Form 13-A). The second one is similar to the first insofar as allowing deferred/partial payments, but apples to the rest of the state (Form 13-B).  Both forms have certain similarities, although Form 13-B gives more latitude to negotiate with tenants over the length of the repayment period. The Multnomah County/Portland Form 13-A mandates a 6-month term.

Final Note.  When using either form, it is important to remember that resident participation in both rent deferral programs is based upon several prerequisites:

1. The request and documentation must occur before the applicable rental period for which the relief is sought; 
2. There must be evidence of actual or impending “substantial loss of income”;
3.  The evidence must be in the form of “documentation” or through other “objectively verifiable means”; and
4. The loss of income must “result” from the COVID-19 Pandemic.  

Lastly, this is not to suggest that if a resident was in dire straits for reasons unrelated to COVID-19, landlords should not try to assist if possible. We’re all in this together.

Answer: This fact pattern should be a cautionary tale for all park owners and managers about the risk of letting too much time elapse between the violation and legal action. In order to fully answer the question, I need to assume certain facts. First, I assume that the rules clearly do not permit one to occupy a home without management approval. Secondly, I assume that some form of permitted subleasing is OK, so long as the subtenant is approved by management. Third, I assume that someone - presumably the father - has been paying the rent.

If rent has been accepted with knowledge of this violation, it would be deemed to have been waived after the second acceptance of rent - regardless of who paid it. Clearly, if the rules prohibit this, as does the rental agreement and law, action should have been taken the moment she refused to cooperate.

The best solution may be for the father to proceed with the eviction, since he is a "landlord" under the non-manufactured housing side of the Landlord-Tenant law. Clearly, he can work it out with her and/or the court, better than management working with the recalcitrant occupant, who has already established her unwillingness to cooperate. Besides, why should the park absorb this expense, when it is really between the father as a "landlord" and his daughter as the "tenant." (I don't know why the judge sent them home, but suspect it was to try to resolve it as a family matter rather than a court matter.)

As for whether to accept the rent, it's already pretty late to be worried about "waiver" since that has long since been confirmed to have occurred. Nevertheless, I would NOT accept the rent until this matter is resolved.

The problem with park management doing the eviction based upon an "unauthorized occupant," violation, is that it's too late to enforce, in my opinion. However, your question about a "No-cause" eviction suggests that you believe this might be a viable alternative - i.e. the legal basis for eviction arises under the non-manufactured housing side of the statutes. I don't think so. First, because the manufactured housing side of the law still applies vis a vis the father, and regardless, rent has been accepted, making the waiver argument a real possibility.

Answer: This fact patter should be a cautionary tale for all park owners and managers about the risk of letting too much time elapse between the violation and legal action. In order to fully answer the question, I need to assume certain facts. First, I assume that the rules clearly do not permit one to occupy a home without management approval. Secondly, I assume that some form of permitted subleasing is OK, so long as the subtenant is approved by management. Third, I assume that someone - presumably the father - has been paying the rent.

If rent has been accepted with knowledge of this violation, it would be deemed to have been waived after the second acceptance of rent - regardless of who paid it. Clearly, if the rules prohibit this, as does the rental agreement and law, action should have been taken the moment she refused to cooperate.

The best solution may be for the father to proceed with the eviction, since he is a "landlord" under the non-manufactured housing side of the Landlord-Tenant law. Clearly, he can work it out with her and/or the court, better than management working with the recalcitrant occupant, who has already established her unwillingness to cooperate. Besides, why should the park absorb this expense, when it is really between the father as a "landlord" and his daughter as the "tenant." (I don't know why the judge sent them home, but suspect it was to try to resolve it as a family matter rather than a court matter.)

As for whether to accept the rent, it's already pretty late to be worried about "waiver" since that has long since been confirmed to have occurred. Nevertheless, I would NOT accept the rent until this matter is resolved.

The problem with park management doing the eviction based upon an "unauthorized occupant," violation, is that it's too late to enforce, in my opinion. However, your question about a "No-cause" eviction suggests that you believe this might be a viable alternative - i.e. the legal basis for eviction arises under the non-manufactured housing side of the statutes. I don't think so. First, because the manufactured housing side of the law still applies vis a vis the father, and regardless, rent has been accepted, making the waiver argument a real possibility.

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;

The U.S. Supreme Court Weighs In. On June 25, 2015, the United States Supreme Court, in Texas Dept. of Housing vs. Inclusive Communities, ruled that under certain circumstances, disparate impact theory can provide the basis for liability in matters pertaining to the sale and rental of housing.

The factual background of the case is as follows: In 2008, Inclusive Communities, a Dallas non-profit, sued the Texas Department of Housing, claiming that the state was awarding tax credits for the construction of affordable housing more frequently in minority neighborhoods than in Caucasian neighborhoods. They argued that this practice resulted in a higher concentration of low-income housing in minority neighborhoods, thus perpetuating de facto segregation in violation of the Fair Housing Act.

The lower federal district court had ruled in favor of Inclusive Communities and the Fifth Circuit agreed, requiring Texas to allocate the subsidies more evenly. The Texas Department of Housing appealed to the U.S. Supreme Court, arguing that it was on the horns of a dilemma: On the one hand it was required not to discriminate based on race, and on the other, it was required to issue housing credits that disproportionally [albeit unintentionally] benefitted neighborhoods with large minority populations.

Thus, so goes the argument, disparate impact theory has created a perverse incentive for businesses, lenders, and municipalities to subtly engage in a form of “reverse discrimination” i.e. benefiting certain protected classes, in order to avoid disparate impact claims. Ironically, in Inclusive Communities, that appears to be exactly what occurred, i.e. the state of Texas tilted in favor of the neighborhoods populated with minorities, rather than poor white communities, in order to avoid a claim of disparate impact against the minorities. But ironically, disparate impact theory can be a two-way street; in the Inclusive Communities case, Texas’s efforts to avoid disparate impacts resulted in exactly what it sought to avoid.

The Majority Opinion. Justice Anthony M. Kennedy wrote for the Majority.[4]

Although the decision was based upon multiple grounds, I will address the most basic – i.e. those relying upon the text of the FHA, rather than delving into the Court’s discussion of prior case holdings.

In order to put the issue in sharp relief, it is important to remember the difference between conduct vs. consequences. One the one hand, the argument is that the FHA only outlaws conduct, i.e. discrimination based upon (or because of) race, color, religion, etc. On the other hand, there are those who believe that the FHA also proscribes consequences, i.e. outcomes that are discriminatory, even though not intentional.

1. Justice Kennedy’s opinion relied upon Section 804(a) of the FHA, which provides that it is unlawful:

“To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the  sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.”   42 U. S. C. §3604(a). [Underscore mine. ~ PCQ]

He also pointed to Section 805(b) of the Act, which provides that:

“It shall be unlawful for any person or other entity whose business includes engaging in real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.” §3605(a). [Underscore mine. ~ PCQ]

Based upon the text underscored above, he concluded that:

“Congress’ use of the phrase “otherwise make unavailable” refers to the consequences of an action rather than the actor’s intent. See United States v. Giles, 300 U. S. 41, 48 (1937) (explaining that the “word ‘make’ has many meanings, among them ‘[t]o cause to exist, appear or occur’” (quoting Webster’s New International Dictionary 1485 (2d ed. 1934)). This results-oriented language counsels in favor of recognizing disparate-impact liability. See Smith, supra, at 236. The Court has construed statutory language similar to §805(a) to include disparate-impact liability. See, e.g., Board of Ed. of City School Dist. of New York v. Harris, 444 U. S. 130, 140–141 (1979) (holding the term “discriminat[e]” encompassed disparate-impact liability in the context of a statute’s text, history, purpose, and structure).” [Underscore mine ~ PCQ]

1. The Majority’s next major argument was based upon the fact that although disparate impact theory had been recognized in the lower federal courts, when Congress had the chance to clarify the matter in its 1988 amendments to the Act, it did not do so:

“In addition, it is of crucial importance that the existence of disparate-impact liability is supported by amendments to the FHA that Congress enacted in 1988. By that time, all nine Courts of Appeals to have addressed the question had concluded the Fair Housing Act encompassed disparate-impact claims.[5]

***

When it amended the FHA, Congress was aware of this unanimous precedent. And with that understanding, it made a considered judgment to retain the relevant statutory text.

***

Against this background understanding in the legal and regulatory system, Congress’ decision in 1988 to amend the FHA while still adhering to the operative language in §§804(a) and 805(a) is convincing support for the conclusion that Congress accepted and ratified the unanimous holdings of the Courts of Appeals finding disparate-impact liability. “If a word or phrase has been . . . given a uniform interpretation by inferior courts . . . , a later version of that act perpetuating the wording is presumed to carry forward that interpretation.”

Then in a somewhat about-face, the Majority identified what it called three “exemptions” from liability in the 1988 amendments to the Act[6] that it said “…assume the existence of disparate impact claims.” In other words, although Justice Kennedy acknowledged that the 1988 did not expressly identify disparate impact as a violation of the FHA, he focused on certain provisions of the 1988 Amendments he believed would not have been created, but for the existence of disparate impact claims. He opined:

“The most logical conclusion is that the three amendments were deemed necessary because Congress presupposed disparate impact under the FHA as it had been enacted in 1968. [Underscore mine. ~ PCQ]

***

In short, the 1988 amendments signal that Congress ratified disparate-impact liability.”

I focus on the above two arguments, since without them, the tertiary arguments – which I will not address – are insufficient to stand on their own.

However, in an effort to clarify that disparate impact claims relying solely upon mere statistical outcomes are insufficient, Justice Kennedy wrote:

“In a similar vein, a disparate-impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity. A robust causality requirement ensures that “[r]acial imbalance . . . does not, without more, establish a prima facie case of disparate impact” and thus protects defendants from being held liable for racial disparities they did not create.  

***

Courts must therefore examine with care whether a plaintiff has made out a prima facie case of disparate impact and prompt resolution of these cases is important. A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact.

*** 

It must be noted further that, even when courts do find liability under a disparate-impact theory, their remedial orders must be consistent with the Constitution. Remedial orders in disparate-impact cases should concentrate on the elimination of the offending practice that “arbitrar[ily] . . . operate[s] invidiously to discriminate on the basis of rac[e].” Ibid. If additional measures are adopted, courts should strive to design them to eliminate racial disparities through race-neutral means.”

The Dissenting Opinion. Writing for the minority, Justice Samuel A. Alioto looked directly to the text of the Fair Housing Act, and correctly noted there was nothing in that law to support non-intentional discrimination.

He pointed to the 2010 case of Gallagher v. Magner, as a cautionary tale of how disparate impact theory can result in bizarre and unpredictable results. In Magner, the plaintiff slumlords landlords, challenged the efforts of St. Paul, Minnesota to combat rats and other unsafe conditions in the city’s poorer rental housing neighborhoods, by aggressively enforcing the local housing codes.

Plaintiffs argued that these enhanced code enforcement efforts drove up housing rents, thus having a “disparate impact” on minorities, who were more likely to be lower income.  The U.S. Supreme Court had agreed to hear the case, but before it was scheduled, the litigants jointly agreed to dismiss, thus paving the way for Inclusive Communities to become a footnote in Fair Housing history.

Quoting from the first paragraph of Justice Alito’s vigorous dissent:  

“No one wants to live in a rat’s nest. Yet in Gallagher v. Magner, 619 F. 3d 823 (2010), a case that we agreed to review several Terms ago, the Eighth Circuit held that the Fair Housing Act (or FHA), 42 U. S. C. §3601 et seq., could be used to attack St. Paul, Minnesota’s efforts to combat “rodent infestation” and other violations of the city’s housing code. 619 F. 3d, at 830. The court agreed that there was no basis to “infer discriminatory intent” on the part of St. Paul. Id., at 833. Even so, it concluded that the city’s “aggressive enforcement of the Housing Code” was actionable because making landlords respond to “rodent infestation, missing dead-bolt locks, inadequate sanitation facilities, inadequate heat, inoperable smoke detectors, broken or missing doors,” and the like increased the price of rent. Id., at 830, 835. Since minorities were statistically more likely to fall into “the bottom bracket for household adjusted median family income,” they were disproportionately affected by those rent increases, i.e., there was a “disparate impact.” Id., at 834. The upshot was that even St. Paul’s good-faith attempt to ensure minimally acceptable housing for its poorest residents could not ward off a disparate-impact lawsuit.

Today, the Court embraces the same theory that drove the decision in Magner. (footnote omitted.) This is a serious mistake.”

Justice Alito rejected the Majority’s wordsmithing, and focused on the plain language of Section 804 of the FHA:

“I begin with the text. Section 804(a) of the FHA makes it unlawful “[t]o refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” 42 U. S. C. §3604(a) (emphasis added). Similarly, §805(a) prohibits any party “whose business includes engaging in residential real estate-related transactions” from “discriminat[ing] against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.” §3605(a) (emphasis added).

In both sections, the key phrase is “because of.” These provisions list covered actions (“refus[ing] to sell or rent  . . . a dwelling,” “refus[ing] to negotiate for the sale or rental of . . . a dwelling,” “discriminat[ing]” in a residential real estate transaction, etc.) and protected characteristics (“race,” “religion,” etc.). The link between the actions and the protected characteristics is “because of.”

What “because of ” means is no mystery. Two Terms ago, we held that “the ordinary meaning of ‘because of ’ is ‘by reason of ’ or ‘on account of.’”

***

Without torturing the English language, the meaning of these provisions of the FHA cannot be denied. They make it unlawful to engage in any of the covered actions “because  of ”— meaning  “by  reason  of ”  or  “on  account  of,” ….

Put another way, “the terms [after] the ‘because of ’ clauses in the FHA supply the prohibited motivations for the intentional acts . . . that the Act makes unlawful.” *** Congress accordingly outlawed the covered actions only when they are motivated by race or one of the other protected characteristics. [Underscore mine.]

The Dissent also rejects the Majority’s theory that just because Section 804(a) of the FHA used the phrase “or otherwise make available” signaled Congressional intent to include disparate impact theory in the law.  Justice Alito wrote:

“It is anachronistic to think that Congress authorized disparate-impact claims in 1968 but packaged that striking innovation so imperceptibly in the FHA’s text.”

It is perhaps the coup de grâce of legal debate to remind an opponent that their current position conflicts with their prior position. Justice Alito did so when he reminded the U.S. Solicitor General, arguing on behalf of HUD, that the United States had previously claimed that the FHA did not recognize disparate impact:

“Shortly before the 1988 amendments were adopted, the United States formally argued in this Court that the FHA prohibits only intentional discrimination. See Brief for United States as Amicus Curiae in Huntington v. Huntington Branch, NAACP, O. T. 1988, No. 87–1961, p. 15.

(“An action taken because of some factor other than race, i.e., financial means, even if it causes a discriminatory effect, is not an example of the intentional discrimination outlawed by the statute”); id., at 14 (“The words ‘because of ’ plainly connote a causal connection between the housing- related action and  the  person’s  race  or  color”).(footnote omitted)  This was the same position that the United States had taken in lower courts for years.”

Although the dissent continued to address other, more arcane, issues in the disparate impact debate, the theme was the same:

“The FHA is not ambiguous. The FHA prohibits only disparate treatment, not disparate impact. It is a bedrock rule that an agency can never “rewrite clear statutory terms to suit its own sense of how the statute should operate.” [Underscore mine.]

If we acknowledge that judges in all courts, from the lowest to the highest, do not begin writing legal opinions without first knowing how their decision will end, then we must conclude that their published opinions represent little more than the written justification for a decision already reached. In other words, the opinion is written to justify the conclusion.

In the majority’s written opinion, it is apparent they dug deep and hard to find justification for a theory of liability never expressed, described, or proscribed, in either the Fair Housing Act of 1968, or the Fair Housing Amendments Act of 1988. In doing so, it was forced to rely upon intellectual “constructs” based not upon words, but inferences.

Thus, despite the clear use of express proscriptions against discrimination based upon conduct in the FHA, the court construed the words “to otherwise make unavailable,” (with no supporting legislative history) to mean that a statistical outcome, with no prior intent, is illegal under the Act.  Justice Alito’s response was akin to calling the Majority’s theory puffery: “It is anachronistic to think that Congress authorized disparate-impact claims in 1968 but packaged that striking innovation so imperceptibly in the FHA’s text.”

And, doubling down on the same theory, the Majority concluded that since several lower courts had previously recognized disparate impact theory before the Act was amended in 1988, the failure to disavow it in the amendments (again with no supporting legislative history), must have meant Congress intended to adopt the theory – to which Justice Alito respond in his dissent: “…this Court does not interpret statutes by asking for ‘a show of hands’”.[7] 

Although Justice Kennedy sought to contain the inevitable flood of litigation invited by the Majority’s decision (“…a disparate-impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity.”), there is little question that the country’s class action attorneys are already sharpening their knives.

Although the Inclusive Communities case will be followed by years of litigation and rulings over what additional evidence must accompany a disparate impact claim, the die is cast. Perhaps worst of all is the fact that the Majority chose to make its decision based not upon what the FHA says, but upon what it failed to say. This is a very poor rationale upon which to interpret Congressional intent. It is also very poor precedent for municipalities to follow when seeking to improve housing availability.  Applying the Court’s rationale to the Mauger case, St. Paul would have been prohibited from enforcing its own rat abatement programs in poor neighborhoods, since “statistically” that is where the protected classes live.

What Does This Have To Do With Occupancy Limits?  After the Supreme Court’s decision in the Inclusive Communities case, occupancy limits imposed in manufactured housing communities, must be very carefully enforced – if at all.

Under the federal and state fair housing laws, discrimination based upon “familial status” is prohibited. According to the Oregon Fair Housing Council, Familial status

“…means having a child under age 18 in the household, whether living with a parent, a legal custodian, or their designee. It also covers a woman who is pregnant, and people in the process of adopting or gaining custody of a child/children.”

Thus, under the Inclusive Communities holding, by placing occupancy limits for homes in manufactured housing parks, it has the unintended consequence of imposing a disparate impact on persons with children under the age of 18.

 ORS 90.510(7) provides as follows:

(a) A landlord who rents a space for a manufactured dwelling or floating home may adopt a rule or regulation regarding occupancy guidelines. If adopted, an occupancy guideline in a facility must be based on reasonable factors and not be more restrictive than limiting occupancy to two people per bedroom.

(b)As used in this subsection:

(A)Reasonable factors may include but are not limited to:

(i)The size of the dwelling.

(ii)The size of the rented space. (Emphasis added).

Unfortunately, while federal law gives lip service to a 2-person per bedroom limitation, it is not etched in stone, as Oregon’s law suggests. Since federal law is more restrictive (i.e. it recognizes exceptions, e.g. use of the living room for sleeping), it supersedes state law. This means that park owners and managers are not safe by simply imposing a hard and fast 2-persons per bedroom rule. The factors set forth in ORS 90.510(7)(b) must be very carefully and prudently applied – if occupancy limits are to be imposed at all.

In its FAQs, the Oregon Fair Housing Council says:

Can a housing provider set limits on the number of occupants?

Overly restrictive occupancy standards can have a disproportionate effect on families with children and are, therefore, illegal. According to HUD, any occupancy standards in housing should not be more restrictive than two individuals per bedroom, assuming average sized bedrooms.

Conclusion.  Park owners and managers may have had a “safe harbor” under ORS 90.510(7) in the past. After Inclusive Communities, in which the U.S. Supreme Court - for the first time – approved disparate impact theory under the Fair Housing Act, as amended, there is no question that for communities open to families (as opposed to 55+ communities), occupancy limits (except in rare cases, such as limitations on well water or sewage facilities), occupancy limits or charges for extra occupants, should be avoided, or very carefully applied on a case-by-case basis.  

[1] Per the Oregon Fair Housing Council : "Familial status" means having a child under age 18 in the household, whether living with a parent, a legal custodian, or their designee. It also covers a woman who is pregnant, and people in the process of adopting or gaining custody of a child/children.

[2] 42 U. S. C. §3604(a)

[3] And, in fact, as discussed below, the actions were taken with the best of intentions of helping members of those protected classes.

[4]  Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor and Elena Kagan, joined Kennedy for the Majority. Justice Samuel A. Alito Jr. penned the dissenting opinion, and was joined by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia and Clarence Thomas (who wrote a separate dissent, agreeing with the minority, but addressing a separate issue raised by the Majority).

[5] Justice Alito, writing for the minority, summarily disposed of this argument by noting: “…this Court does not interpret statutes by asking for ‘a show of hands’”. 

[6] “First, Congress added a clarifying provision: “Nothing in [the FHA] prohibits a person engaged in the business of furnishing appraisals of real property to take into consideration factors other than race, color, religion, national origin, sex, handicap, or familial status.” 42 U. S. C. §3605(c). Second, Congress provided: “Nothing in [the FHA] prohibits conduct against a person because such person has been convicted by any court of competent jurisdiction of the illegal manufacture or distribution of a controlled substance.” §3607(b)(4). And finally, Congress specified: “Nothing in [the FHA] limits the applicability of any reasonable . . . restrictions regarding the maximum number of occupants permitted to occupy a dwelling.” §3607(b)(1).”

[7] A likely reason that Congress ignored mentioning disparate impact was that the Republicans and Democrats could not agree upon the theory, and simply left it out of the legislation, agreeing to disagree.  That is not an unusual approach, when the alternative would mean bickering and delay on all of the remaining points agreed upon. If there was no legislative history indicating acceptance of the theory, it is specious to assign as the reason that Congress intended to include it. Silence may signal consent in some matters of daily life, but not when it comes to legislative enactments of the magnitude and importance of fair housing law.

Evictions.

Most evictions are either for failure to pay rent or violation of rules. An eviction (formally known as a "forcible entry and detainer" or "FED") is an expedited legal procedure designed to allow landlords to obtain possession of their property through the court system. Oregon does not require that landlords obtain an attorney in order to file an FED. The necessary summons and complaint can be obtained from the courthouse and they can be filed and served quickly. This has its advantages and disadvantages: It is good insofar as it keeps the cost of the process down, but it is bad if the owner or manager fails to strictly follow all of the legal procedures required by the statutes. Accordingly, for the inexperienced manager or new owner, it is strongly, recommended that guidance first be sought, either through the MHCO, from an experienced attorney, or by consulting with a knowledgeable community management company.

Since the FED process is designed to be a "summary" or quick proceeding, the law imposes upon those seeking its assistance, i.e. owners and managers, the duty to strictly comply with all of the requirements set out in the statutes. This means, for instance, that the written notice that must precede the filing of the complaint (e.g the 72-hour nonpayment of rent notice or the 30-day notice of termination for cause) must be properly filled out to the letter. Since the notice is required to be attached to the FED complaint, and thereby becomes a part of it, if it is defective in any respect, the Court can unilaterally dismiss it - thus forcing the landlord or manager to start all over again. It is for this reason that before actually filing the summons and complaint which starts the FED court process, the plaintiff should closely review the notice to make sure it complies with the law.

Leases & Rental Agreements.

As a result of MHCO's efforts in the recent Legislative Session, landlords will be able to use leases for two year terms or more. At the end of the term, the tenant must either agree to a new updated lease as well as rules and regulations. Briefly, the process is as follows: Not more than 60 days prior to the termination of the lease, the landlord must provide the tenant with a copy of the new proposed lease and rules. Thereafter, the tenant has 30 days within which to either agree to the new terms or to vacate and remove the home. If the tenant declines to sign and elects to vacate, he/she can try to re-sell the home in the park for up to 12 months, so long as storage fees are paid.

The one limitation on landlords - and not an unreasonable one - is that the new lease agreement or rules that the tenant may be asked to sign must be the substantially the same as those the landlord is currently offering others who are seeking to rent a space in the community.

One caveat for landlords: If they fail to offer the new rules and lease agreement to the tenant on or before 60 days prior to expiration of the current term, the lease turns into a month-to-month tenancy.

Thus, the use of leases under the new law will now permit landlords to unilaterally update their rental agreements and rules. We'll be talking about this in depth at the Annual Convention.

Day Care Facilities.

Frequently, community managers are confronted with tenants who seek to open day care businesses in their home. There are multiple issues involved here. First, is it a violation of the existing zoning laws to use the home for a commercial business? Secondly, will it impact the landlord's insurance rates? Lastly, what about increased traffic and risk of accidents? All of these issues militate against permitting tenants to open such enterprises.

Landlords should review their rules and regulations to make sure they have adequate limitations on day care businesses. If they do not, consideration should be given to updating the rules to make the appropriate amendments. However, for those landlords or managers whose rules do not address the issue, how is one to proceed? Oregon law provides that violation of the law constitutes a breach for which a curable 30-day notice of termination may be given. Accordingly, the landlord or manager should first check the zoning law. If it is a residential neighborhood, there may be zoning restrictions on such business enterprises. Also, even if there is not current restriction, there is nothing illegal about instituting a restriction of day care facilities immediately. Oregon law permits such rules, even if they make a material modification to the landlord-tenant relationship, so long as they are passed by the tenants in a legally adopted rule change (i.e. 51% or more do not object.)