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By Gordon R. Friedman - The Oregonian/OregonLive

Published 8-20-18

The Portland City Council will soon consider an ordinance to cap what landlords can charge for security deposits and limit how they may use renters' credit and criminal conviction history to deny them tenancy.

"Screening criteria and security deposit reform" will be the subject of an upcoming council agenda item, Commissioner Chloe Eudaly wrote in an August 14 post to her Facebook page. The ordinance is scheduled for a hearing September 20, said Eudaly spokeswoman Margaux Weeke.

It is exactly the kind of move that Oregon landlords feared when they banded together to try to raise $2 million to fight those and other restrictions they say will undermine their businesses.

Policymakers in other cities have also explored regulating security deposits, citing mounting pressures on renters who struggle to save up cash for move-in fees. New York City's comptroller in July introduced a deposit-limiting measure. The Seattle City Council adopted a similar ordinance in December 2016, and landlords filed a lawsuit to challenge it.

In Portland, landlords may currently charge what they like as a security deposit, and there are few regulations over how deposits must be returned after a tenant vacates. That would change under Eudaly's ordinance. In the Facebook post, Eudaly described one an effect of the ordinance as "limit security deposit requirements."

The ordinance would also change how landlords may use information about potential tenants. Property owners typically perform criminal records and credit history checks on rental applicants. Some renter advocates have described the background checks as offering landlords a pretense for discriminating against those with criminal pasts or poor credit.

Eudaly said in her Facebook post that changing how landlords may use information about rental applicants to deny them tenancy is in part intended to "reduce barriers to housing" and "prevent discrimination."

According to a draft of the ordinance provided by Eudaly's office, she has considered establishing a system that requires landlords to approve tenants on a first-come, first-served basis, though a minimum credit score would still be allowed.

To deny applicants, landlords would be required to rank applicants on their credit history, criminal convictions and housing record and give them a chance to provide favorable information.  

The draft ordinance includes a list of crimes that are not to be judged by landlords as meaning a tenant convicted of them would likely harm the property or cause the premises to be unsafe, if the applicant was sentenced at least three years prior or released from prison one year prior. The list includes felony assault and battery, felony burglary or breaking-and-entering, stalking and misdemeanor domestic violence, dealing or manufacturing illegal drugs, and non-forcible sex offenses, among others.

Most importantly, the “vacation occupancy” period for RVs has been expanded from 45 days to 90 days.  This means if you have a written agreement that complies with the vacation occupancy requirements in HB 2634, those RV occupants do not become “tenants” under Oregon law.  As such, they may be asked to vacate at any time without issuing an eviction notice or going to court.  If necessary, law enforcement may be called to remove any “vacation occupants” as trespassers if they refuse to leave.  In that case, you must have a copy of the written vacation occupancy agreement available to show the responding officers that the occupants are not tenants under Oregon law and can be cited for trespassing.

An RV vacation occupancy agreement must be signed by the occupant and must state:  (1) The occupant is renting the RV space for vacation purposes only, not as a principal residence, (2) the occupant has a principal residence other than at the space, (3) the period of occupancy cannot exceed 90 days, (4) the RV must be removed from the park at the end of the occupancy period, and (5) occupancy of the space in the RV park is a vacation occupancy and is NOT subject to the Oregon Residential Landlord and Tenant Act (ORS Chapter 90).

If occupants meet the criteria to sign a vacation occupancy agreement, my view is that RV park landlords should use a 90-day vacation occupancy agreement as a “probationary period” to ensure that they follow the rules and pay the rent.  If they are causing problems, you can ask them to leave any time before the 90-day period expires, thus avoiding creation of a “tenant.”  If they work out as good 90-day occupants and want to become tenants, you can then sign them up using a month-to-month rental agreement.

Answer: The submetering statutes, ORS 90.531 - 90.539 are complex and confusing. As most owners and managers know who have explored converting to submeters, the concept is relatively simple. But the devil is in the details, i.e. the statutes. The basic concept is that for communities with utilities [e.g. water and sewer] that are buried in the base rent, they may extract those charges from base rent, and pass them through to the residents directly for payment. The "quid pro quo" for this is that the residents' base rent is reduced in a commensurate amount, so in theory, there is no initial net difference to landlord or tenant. But when utilities are increased, it becomes the residents' immediate responsibility to pay the increased charge - the landlord no longer has to raise the rent via a 90-day notice to recover the increase. Your question specifically pertains to one of the "devilish details' of this conversion process, i.e. passing through the utility cost for common areas. Specifically, you are referring to subsection (5) of ORS 90.537 ("Conversion of billing method for utility or service charges"). That statute provides that a landlord who has previously included utilities and services in their base rent [called "the rent billing method"] and converts to the "submeter billing method" may unilaterally, and at the same time as the conversion to submetering, begin billing for common areas to a "pro rata billing method" [i.e. where the residents' cost of the utility is charged and paid separately from the rent in an amount determined by apportioning on a pro rata basis the provider's charge to the landlord as measured by a master meter]. This common area charge must be included in the 180-day notice to residents that precedes the submeter conversion process. This means that the landlord would charge each resident a prorata portion of the master meter readings attributable to common area costs. Obviously, master meter readings do not distinguish between utility services provided to residents, versus those provided to common areas. For purposes of determining the amount of the offset the landlord should check with the utility provider to find out the cost of its service to the common areas. If the provider cannot provide the landlord with an accurate cost for service to the common areas, the landlord "shall assume the cost of serving the common areas to be 20 percent of the total cost billed." Note: Only if the landlord continues use the rent billing method for the cost of utilities to the common areas may the landlord may obtain an offset against the total rent reduction given to residents. This is because if the common area utility cost is still buried inside the base rent. It would be unfair to the landlord to require a dollar-for-dollar rent reduction for all utilities, since those attributed to the common areas are not passed directly through to the tenants for separate payment. In other words, the right of offset '_is not available if the landlord chooses to bill for the common areas using the pro rata method." If the cost of the utility service to the common area is apportioned on a prorate basis and passed through to the residents, there will be no need for offset against the rent reduction as a part of the conversion to submeters. In those cases, the landlord may only apportion the common area utility cost on a prorata basis. For purposes of determining the pro rata charge per resident, ORS 90.534 ("Allocated charges for utility or service provided directly to space or common area") clarifies the protocol to be followed: - A utility charge that is assessed to residents on a pro rata basis must be allocated among them '_by a method that reasonably apportions the cost among the affected tenants and that is described in the rental agreement." - Methods that reasonably apportion the cost among the residents include, but are not limited to, methods that divide the cost based on: _ The number of occupied spaces in the facility; _ The number of residents or occupants in the home compared with the number of residents or occupants in the facility, if there is a correlation with consumption of the utility or service; or _ The square footage in each home compared with the total square footage of occupied homes in the facility, if there is a correlation with consumption of the utility or service. - A utility or service charge to be assessed to a resident for a common area must be described in the written rental agreement separately and distinctly from the utility or service charge for the tenant's space. - A landlord may not: _ Bill or collect more money from residents for utilities or services than the provider charges the landlord; _ Increase the utility or service charge to a resident by adding any costs of the landlord, such as handling or administrative charges. See, I said the devil was in the details! ~PCQ

10 Essential Rules for Avoiding Fair Housing Trouble

This month, we highlight 10 essential rules to help you to comply with fair housing law. Housing discrimination has been outlawed for more than 50 years, but all too often communities still find themselves on the wrong side of the law and are forced to pay out thousands—and in some cases millions—in settlements or court awards, civil penalties, and attorney’s fees to get themselves out of fair housing trouble.

In this article, we’ll provide an overview of fair housing requirements and offer 10 essential rules to help you ward off fair housing problems at your community. 

WHAT DOES THE LAW SAY?

The federal Fair Housing Act (FHA) prohibits discrimination in housing on the basis of race, color, religion, sex, national origin, disability, and familial status. In a nutshell, the FHA prohibits communities from excluding or otherwise discriminating against prospects, applicants, and residents—as well as anyone associated with them—based on any of these protected characteristics.

The FHA also bans discriminatory statements—including advertising—that indicate a preference, limitation, or discrimination based on race, color, religion, national origin, sex, disability, and familial status. And the law prohibits retaliation against anyone for exercising his or her rights under fair housing law or assisting others who exercise that right.

FOLLOW 10 ESSENTIAL RULES

TO AVOID FAIR HOUSING TROUBLE

Rule #1: Don’t Discriminate Based on Race or Color

The FHA bans discrimination based on both race and color, two separate but closely related characteristics. In general, race refers to a person’s physical appearance and color refers to a characteristic of a person’s race, so discrimination claims based on color are often coupled with claims based on race.

Be sure to give prospects the same information about availability and the terms and conditions of tenancy, such as screening criteria, rental terms, and any other relevant information. Under the FHA, it’s unlawful to deny housing based on an applicant’s race or color by providing different and false information about terms, conditions, and availability of rental properties.

Example: In September 2019, the owners and managers of two New York apartment buildings agreed to pay $272,000 to resolve allegations of racial discrimination against African American prospects in violation of federal, state, and local fair housing laws. The Fair Housing Justice Center filed the lawsuit based on the results of a two-year investigation involving white and African American testers posing as prospective renters. The complaint alleged that the white testers were repeatedly shown available units and encouraged to apply, while the African American testers were routinely told that no apartments were available for rent.

It’s also important to apply the community’s policies and procedures—including screening criteria—consistently without regard to race, color, national origin, or other protected characteristics. Whatever your policy on criminal background checks, for example, applying it only to applicants who are members of racial or ethnic minorities, but not to white applicants, is a sure way to trigger a fair housing complaint.

Example: In August 2019, the owners and managers of a Tennessee community agreed to pay $42,250 to resolve a race discrimination case alleging that they denied the rental application of an African-American applicant because of his criminal record, despite contemporaneously approving the rental applications of two white people with disqualifying felony convictions.

Tip: If your community has a policy to conduct criminal background checks, check to make sure it passes muster under HUD’s 2016 guidelines on the use of criminal records in conventional and assisted housing communities. The HUD guidance doesn’t prevent communities from screening applicants based on their criminal history, but you could trigger a fair housing complaint if the policy, without justification, has a disparate impact—or discriminatory effect—on minority applicants.

Rule #2: Don’t Discriminate Based on National Origin

The FHA prohibits discrimination based on national origin, which means the geographic area in which a person was born or from which his or her ancestors came. National origin discrimination means treating people differently because they or their family are from outside the United States, or because they have physical, cultural, or linguistic characteristics of persons from a foreign geographic area.

Example: In March 2019, the owners of a Minnesota rental home and a realty company agreed to pay $74,000 to resolve allegations that they refused to rent to a family of five adults and six minor children because they are Native American and Hispanic, and had minor children. HUD’s charge alleged that the housing providers discouraged the family from renting the six-bedroom home by offering them less favorable rental terms, including increasing the requested monthly rent by $1,000.

“Denying a family housing because of their ethnicity or familial makeup not only robs them of a place to call home, it violates the law,” Anna María Farías, Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement.

Tip: In September 2016, HUD issued new “Limited English Proficiency” (LEP) guidance on how fair housing law applies to claims of housing discrimination brought by people because they don’t speak, read, or write English proficiently. Although people with limited English proficiency are not a protected class under the FHA, the law bans discrimination based on national origin, which is closely linked to the ability to communicate proficiently in English.

Rule #3: Don’t Discriminate Based on Religion

The FHA prohibits discrimination based on religion, so it’s unlawful to refuse to rent to people, or to treat them differently, because of their religion. For example, it’s unlawful to show favoritism toward applicants who share your religious beliefs—or bias against—those of other religious faiths.

Example: In December 2019, a California homeowners association (HOA) and its management company agreed to pay $40,000 to resolve allegations that they refused to permit a condo owner to display a religious object, a mezuzah, on her front doorpost because it violated community rules. A mezuzah is a small object placed on the doorpost of many Jewish homes in fulfillment of religious obligations. Allegedly, someone forcibly removed the mezuzah from her doorpost.

“A rule prohibiting the display of a mezuzah effectively makes that housing unavailable for many observant Jews,” said Kevin Kish, director of California’s Department of Fair Employment & Housing. “For that reason, DFEH interprets California fair housing law to require landlords and HOAs to permit residents to display mezuzah outside of their homes.”

Tip: The FHA doesn’t define “religion,” but fair housing experts believe it’s broad enough to prohibit discrimination against individuals who aren’t affiliated with a particular religion or don’t ascribe to particular religious beliefs. Treating people differently simply because they do—or do not—attend religious services or identify with a religious faith could lead to fair housing trouble.

Rule #4: Don’t Discriminate Against Families with Children

Fair housing law prohibits discrimination because of familial status, which FHA defines to mean households with one or more children who are under 18 years of age, where the child is living with:

• A parent,
• A person who has legal custody (such as a guardian), or
• A person who has the written permission of the parent or legal custodian to care for the child.

That covers not only traditional families with children, but also same-sex couples, single mothers or fathers, grandparents, and others who have permission to have a child under 18 living with them. It also includes pregnant women and those in the process of securing legal custody of a minor child, such as a foster or adoptive parent.

There’s a limited exception to the familial status provisions that allows senior housing communities to lawfully exclude children, but it applies only if the community satisfies strict legal requirements to qualify as “housing for older persons.” Otherwise, it’s unlawful to refuse to rent to families with children under 18 by enforcing an “adults-only” policy or adopting rules, such as an age limit, that would prevent children from living there.

Overly restrictive occupancy standards can lead to discrimination claims based on familial status because they limit the housing choices of families with children under 18. In general, the law considers two people per bedroom—regardless of gender—to be a reasonable occupancy standard, but there are exceptions based on the size or configuration of the unit and other factors.

Example: In September 2019, the owners and managers of a single-family rental home in Idaho agreed to pay $15,000 to settle allegations that they discriminated against a family attempting to lease their 2,600 square foot, four-bedroom rental home because they have seven minor children. HUD’s charge alleged that when the couple met with the property manager about renting the home, he told them that the owners had set a limit of four children for the home.

“Persons attempting to provide a home for their family should not have their housing options limited because they have children,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement.

The FHA’s familial status provisions also protect pregnant women from discrimination, so it’s unlawful to require residents to move out because of the birth of a child.

Example: In April 2019, the owners and operators of a student housing community in Arizona agreed to pay a $2,000 civil penalty to resolve allegations of discrimination based on sex and familial status. The Tucson Civil Rights Division brought a charge of housing discrimination against the community after viewing an example lease agreement on the apartment complex’s website. Allegedly, a portion of the lease agreement stated that if a female resident became pregnant, then she must vacate the apartment upon or prior to the birth of the child.

Rule #5: Don’t Discriminate Based on Sex

Under the FHA, it is unlawful to discriminate against applicants based on their sex. Making decisions about whether to accept or reject applicants based on their sex can lead to costly fair housing litigation, particularly when combined with allegations of discrimination based on familial status or other protected characteristics. 

Example: In June 2018, the owner of a three-unit rental community in South Dakota agreed to a $3,000 settlement to resolve allegations of discrimination based on sex and familial status. The complaint alleged that the owner refused to rent a unit to a woman and her 17-year-old daughter because she would be concerned about any woman being alone there and she had “always rented to bachelors” [U.S. v. Kelly, South Dakota, 2018].

Sexual harassment—that is, unwelcome sexual conduct—is a form of discrimination based on sex, according to HUD, which explains the two main types of sexual harassment:

Quid pro quo harassment occurs when a housing provider requires a person to submit to an unwelcome request to engage in sexual conduct as a condition of obtaining or maintaining housing or housing-related services. HUD offers these examples:

• A landlord tells an applicant he won’t rent her an apartment unless she has sex with him.
• A property manager evicts a tenant after she refuses to perform sexual acts.
• A maintenance man refuses to make repairs unless a tenant gives him nude photos of herself.

Hostile environment harassment occurs when a housing provider subjects a person to severe or pervasive unwelcome sexual conduct that interferes with the sale, rental, availability, or terms, conditions, or privileges of housing or housing-related services. HUD offers these examples:

• A landlord subjects a tenant to severe or pervasive unwelcome touching, kissing, or groping.
• A property manager makes severe or pervasive unwelcome, lewd comments about a tenant’s body.
• A maintenance man sends a tenant severe or pervasive unwelcome, sexually suggestive texts and enters her apartment without invitation or permission.

Combatting sexual harassment remains a top priority for federal enforcement officials, who continue to come down hard on owners and managers accused of sexual harassment against prospects, applicants, or residents.

Example: In August 2019, the owner and manager of rental properties in New York agreed to pay $850,000 to resolve allegations that he sexually harassed numerous female applicants and residents for nearly three decades. In its complaint, the Justice Department alleged that the landlord subjected former residents and prospects to unwanted sexual intercourse, sexual advances and comments, groping or other touching of their bodies without consent, and offers to reduce or eliminate security deposits and rent in exchange for sexual contact. The complaint also accused him of taking or threatening to take adverse action against residents when they refused or objected to his advances.

“The sexual harassment of the vulnerable female applicants and tenants in this case by their landlord is an egregious and intolerable violation of federal civil rights law,” Assistant Attorney General Eric Dreiband said in a statement. “The Department of Justice will continue to pursue any depraved landlords and others who prey upon vulnerable women” [U.S. v. Waterbury, New York, August 2019].

Rule #6: Don’t Discriminate Based on Disability

The FHA prohibits discrimination based on disability. Under fair housing law, disability means a physical or mental impairment that substantially limits one or more major life activities. The list of impairments broadly includes a wide range of physical and mental conditions, including visual and hearing impairments, heart disease and diabetes, HIV infection, and emotional illnesses. Examples of major life activities include seeing, hearing, walking, breathing, performing manual tasks, caring for one’s self, learning, and speaking. In sum, the law protects anyone with a physical or mental impairment that’s serious enough to substantially affect activities of central importance to daily life—even if it isn’t obvious or apparent.

Under the FHA, it’s unlawful to deny housing to people—or to treat them less favorably than others—because of a disability.

Example: In October 2019, the owner and manager of a California community agreed to pay $50,000 to resolve a fair housing claim by a resident who alleged that her lease was illegally terminated based on her disability. In her complaint, the resident claimed that the community terminated her lease because throughout her tenancy she experienced multiple medical emergencies that required the assistance of an ambulance to transport her to the hospital. Allegedly, the property manager received complaints from other residents about these emergencies.

“Housing providers cannot terminate or decline to renew a lease simply because they disfavor tenants with disabilities,” Kevin Kish, Director of the California Department of Fair Employment and Housing, said in a statement.

Tip: Although the disability rules protect those recovering from past drug addiction, it specifically excludes anyone who is currently using illegal drugs. The law also excludes individuals with disabilities whose tenancy would constitute a “direct threat” to the health or safety of others—or result in substantial physical damage to the property of others—unless the threat can be eliminated or significantly reduced by reasonable accommodation. Nevertheless, federal guidelines warn against a blanket policy that excludes anyone based upon fear, speculation, or stereotypes about disabilities. Instead, the law requires an individualized assessment of whether that particular applicant or resident poses such a threat based on reliable objective evidence of current conduct or a recent history of overt acts.

Rule #7: Carefully Consider Reasonable Accommodation and Modification Requests

In addition to the general rules banning disability discrimination, the FHA imposes affirmative duties on housing providers—with respect to reasonable accommodations, reasonable modifications, and accessibility design features—to ensure that individuals with disabilities have the same opportunity as everyone else to have full use of the community.

Under the FHA, it’s unlawful to refuse to make reasonable accommodations in the rules, policies, practices, or services if necessary for an individual with a disability to fully use and enjoy the housing. In general, communities are required to make an exception to the rules, when requested, if it’s both reasonable and necessary to allow an individual with a disability to fully use and enjoy the community. Common examples include a request to keep an assistance animal in a community with a no-pet policy or a request for a reserved parking spot in a community that doesn’t have assigned parking.

Example: In August 2019, a New Jersey HOA agreed to pay $30,000 to resolve allegations of discrimination against a resident with disabilities by denying her the right to have a dog as an assistance animal. According to the HUD charge, the community allegedly required the resident, who has hearing and sight disabilities, to cage her animal in common areas and use the service entrance when entering and exiting the building with the animal.

“No person with a disability should be denied the reasonable accommodation they need to make a home for themselves,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement.

Example: In March 2019, the owners and managers of a San Diego apartment complex agreed to pay $17,000 to resolve allegations that they denied the request of a resident with disabilities for a designated parking space close to the building. The HUD complaint was filed by the resident, who uses a wheelchair, alleging that his request for an assigned parking space in the development’s garage had been denied. He said that the community later allowed him to park in non-assigned accessible spaces in the garage, but it wouldn’t give him the key necessary to enter the garage and to use the elevator. As a result, the resident said that whenever he wanted to enter the garage, he had to wait for another resident to open the gate, then follow that person in so he could use the elevator.

“To a person with mobility limitations, a designated parking space can mean the difference between merely living in a development and truly being able to call a place home,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement.

Tip: The FHA also makes it unlawful to refuse to allow reasonable modifications to the unit or common use areas, at the applicant or resident’s expense, if necessary for the individual with a disability to fully use the housing. Reasonable modifications are structural changes to interiors and exteriors of units and to common and public use areas, such as lobbies, main entrances, and parking lots. Examples include widening doorways to make rooms more accessible for people in wheelchairs, installing grab bars in bathrooms, lowering kitchen cabinets to a height suitable for persons in wheelchairs, adding a ramp to make a primary entrance accessible, or altering a walkway to provide access to a public or common use area.

Rule #8: Abide by Rules Banning Discriminatory Advertising

Under the FHA, it’s unlawful to advertise or make any statement that indicates a limitation or preference based on race, color, religion, national origin, sex, disability, or familial status. Liability for making discriminatory statements doesn’t require proof of discriminatory intent. Instead, the focus is on whether the statement would suggest a preference to an “ordinary reader or listener.” The rules apply not only to verbal and written statements, but also to all advertising media, including newspapers, magazines, television, radio, and the Internet.

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. A fair housing advocacy group filed the HUD complaint alleging that the community posted discriminatory advertisements indicating that children were not allowed and refused to negotiate with fair housing testers posing as families with children.

“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 #9: Watch Out for Potential Retaliation Claims

Under the FHA, it’s unlawful to “coerce, intimidate, threaten, or interfere with” anyone who has exercised a fair housing right—or anyone who assisted others in exercising that right. Because discrimination and retaliation are separate violations under fair housing law, you could face liability for retaliation if you take adverse action against a resident solely because he filed a discrimination complaint against you—even if the discrimination claim is ultimately dismissed.

Watch out for potential retaliation claims when dealing with requests for reasonable accommodations or modifications by or on behalf of individuals with disabilities. The law protects people from retaliation for exercising their right to make disability-related requests.

Example: In March 2019, the owner and manager of a California rental community agreed to pay $6,000 to settle allegations that they refused to remediate mold at the property as a reasonable accommodation for a couple with disabilities and retaliated against them for asking that the mold be removed. In their HUD complaint, the couple alleged that the owners retaliated against them for making the reasonable accommodation request by increasing their rent and issuing a notice terminating their lease.

“Reasonable accommodation requests aren’t requests for special treatment. They are what many individuals with disabilities need to live in the place they call home,” Anna María Farías, Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement.

Rule #10: Abide by Applicable State and Local Fair Housing Laws

To avoid fair housing trouble, it’s important to comply with not only the FHA, but also applicable state or local fair housing laws. Often, these state and local laws extend fair housing protections beyond federal requirements to ban discrimination based on:

Marital status: Nearly half the states prohibit housing discrimination based on marital status, which generally means being single, married, divorced, or widowed.

Age: Many state and local laws ban discrimination based on age, though there are significant differences in how the laws apply because of the way they define age.

Sexual orientation and gender identity: Many state and local fair housing laws ban discrimination based on sexual orientation; of those, many, but not all, also cover gender identity or transgender status.

Source of income: Many state and local fair housing laws also cover lawful source of income to ban discrimination against people based on where they get their financial support. The specifics of the laws vary, but they generally apply to wages, retirement benefits, child support, and public assistance. Of those, many, but not all, also cover housing subsidies, most notably Section 8 housing vouchers.

Military status: Some state and local laws offer some form of fair housing protection for military status. The laws generally prohibit discrimination against active duty members and veterans of the armed forces, reserves, or state National Guard.

Other protected classes: Some state and local laws ban discrimination based other factors, such as status as survivor of domestic violence, genetic information, HIV status, lawful occupation, political beliefs or affiliation, student status, alienage or citizenship, personal appearance, or arbitrary personal characteristics.

Answers to Questions Nos. 1 and 2. Under the Fair Housing Act ("the Act") landlords are required to make reasonable accommodations to the rented facilities and common areas, if so requested by a handicapped tenant or their legal occupant. This law applies to the use of assistance animals.

A "reasonable accommodation" is a reasonable change, exception or adjustment to a rule, policy, practice or service that will enable a handicapped person to have an equal opportunity to use and enjoy the rented facilities and common areas. There must be an identifiable relationship between the requested accommodation and the person's disability. Landlords are not required to make requested accommodations if doing so would impose an undue financial or administrative burden upon them or fundamentally alter the nature of the landlord's operations. In order to address the request, Landlords are entitled to obtain information that is necessary to evaluate it for a reasonable accommodation. With respect to a person, a "handicap" means: (a) one with a physical or mental impairment which substantially limits one or more major life activities; (b) one with a record of such impairment; or (c) one who is regarded as having such an impairment. Juvenile offenders, sex offenders, persons who illegally use controlled substances and those with a disability whose tenancy would constitute a direct threat to others, or result in substantial physical damage to the property of others, are generally not protected under the Act. If the landlord refuses a requested accommodation, the requester is encouraged to have a discussion with the landlord concerning an alternative accommodation. This is a summary only and not intended to constitute legal advice. For more information, landlords, tenants and legal occupants of tenants are encouraged to consult with their attorney or a Fair Housing expert if they have any questions regarding their rights and responsibilities.

Note: MHCO has Form No. 15 which permits residents to make reasonable accommodation requests.

I think my first step (which may have already occurred prior to the rule changes, is determine the extent of the problem for emergency vehicles along the narrow streets. Does a single car slow or restrict access to emergency vehicles? In short, how problematic is it for a single car to be parked along the street? Does it create any danger to the community, its drivers, or the emergency vehicles? Once you have that baseline, you will have a sense about the safety of making a reasonable accommodation by permitted on-street parking.

Secondly, if I were to permit anyone to park on the street (assuming the safety issue is properly vetted), I think I would insist that they have a handicapped parking permit. That way, anyone parking on the street without a permit would be easier to spot. (Although you should consider whether the permit is expired or being abused, or in the name of the car's owner.)

The handicapped caretaker is not your direct responsibility - she was hired by your resident. I do not believe convenience is the litmus test here - it's whether the rule prevents her from performing her tasks, and coming and going to the site. I think the biggest problem, and one you've not mentioned but certainly are thinking, is this could become a slippery slope. The more cars you permit to park on the street, the more others will try the same thing. At this point, I believe I'd take the position that if the parking area can accommodate two cars, then that's where they should park - even if it means shuffling them around, handicapped or not.

I do not believe handicapped caretaker has standing to request a reasonable accommodation, since he/she is not a tenant or occupant of the home. But I have not research this issue; you should verify this with your own attorney.

As for the non-handicapped caretaker, a little walk to and from the guest parking is not the end of the world. "Convenience" for a non-handicapped person is not a basis for a reasonable accommodation under the ADA, Fair Housing law, or common sense.

First up: Sexual harassment. Accusations against high-profile celebrities, politicians, and media moguls, fueled by the #MeToo movement, have raised awareness and pushed the issue into the national consciousness. Likewise, it’s become a top priority for officials in the Justice Department and HUD, which continue to come down hard on those accused of sexual harassment against prospects, applicants, and residents. Meanwhile, the victims of sexual harassment in rental housing continue to turn to the courts, either on their own or with the help of fair housing advocates, to seek redress for their injuries.  

Next up: Tenant-on-tenant harassment. Federal fair housing law bans not only sexual harassment, but also harassment based on race, national origin, or other protected characteristics. Most cases against community owners are based on the actions of managers or employees, but HUD regulations—and a recent court ruling—make it clear that communities face potential liability under fair housing law for tenant-on-tenant harassment under certain circumstances.

Last up: Criminal background checks. A few years ago, HUD released guidelines on how fair housing law applies to the use of criminal records by both conventional and assisted housing providers, and federal officials and fair housing advocates continue to press communities accused of discrimination based on criminal screening policies.

In this lesson, we’ll take each of these topics in turn, reviewing recent developments involving HUD, the Justice Department, and the courts, so you’ll understand how to handle these situations should they arise at your community. Finally, you can take the Coach’s Quiz to see how much you’ve learned.

SEXUAL HARASSMENT

The federal Fair Housing Act (FHA) prohibits discrimination in housing on the basis of race, color, religion, sex, national origin, disability, and familial status.  

Sexual harassment is a form of sex discrimination banned under the FHA. The basic rules haven’t changed much, but it’s becoming increasingly urgent to take all steps necessary to prevent sexual harassment at your community.

Federal officials with HUD and the Justice Department have made it a top priority to crack down on sexual harassment in housing. In 2017, the Justice Department launched an initiative to combat sexual harassment in housing, and last year, it announced the nationwide rollout of the initiative, including three major components: a new joint Task Force with HUD to combat sexual harassment in housing, an outreach toolkit to leverage the Department’s nationwide network of U.S. Attorney’s Offices, and a public awareness campaign, including the launch of a national Public Service Announcement.

Earlier this year, HUD launched a campaign and training initiative to help protect people from harassment by landlords, property managers, and maintenance workers in HUD-assisted housing. The “Call HUD: Because Sexual Harassment in Housing is Illegal” campaign aims to educate the public about what behaviors constitute sexual harassment and what to do and whom to contact if they experience it where they live. The initiative also offers sexual harassment training to employees of public housing authorities and other housing providers.

“Complaints we receive and cases we see tell us that there are some housing providers who unfortunately prey on vulnerable men and women,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement. “No one should have to tolerate harassment or unwanted sexual advances in order to keep a roof over their head, and HUD will continue to take appropriate action when discrimination of this type occurs.”

Since launching the initiative, the Justice Department has filed nine lawsuits alleging a pattern or practice of sexual harassment in housing. The Department has filed or settled 14 sexual harassment cases since January 2017 and has recovered over $2.2 million for victims of sexual harassment in housing.

Example: In April 2019, the Justice Department announced a $600,000 settlement with a North Carolina property owner for allegedly subjecting 17 female prospects and residents to sexual harassment over the course of more than 10 years in violation of the Fair Housing Act and the Equal Credit Opportunity Act.

According to the complaint, the owner ran a real estate business that involved not only operating residential rental properties, but also selling homes through “owner financing,” meaning that he extended credit to individuals to purchase homes that he owned. The complaint alleged that he subjected female prospects and residents of these homes to sexual harassment by making unwanted sexual advances and comments; groping or otherwise touching their bodies without consent; offering to reduce or eliminate down payments, rent, and loan obligations in exchange for sexual favors; and taking or threatening to take adverse action against residents when they refused or objected to his advances.

Under the settlement, the owner agreed to pay $550,000 in damages to former and prospective residents, as well as a $50,000 civil penalty. The settlement also permanently bars him from participating in the rental, sale, or financing of residential properties, and requires that he relinquish his ownership interest in all such properties.

“Abusing power and control over housing and credit by committing acts of sexual harassment is an abhorrent and intolerable violation of every woman’s right to equal housing and credit opportunities,” Assistant Attorney General Eric Dreiband said in a statement. “The Justice Department, through its Sexual Harassment in Housing Initiative, will continue to aggressively enforce federal anti-discrimination laws against property managers and owners who cause women to feel unsafe in their homes.”

Example: In April 2019, the Justice Department announced that it has added more alleged victims in a sexual harassment case against the owner and manager of rental properties in Tennessee. The lawsuit alleged that the landlord, who owned and managed a mobile home park and other rental properties, sexually harassed a number of female residents at his properties. Among other things, the landlord was accused of conditioning housing or housing benefits on female residents’ agreement to engage in sexual acts; subjecting at least one female resident to unwanted sexual touching; making unwelcome sexual comments and advances to female residents; and taking adverse housing-related actions against female residents when they refused his sexual advances. The complaint contains allegations of unlawful conduct; the allegations must be proven in federal court.

“No woman should ever be subjected to sexual harassment or intimidation in her home,” Assistant Attorney General Eric Dreiband said in a statement. “The Fair Housing Act protects tenants from harassment and retaliation by their landlords, and the Justice Department will continue to vigorously enforce this law and seek relief for victims.”

“Property owners and landlords who use their position to harass residents or to attempt to trade sexual favors for rent violate the sanctity of an individual’s home, the place where they should feel the safest,” said Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “HUD will continue to work with the Justice Department to take action against housing providers that violate the Fair Housing Act by engaging in this type of behavior.”

Example: In March 2019, the owners and former manager of more than 70 rental properties in West Virginia were held in civil contempt for failing to pay $600,000 still owing under a 2017 settlement with the Justice Department in a sexual harassment case. 

The initial complaint alleged that a married couple and related entities owned the properties and that the husband, while serving as the manager, subjected female prospects and residents to egregious sexual harassment and retaliation in violation of fair housing law. In 2015, the husband pleaded guilty to sexual abuse and other charges and was incarcerated for two years for those offenses. The wife has since died.

According to the complaint, the husband sexually harassed multiple female prospects and residents from at least 2006 until he was incarcerated. Among other things, the husband was accused of engaging in unwanted sexual touching and groping; conditioning or offering tangible housing benefits in exchange for performance of sex acts; touching himself in a sexual manner and exposing himself in the presence of female residents; making unwanted and unwelcome sexual comments and verbal sexual advances; entering the apartments of female residents without permission or notice to sexually harass them; and taking or threatening to take adverse action against female residents who refused or objected to his sexual advances.

The wife was accused of failing to take appropriate steps to remedy the discrimination after receiving tenant complaints about sexual harassment. To the contrary, she allegedly took adverse housing actions, or threatened to take such actions, in retaliation for discrimination complaints.

To resolve the case, the defendants agreed to a settlement, which required them to deposit $500,000 into a compensation fund for potential victims and pay $100,000 in civil penalties to the government. The defendants made the first $100,000 payment but failed to deposit the remaining $400,000 into the compensation fund or pay the $100,000 civil penalty as agreed a year later.

The Justice Department took the case back to court, where the judge granted its request to hold the defendants in civil contempt for failing to pay the balance of the funds owed under the 2017 settlement agreement.

The defendants didn’t deny that they owed the money and failed to submit financial documents to prove their supposed inability to pay. They conceded that they owned more than $700,000 worth of property but said that they couldn’t obtain a loan secured by the properties. They didn’t want to sell the properties because the husband wanted to transfer his interest in the properties to his children and a forced sale of the properties at below market value “would only punish innocent persons not party” to the settlement agreement.

Rejecting those claims, the court said that obtaining fair market value for the sale of their real estate wasn’t required for the defendants to satisfy their obligations under the settlement agreement. The “innocent persons” at issue in this case were the defendants’ former female residents and prospects who have yet to be compensated for the harms they suffered as a result of the husband’s conduct [U.S. v. Walden, March 2019].

Coach’s Tip: Adopt a zero-tolerance policy against sexual harassment at your community. It’s important to have a clear, written policy that sexual harassment of any kind won’t be tolerated at your community and that violations will bring prompt disciplinary action, up to and including termination. Require all employees—from leasing agents to maintenance workers, whether full or part time—to receive fair housing training, including your sexual harassment policy.

TIME OUT!

Understanding Harassment Regulations

In September 2016, HUD adopted final regulations on fair housing protections for victims of harassment based on race, color, religion, national origin, sex, familial status, or disability. The new regulations cover “quid pro quo” harassment and hostile environment harassment in both private and publicly assisted housing.

Sexual harassment in housing threatens a resident’s safety and privacy in her own home, according to HUD. In its experience enforcing the FHA, HUD said that low-income women—often racial and ethnic minorities and persons with disabilities—may be particularly vulnerable to sexual harassment in housing. HUD’s final rule on harassment in housing includes formal uniform standards for evaluating claims of hostile environment and quid pro quo harassment in the housing context:

Quid pro quo (“this for that”) harassment involves subjecting a person to an unwelcome request or demand and making submission to the request or demand a condition related to the person’s housing.

Hostile environment harassment involves subjecting a person to unwelcome conduct that’s so severe or pervasive that it interferes with or deprives the person of the right to use and enjoy the housing.

The new rules also clarify when housing providers and other covered entities or individuals may be held directly or vicariously liable under the Fair Housing Act for illegal harassment or other discriminatory housing practices.

TENANT-ON-TENANT HARASSMENT

HUD’s regulations make it clear that fair housing law bans not only sexual harassment, but also harassment based on any protected class, including race, national origin, disability, and family status.

The regulations also clarify when housing providers and other covered entities and individuals may be held liable for illegal harassment and other discriminatory housing practices. Under HUD regulations, community owners may be liable under fair housing law for failing to take prompt action to correct and end discriminatory conduct, including harassment, by their employees or agents, where they knew or should have known about it.

You don’t have only your employees or other staff members to worry about—you could face liability for tenant-on-tenant harassment under certain circumstances. Based on the HUD regulations, you could be liable under fair housing law for failing to take prompt action to correct and end a discriminatory housing practice by a third party, where you knew or should have known of the discriminatory conduct and had the power to correct it. The power to take prompt action to correct and end a discriminatory housing practice by a third party depends on the extent of your control or any other legal responsibility you may have with respect to the third party’s conduct.

Example: In March 2019, a court ruled that a New York community could be liable under the FHA for an alleged campaign of racial harassment against an African-American resident by his neighbor.

After living at the community for several months, the resident claimed that his next-door neighbor began a relentless campaign of racial harassment, abuse, and threats directed toward him. From the start of the harassment, the resident said he feared for his personal safety, so he contacted the police and the site’s management to complain.

According to the resident, his first call in March 2012 prompted police officers in the hate crimes unit to visit the site, interview witnesses, and warn the neighbor to stop threatening the resident with racial epithets. That day the resident said he filed a police report, and a police officer told the management about the neighbor’s conduct. Allegedly, the management did nothing.

In May 2012, the resident said he called the police again and filed another police report. This time, the resident said he provided written notice to management about his neighbor’s racial harassment and racial slurs directed toward him between March and May 2012. It also provided contact information for the police officers responsible for investigating the neighbor. Allegedly, the management still took no action.

According to the complaint, the neighbor’s conduct persisted to the point that the police arrested him for aggravated harassment. In August 2012, the resident said he sent a second letter informing management of the continued racial slurs directed to him and the fact that the neighbor had recently been arrested for harassment.

In September, the resident said he contacted the police and sent the management group a third letter complaining about his neighbor’s continued harassment. After receiving the letter, according to the complaint, the management group advised the site manager “not to get involved,” and the management group declined to respond or follow up. To the contrary, the resident claimed that the neighbor was allowed to stay in his unit until his lease expired and he moved out in January 2013. A few months later, the neighbor pleaded guilty to harassment and a court entered an order of protection prohibiting him from contacting the resident.

The resident sued, accusing the owner and manager of violating fair housing law by failing to take action to address a racially hostile housing environment created by his neighbor. A district court ruled against the resident and dismissed the case.

On appeal, the court reversed, ruling that the resident could pursue his claims against the community for failing to do anything to stop the neighbor from subjecting him to a racially hostile housing environment.

The court cited HUD’s regulations, which specifically state that an owner may be liable under the FHA for “[f]ailing to take prompt action to correct and end a discriminatory housing practice by a third-party” tenant where the owner “knew or should have known of the discriminatory conduct and had the power to correct it.”

The court acknowledged that the owner’s ability to control a given resident is relevant to determining the owner’s liability. In some cases, an owner may not have enough control over its residents to be held liable for failing to intervene. According to HUD, the owner can be held liable only in circumstances where the landlord had the power to take corrective action yet failed to do so. That would mean that the landlord escapes liability under the FHA if the appropriate corrective action is “beyond the scope of its power to act.”

In this case, the resident’s complaint adequately alleged that the owner and manager engaged in intentional racial discrimination by tolerating and/or facilitating a hostile environment, even though they had authority to “counsel, discipline, or evict [the neighbor] due to his continued harassment of [the resident],” and also had “intervened against other tenants at [the site] regarding non-race-related violations of their leases or of the law.”

The complaint alleged that the owner and manager had actual knowledge of the neighbor’s criminal racial harassment of the resident but, because it involved race, intentionally allowed it to continue even though they had the power to end it. It may turn out that the owner tried but failed to respond. Or it may be that the owner was powerless to evict or otherwise deal with the neighbor. But the resident was entitled further proceedings to determine the level of control the owner and management group actually exercised over tenants and whether they had the power to act to stop the neighbor’s abuse [Francis v. King Park Manor, Inc., March 2019].

Coach’s Tip: Take all necessary steps to prevent—and address—discrimination or harassment at the community. Aside from ensuring that your policies and procedures conform to fair housing law, you can reduce the likelihood of a complaint by properly training and supervising all employees—not only managers and leasing staff, but also maintenance workers and anyone else who interacts with the public. And be particularly careful when hiring and supervising outside contractors or anyone else who could be considered your agent.

Promptly address any complaints of discrimination or harassment by conducting an investigation and, if warranted, taking adequate steps to stop the offending conduct. Get legal advice if necessary, and be sure to document what you’ve done so you’ll be prepared to defend yourself in case a claim is filed against you.

Just don’t try to solve the problem by doing anything that looks like you’re punishing the victim. According to HUD regulations, taking prompt action to correct and end the discriminatory conduct may not include any action that penalizes or harms the aggrieved person, such as evicting a resident who complains to you about discrimination or harassment by an employee, agent, or another resident.

CRIMINAL BACKGROUND CHECKS

Have you reviewed your criminal screening policies lately? If it’s been a while since you last reviewed your policy, it’s important to ensure that it doesn’t run afoul of HUD’s 2016 guidelines explaining how federal fair housing law applies to the use of criminal records in both conventional and assisted housing communities.

The HUD guidance doesn’t prevent communities from screening applicants based on their criminal history, but communities could face liability under fair housing law if its criminal history policy, without justification, has a disparate impact—or discriminatory effect—on minority applicants. It’s important to review the guidance in detail, but there are some steps you should take ASAP to reduce the risk of fair housing trouble. If, for example, your policy still considers arrest records in criminal background screenings, you should make some changes immediately. HUD’s new guidelines flatly say that excluding someone based on arrest records is likely to have a discriminatory effect based on race and national origin.

Check whether your policy still lists “all felonies” or long-ago felonies as reasons not to rent to someone. If so, you may be headed for trouble because the guidelines call into question the lawfulness of excluding people based on criminal convictions—without consideration of what the conviction was for or how long ago it occurred.

Example: In January 2019, a court refused to dismiss a lawsuit filed by an applicant who claimed that a community discriminated against him on the basis of race when it denied his rental application based on its policy to automatically exclude anyone with a felony conviction from renting a unit at the community.

The applicant was an African-American man with a felony conviction. At the time he submitted his application, the applicant met the income eligibility requirement for the unit he applied for, had no prior evictions, and didn’t have a bad credit history. The community allegedly notified him that his application had been denied due to a felony on his criminal record. The applicant said he called twice to request an appeal, but no one returned his calls.

The applicant sued, accusing the community of discrimination because its criminal background policy had a disparate impact based on race. According to the complaint, the applicant alleged that the community had an outwardly neutral policy of automatically excluding anyone with a felony conviction, but the policy had a disparate impact based on race because statistics showed that blanket bans based on criminal history resulted in the denial of housing opportunities at a disproportionate rate for African-Americans and minorities.

The court rejected the community’s request to dismiss the case. The applicant could pursue his disparate impact claim because the statistical racial disparity he relied on was directly related to its alleged policy of excluding a person with a felony conviction from renting at the community [Jackson v. Tryon Park Apartments, Inc., January 2019].

Check whether your policy allows applicants to explain the background of a felony conviction. The HUD guidelines say that communities should offer applicants with criminal records an opportunity to explain the circumstances and what’s happened since then—something akin to the “interactive” process for disability-related reasonable accommodation requests.

Example: In April 2019, a court dismissed claims by an applicant who accused a public housing authority of race discrimination by denying him housing because of his criminal record.

In his complaint, the applicant alleged that he applied to be placed on the public housing waiting list, requesting placement in the first available housing with wheelchair accessibility. At the time he applied in 2016, the PHA required a credit check and criminal background check for all applicants. The policy stated that certain factors could lead to a mandatory denial, including a homicide-related offense. The policy provided applicants with the opportunity to dispute the accuracy and relevancy of the information through an informal hearing.

After an interview, the PHA denied his application for two reasons: a police record—a felony guilty plea to involuntary manslaughter in 1997—and a landlord/tenant judgment against him for $871.

At his hearing, the applicant clarified that his conviction was for a misdemeanor, not a felony, and provided an explanation for the landlord/tenant dispute: He had missed payments only because he had avoided the rental office after being sexually harassed by an employee there.

The PHA reversed its decision regarding his conviction and gave him 30 days to provide proof that he had entered a repayment plan to resolve the landlord/tenant dispute.

The applicant didn’t meet the 30-day deadline, so the PHA upheld the denial of his application. A week later, he sent in the rental payment agreement and the PHA granted his application. Eventually, he signed a lease for a unit at a PHA property.

The applicant sued, accusing the PHA of race discrimination in violation of fair housing law and his due process rights by denying his application because of his criminal record.

Siding with the PHA, the court dismissed the case. The applicant claimed that the PHA discriminated against him and violated his due process rights by refusing to house him because of his criminal record, but the exact opposite was true: Although the PHA initially found him ineligible for housing because of his homicide-related offense, the PHA reversed its decision after a hearing revealed that the offense was only a misdemeanor. Nothing in the record showed that he was the victim of housing discrimination or that he was denied due process.

“There is no evidence that the PHA’s criminal history policy violates state or federal fair housing laws or the Constitution. [The applicant’s] case presents an example of due process at work. Although the PHA may have erred in its initial decision to deny [his] application for public housing, the PHA corrected that decision after giving [the applicant] a meaningful opportunity to demonstrate the PHA’s error” [Hall v. Philadelphia Housing Authority, April 2019].

Coach’s Tip: Whatever your policy on criminal background checks, be sure that you apply it consistently—without regard to race, color, national origin, or other protected characteristics. Applying it only to applicants who are members of racial or ethnic minorities, but not to white applicants, is a sure way to trigger a fair housing complaint.

Example: In October 2018, the Justice Department sued a Tennessee community and its property management company for allegedly denying the application of an African-American applicant because of his criminal record, despite approving the rental applications of two white people with disqualifying felony convictions.

The case dates back to 2012 involving a man living with his ex-wife at the community, who completed a lease application in which he disclosed a felony conviction for writing a bad check. According to the complaint, the community’s resident selection guidelines provided for rejection of applicants who had a felony conviction within the last 10 years as well as any conviction for the sale, distribution, or manufacture of controlled substances or certain sexual offenses.

According to the applicant, the community’s resident manager denied his lease application because of the policy not to rent to felons. Allegedly, she also told him that he was no longer allowed on the property because he was a felon.

Around the same time, according to the complaint, at least two other applicants who were not African American and who had criminal records in violation of the resident selection guidelines were approved for housing at the community. Allegedly, both disclosed their convictions on their applications: The first had a conviction for felony sexual battery and was on the national sex offender database; the second pleaded guilty to felony drug charges and was serving probation [U.S. v. Dyersburg Apartments, LTD., October 2018].

TIME OUT!

Court: Tenant-Screening Services Must Comply with Fair Housing Act

In a landmark civil rights decision, a court ruled that consumer reporting agencies must comply with the FHA when conducting tenant-screening services for landlords.

Fair housing advocates filed the lawsuit against a consumer reporting agency after its tenant screening product allegedly disqualified a disabled Latino man with no criminal convictions from moving in with his mother. The complaint alleged that the company’s screening product provided landlords with an “accept or decline” decision based on an assessment of an applicant’s criminal record. The lawsuit claimed that the screening company’s product discriminates based on race, national origin, and disability in violation of the Fair Housing Act.

The court rejected the company’s claim that the case should be dismissed because fair housing laws didn’t reach its services. According to the court, the company “held itself out as a company with the knowledge and ingenuity to screen housing applicants by interpreting criminal records and specifically advertised its ability to improve ‘Fair Housing compliance.’” Because consumer reporting companies functionally make rental admission decisions for landlords that use their services, they must make those decisions in accordance with fair housing requirements [Fair Housing Center et al. v. CoreLogic Rental Property Solutions, LLC, March 2019].

"Fair Housing Coach" articles are a benefit of MHCO membership.  Sharing, duplication is prohibited.

1. Question:  I am using MHCO leases that I will renew in three years.  The leases provides for a rent increase each year of the lease of 4.5%.  Going forward, can I now increase rent 6% each year that is left of the lease or do I have to stick with the 4.5%?  

Answer: Sorry, the new law does not give you a choice. You are bound by the terms of your existing lease, even if the new law raises the cap. In fact, the law ignores existing lease agreements created before the September 1, 2025 date it goes into effect. In my opinion, it would be impossible for the law to retroactively adjust the terms of an existing contract predating the law. In other words, it can affect the rents commencing on or after January 1 2026. So your 4.5% increase cap applies until the last day of the third year of your lease. You can amend your leases after the 3-year term if you follow the protocol in ORS 90.545(2), but the new rent would be subject to the caps under HB 3054.

2. Question: We have storage agreements that we are planning to raise the storage fees.  Are we limited to 6% increase on storage fees?

Answer: This is an interesting question and raises issues beyond the scope of this general article. The reason is that “storage agreements” only apply to abandonments of personal property under ORS 90.425 and manufactured homes under ORS 90.675. These statutes contemplate just lienholders or representatives of the estate following death of a tenant living alone. 

Over the past several, park owners have created and used storage agreements for reasons other than abandoned homes; so much depends on what your storage agreement says.

In general, since the HB 3054 cap only applies to “rent” as defined in ORS 90.100(41) it would seem that the limits would not apply to charges under storage agreements.[1] But you should obtain an opinion from your own attorney.

3. Question: If I send an increase notice next month that is effective January 1, 2026, can we increase the rent 10% since the notice was sent prior to September 1, 2025?  As long as the notice is sent out by September 1, 2025 is there a limit to how far out that the rent increase is effective?

Answer:  If I understand your question, it sounds as if you would like to send out a rent increase notice beforethe September 1 2025 date of the new law, but have it apply to rents beginning on or after January 1, 2026. If that is the question, the short answer is “No.” The reason is that HB 3054 limits “rent increases” issued under ORS 90.323 and 90.324, which includes manufactured homes.

4.   Question: .  It appears that the new laws apply to RV parks, as the RV Space Rental Agreement includes the rent control parameters.  Correct?

Answer: Yes, since RVs are personal property whether they are in a manufactured housing park or a recreational vehicle park and the rent caps apply to both. See, ORS 90.323, 90.324 and ORS 197.493(1)(b)

[1] “…any payment to be made to the landlord under the rental agreement, periodic or otherwise, in exchange for the right of a tenant and any permitted pet to occupy a dwelling unit to the exclusion of others and to use the premises.” (Emphasis added.)

Answer.Under SB 608 rent increases are limited to 7% plus the September-to-September average change in the CPI, for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor in September of the prior calendar year (“the CAP”)

To increase rent on a month-to-month tenancy, the Landlordmust:

• Give 90-days’ advance written notice (MHCO Form 49)

• Increases may not exceed theCAP.

• Note: For manufactured housing communities in the City of Portland,  Ordinance 30.01.085 provides for the payment of Relocation Assistance for tenants when the rent increase is 10% or more.

The writtennotice must state:

• Amount of rentincrease;
• Amount of the new rent (i.e. total of old rent plusincrease);
• Facts supporting the Exemption,[1]if the increase is above the CAP;  and
• The date on which the increase becomes effective.

No later than September 30th of each year, the Oregon Department of Administrative Services (“the Department”) is required to calculate the maximum annual rent increase percentage under theC AP for the following calendar year as seven percent (7.00%) plusthe September annual 12-month average change in the in the CPIas most recently published by the Bureau of Labor Statistics of the United States Department ofLabor. For the calendar year 2021 that figure is 9.2% (i.e. 7.00% + 2.20%).

To your question as to whether the effective date of the rent increase amount is based on when the notice was sentor when it became effective, I view this as largely academic, since the “annual 12-month average change” is based upon a calculation of the percent change relative to the previous July through August. Thus, the maximum rent CAP of 9.20% will apply to the calendar year 2021, beginning on January 1, and will be known 90 days before January 1, 2021. If the notice is hand-delivered, or nailed and mailed on October 1, 2020, it would be both legal when sent, and legal when it became effective.[2] 

If your rent increase was over the correct maximum figure of 9.20%, but failed to set forth the facts supporting your exemption, you would be in violation of the CAP, which could make you liable to the tenant for 3X the monthly rent, plus actual damages, costs and attorney fees. Also, being wrong would invalidate your increase notice.

By: Dale Strom

Dale Strom is a second generation Manufactured Home Community landlord. He is a Board Member, past President and current Treasurer of MHCO.

This is the fourth of a multiple part series on a private owner of a Manufactured Home Community willingly attempting to sell that Community to an Association of tenants within that Community. Riverbend MHP is a 39 space community located within the city limits of Clatskanie, OR.

In the third part, the meeting with the tenants is held in Clatskanie, OR. The turnout of the tenants was overwhelming to the author, as well as the enthusiasm of those in the Clatskanie PUD board room. The Author ends this day feeling that this purchase will, more than likely, have a good chance to occur.

In this fourth part, the author now awaits hearing from CASA the Association is formed and learning about the steps being taken during the due diligence, fund acquisition and appraisal periods. Soon, the closing date, November 1, will be here.

*****

Now that I'm home, and just spoken with my onsite manager about what occurred at the meeting, unknowingly, I am entering the Michael Collins phase. Who is Michael Collins you ask? The end of part 3 of this series will give you a hint. I will bring the Michael Collins analogy full circle later in this article.

The meeting at the Clatskanie PUD with the tenants was on June 26, a Tuesday. Other than my manager, I get no feedback from anyone at the meeting. It was either that Thursday or Friday that I call the phone number of the Development Director. No answer; so a message is left on the voice mail. The purpose of my call was to get a summary of what occurred after I exited the meeting.

No response to my message. I'm not going to send another message or phone call. Maybe I'm not to know what went on. Maybe there are things in flux where the information that I'm looking for is not solid. I will wait.

On July 5, nine days after the meeting with the tenants, I get an email from First American Title that a Title Report will be sent to me for my review and approval. I am given a gesture of a happy closing from the Escrow Officer. I guess this purchase is going through.

In a sale to a tenant group in order to form a cooperative, all homes must be owned by the occupants. There can be no park owned homes in a cooperative. OK, this is a small part of this process that I wasn't aware of. Not that it is a problem; but my manager lives in one home and another tenant that is on Section 8 assistance lives in another home that I both own. The home that my manager lives in shouldn't be a problem. I can finance that home to her and her husband, change the ownership documents to their names and I will become a lienholder.

The other home may be an issue. How do you sell a home to a person that doesn't have the proverbial pot to pee in"? To sell Riverbend

The nationwide need for affordable housing is a boon to our wider industry. Many factories across the US are operating at capacity, or even adding shifts. In recent years, customers could expect their homes delivered within three or four weeks after ordering; due to current production demands, it's now common to wait six or eight weeks, or even longer.

Financing for buyers of manufactured homes in parks is STILL very difficult and expensive.

The collapse of the manufactured home consumer lending market in the late 1990s and early 2000s resulted in far fewer lenders, and more stringent underwriting standards. As a result, qualifying for a manufactured home loan is a real challenge to the consumers who most need affordable housing.

I just sold a new home in my park and saw firsthand how difficult it is for a buyer. The buyer was a parent who would be the sole borrower, but needed his daughter on title to comply with my park's requirements. This is known as a 'Buy-for' and has for decades been a common scenario for the major lenders who fund home sales in parks; but this particular bank had recently changed its underwriting guidelines and the Buy-for became an issue at the 11th hour, resulting in a two-week delay.

Then, the bank realized it had somehow transposed the borrower's social security number with another application throughout the process, and upon discovering my buyer's credit score was lower than they thought, demanded 35% down payment instead of the 20% they were prequalified on. Another two-week delay. At that point, the buyer bypassed the mortgage broker and started calling the bank directly, pleading and on the verge of a nervous breakdown because he'd passed on other housing options for his daughter on the bank's assurances that this loan was teed up and closing imminently.

The end results:

• A ten-week process from buyer's initial loan application to funding of loan (from one of the largest providers of such loans).
• An appraisal that valued the brand-new Energy Star, option-loaded home at less than 70% of what I paid the factory for it.
• The buyer paid 35% down payment ($17,500) on a $50,000 purchase.
• Closing fees, points and broker's commission were added into the loan balance and amortized.
• The buyer was subjected to stressful false starts and apparently unanchored underwriting standards...
• ... and he's paying 13.5% APR for the privilege of getting the loan!

These types of lending barriers -- combined with the restrictions and liability risk foisted on park owners under the Dodd-Frank act - illustrate the pressures of the market that are suppressing manufactured housing sales, compared to past markets where credit was more accessible.

Though the process was sometimes excruciating for the buyer, he and his daughter (my new resident) are thrilled with the outcome: They own a brand new, warrantied, Energy-Star rated 2 bed/1 bath home with covered front porch, gabled entry, lap siding, 12" eaves, stainless appliances, gas furnace/water heater/range, skylights, upgraded cabinets and carpet, set up in the middle of the hottest real estate market in the nation... and purchased at $72/square foot. See photo at top of page.

Federal Section 8 Vouchers can now be used to purchase manufactured homes

President Obama signed the Housing Opportunity through Modernization Act of 2016 (H.R. 3700) into law on July 29th, 2016. Among other actions, this law authorizes Section 8 housing vouchers to be used toward the full annual cost of purchasing a manufactured home.

As there are more than two million households in the US receiving federal housing assistance through Section 8, this could be a significant boost to the industry, and to low-income residents who desire to be homeowners.

Perhaps this is an early indicator of evolving social attitudes towards manufactured housing, and the benefit we provide to our residents as community owners..?

Sell your park to residents and pay no state capital gains tax

Did you know that Oregon law provides a full state capital gains tax exemption to park owners who sell their communities to a tenant's association, or similar entity? Depending on your individual tax situation, this exemption could save you many thousands of dollars in tax liability upon sale!

ORS 316.792 amended Oregon tax law to authorize the exemption. It reads in part: 'To qualify, the park must have been sold to a tenant's association nonprofit organization, community development corporation, or a housing authority.'

As a mobile home park real estate broker, I often work with CASA (Community Assistance and Shelter Association), a nonprofit organization that assists park residents in creating tenant's associations to purchase their communities. If you are considering selling your park, there are several advantages to considering a resident purchase through CASA. Call me at 503-653-3887 if you have any questions.

Contact Information:

Multifamily and Mobile Home Park Investing
3215 SE Raymond St.
Portland, OR 97202

Tel: 503-242-0033
Fax: 503-281-4054
Cell: 503-653-3887
tydowning@westernequities.com