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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;

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 and owns two manufactured home communities in Oregon.

This is the fifth 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.

The fourth part of this series covered a period of time immediately after the tenants met with representatives from CASA to early October where both parties were anticipating to sign a purchase agreement on November 1. This period of time of will encompass almost 5 months.

The author is called by both CASA's Executive Director and the Development Manager. Obviously, there is something that isn't going according to schedule. Obviously, November 1 will come and go without the completion of the sale.

Before we get back to the phone call from CASA, a few details that occurred after September 1 were not mentioned in thefourth part of this series.

THE PAPERWORK PROCESS - The Cooperative requested an appraisal on Riverbend for the purpose of financing. An application for Capital Needs Assessment was required to fund the appraisal. Although this process was a few days late, this shouldn't delay the sale, if any, at all. The request for the appraisal was made on or around September 17. The completed appraisal was submitted to the State on October 16.

The appraisal, once completed, is the last and remaining document for the application process. The application then activates the underwriting process. When the State grants its approval of the underwritten application, it is then forwarded to the Oregon Housing Stability Council (HSC) for the final approval. So, who then gives the financing approval?

Grant agreements are then drafted and agreed to by CASA, the Cooperative and the Department of Justice for comments and approval of the funds needed to finance this purchase agreement. Once the agreement has gone through the many approvals and those signatures have been secured, the sale then gets the go ahead. The closing is all that remains. 

PARK OPERATIONS - Always in the back of my mind in the 4thquarter of each year is budgeting and my assessment for a need to increase the rent. Scheduled rent increases that I have asked of the tenants usually takes place on January 1. If the sale does not go through as expected, I will need to start in late September on implementing the increase.

All Oregon MHP landlords know that when they feel that they must increase their rents, that landlord will immediately turn to their Oregon Revised Statutes and go directly go to ORS 90.600. Those landlords will then be reminded that all tenants will need to be given a 90 day notification upon a landlords need for such an increase. In this case, I needed to get my notifications in the mail by September 26 to insure that the tenants did get their notices by September 30 in time for the January 1 implementation. (In Oregon, a tenant needs to be properly served via first class mail so that the notices are in their possession for the full 90 days before the rent is due).

My tenants were now aware that if I was still the owner of the community on January, their rents were now to be increased from $370 to $380 per month for the New Year. (Yes, that is the going rate of MHP rents in the small city). The request for the rent increase at the beginning of the year would become prophetic in more than one way.

Now we have an appraisal, capital needs assessment, an application, a submittal to the State for underwriting, approval by HSC for final approval, financing and finally approval by the Department of Justice, CASA and the Cooperative. And then we are ready for a closing on November 1. What could possibly go wrong???

Receiving the phone call from the Executive Director and Development Manager of CASA, they informed me that the events of their due diligence, application and approval process leading to a final sale was running behind their timeline. Their request was that we agree to and move back the closing date to March 1.

If you remember from the first part of this series, I wanted to sell this community for several reasons. I thought that the possible sale to the tenants would work for me because I was not going to exercise my 1031 option and I wanted to sell but didn't need to sell. The exemption of the State Capital Gains was another huge benefit that does not go ignored. I could wait when the purchasing party was ready.

I also mentioned in the first part of the series that my terms on selling would increase the Ernest Money by $10,000 per month for 2 months for any delay by the buyer for this sale.

CASA did want to delay the sale of the park back to March 1 because of delays of the process that the buyer needs to achieve in this process. It appears that the delay could possibly be with the Department of Justice. It has been suggested to me that the DOJ accomplishes its work on its timeline and doesn't have any kind of fast track program for this type of case. Whatever the delays were, the Ernest Money was increased by $20,000.

Then there is the case of my onsite manager. She has been there the entire 12 _ years that I have owned the community. She has spoken to me over the past 2 or more years about retirement and spending more time for herself and family. She does not want the responsibility of park management anymore. My agreement with my manager when I signed the Purchase Agreement was that she would work for me until November 1. This was extended another month, when the extension by CASA was requested. My manager still resides in the park and will continue to live there as a tenant. 

During this time, I have also been in frequent contact with the Coop board President and the Treasurer about the status of the park. This can lead to problems of a conflict of interest here although the best interest of the Community is most important to both parties. I continue to speak with the onsite manager regarding the status of the park. When it is necessary to speak with the 2 board members, usually the conversation will swerve into the current status of the park and how some issues need immediate attention. With all that has occurred since the formation of the board for the Cooperative, I can honestly say that I have had a great working relationship with both the President and the Treasurer. Also adding that they, in no way, have acted in my behalf to take care of any issues that I have a need to accomplish. I have seen this as phasing out my current manager and bring in the new ownership.

I do look forward to closing this deal in that we have been working on this sale for almost 5 months. Now I look at this delay from another standpoint. We are getting late in 2018. Pushing this sale back into 2019 will make tax planning much easier in that I have more time to do that planning. In addition, the rent increase will be implemented on schedule on January 1. It became prophetic in that the $380 rent is the amount that the Cooperative will start asking its members upon closing.

It remains to be seen if this rent in the long run can be sustained by the Cooperative or if an adjustment of the rent will need to be made.

Now that we are targeting the close sometime in the first quarter of 2019, I can now anticipate enjoying the Thanksgiving and Christmas holidays. But I also need to find the proper way to sell" the 2 park owned homes to the "occupants" (not a complete legal description of the habitants) of those homes.

Recently

Answer. ORS 90.396 addresses acts or omissions justifying 24-hour notice of termination. This type of event is covered under the statute. If provides for termination if:

“The tenant, someone in the tenant’s control or the tenant’s pet seriously threatens to inflict substantial personal injury, or inflicts any substantial personal injury, upon a person on the premises other than the tenant;”

What you describe clearly qualifies on its face for a 24-hour notice. However, if this is not something expected, or if the tenant has some mental/anger issues which qualify for treatment, you may want to get more information before proceeding. 

Here are some things to remember:

• 24-hours’ notice is a minimum; you can always allow a longer period of time;
• This violation is not curable like the 30-day notice;

The 24-hour notice should not be used where a 30-day curable notice would likely suffice in securing compliance. Your description clearly suggests a 24-hour notice is appropriate, since allowing the right to cure may not be appropriate. Plus, there is likely too much risk in permitting the resident to return, only to cause further injury to others.

For purposes of service of the 24-hour notice you would normally send by regular mail, personally serve, or mail and attach the notice to the front entrance of the door.  However, if you know a tenant is in jail or here, being housed in a hospital, using the above methods will not likely provide the notice you need. You should contact the institution (e.g., sheriff’s office, hospital admitting desk, etc.) to find out how they permit notices to be delivered to persons in confinement.

In less serious cases, e.g., verbal abuse (not threats of imminent injury, however), the 30-day notice may be more appropriate. Now that ORS 90.630 has a 3-day “cure period” for isolated events, it can be a useful tool that does not prolong the unpleasantness for managers having to wait 30 days. 

For example, if the verbal conduct has continued, and shows no sign of abating, issuing a notice under ORS 90.630 can be used. It now becomes noncurable quickly if breached, so management can use it effectively to stop the conduct. 

Part of the issue today is using the courts to enforce evictions considering Covid delays and the housing crisis. Accordingly, you must be judicious when using termination notices, i.e., only in those cases you believe are necessary either for management safety, or the protection of other residents. 

If the conduct does not rise to “termination notice” level, you might consider using mandatory mediation to secure voluntary compliance. See, ORS 90.767.

Of course, the best solution to threats, intimidation, and more serious conduct is to avoid it by choosing your tenants carefully. This means vetting applicants closely before ever being allowing in the community. Unfortunately, that is not always an option, which is why the 24-hour notice is the tool of last resort.

Lastly, remember that judges are hesitant to terminate a tenant in such cases, unless it is an issue of health and safety of management and the residents. Before proceeding, check with your attorney to discuss how best to proceed.

Answer:  There are several issues that I see repeatedly.  Here are a few:

1. Managers not adequately papering their file before taking legal action against a resident.  Judges want to see that you’ve “walked the extra mile” with the resident, making every reasonable effort to bring them into compliance.  This means starting with a personal conversation with them about the problem and then making notes of the date, time, and matters discussed and the resident’s responses. Next try a note or letter without using a formal termination notice.  Only after it becomes apparent that you will have to go the formal route should you do so. 

2. Failing to act promptly when a resident violate the rules.  Although many things are not waivable, such as maintenance violations, some definitely are, such as unpermitted pets or occupants.  When there is a belief that the resident has either an unapproved pet or occupant, the resident should be contacted immediately.  With pets (assuming they are not in violation of the rules against breeds, or numbers), you want to promptly get them onto a Pet Agreement.  With occupants you should use the Occupancy Agreement and run a background check. (Make sure you don’t require a financial background check, since that is not permitted on occupants – only tenants.) If the resident delays in complying, get a 30-day notice issued and do not accept rent until the matter is resolved.  I have seen too many managers accept rent and work for months with the resident, not realizing that they are being lulled into believing the resident will ultimately cooperate – until it’s too late.

3. Failing to properly prepare a notice of termination.  Oregon law is very strict when it comes to the preparation of notices. Even the slightest error can be fatal. Make sure you’re using the correct MHCO form [e.g. don’t use a 30-day notice for failure to maintain under ORS 90.630, when you should be using a 30-day notice for repair and deterioration under ORS 90.632.]  When you draft the notice, have someone else read it for content and accuracy.  Then do so again yourself.  If you realize that you sent out an incorrectly prepared notice, send out a corrected one and state that it rescinds and replaces the incorrect one.  

4. Accepting residents you have doubts about.  Always do a “gut-check.”  If you think the applicant would be problematic, look closely at their application and references.  While you cannot and should not reject applicants arbitrarily, if they are on the cusp – i.e. you could legitimately accept or reject - give careful consideration to your decision and don’t let it be dictated by your desire to just fill a space. 

5. Not understanding the range of solutions when dealing with a resident.  By this I mean, don’t just fire out a notice as a knee jerk reaction to a violation.  A good example is a resident who is intoxicated and gets into a verbal altercation with another resident.  Say it gets out of control, and threats are made by the resident.   If this is unusual for the resident and out of character for him, don’t simply send a 24-hour notice.  The law is quite clear that you are notto use a 24-hour notice if another form of notice, e.g. a curable 30-day notice would work.  Remember, a repeat violation with six months following the date of the 30-day notice gives you the right to terminate with a 20-day non-curable notice.  Judges don’t like to terminate manufactured housing residents, given the drastic consequences.  You want to show the judge that you were not being heavy-handed, but tried the most rationale and reasonable approach first.

That is the question on the minds of most MHCO members we speak to. As you have likely noticed, the costs of water, sewer, and other utilities has increased exponentially in the last few years for both commercial and residential properties alike. The addition of unrelated or undefined fees, such as street maintenance, base charges, and additional services, has become commonplace. Combine that with careless usage of water by tenants and you have a perfect storm for losing revenue. Since we cannot directly control these increasing costs or the careless usage, it is nearly impossible to try and keep up by using rent increases alone.

Our recommendation is to focus on what you can control: who is directly paying for the utility expense. According to the Alliance for Water Efficiency (http://www.allianceforwaterefficiency.org), the average submetered customer uses up to 20% less than a customer on a master metered system. In our professional experience, we have seen decreases of up to 40%. It is really no surprise that when you transfer the responsibility to the tenant, they instantly become more aware of the leaks and conservation behaviors that they had been ignoring previously. It is just human nature that if something doesn'tcost you anything, you are less likely to be conscientious.

In order to place this responsibility on the tenant and get control of your utility expenses, you need to convert your park to the "Submeter Billing Method" outlined in the Oregon statutes. This can be a daunting task to take on alone, so it is important that you use someone who is an expert. We have spent the last few years immersed in research and have designed Jet Utilities' Submeter Conversion Program around the laws specific to Oregon. We have consulted the best minds in the business, including many Coalition board members, as well as independent council. We can confidently call ourselves experts in not only regulations and project management, but also in the actual installation of the system. Jet has its own licensed journeyman plumbers who are dedicated to the installation of submeters at mobile home parks. We have the knowledge and experience to handle a park of any size, with any type of plumbing material, anywhere in Oregon, Washington, or California.

We are confident that submetering is the right thing to do for your manufactured home community. The largest obstacle that many owners face after realizing their need to submeter is finding a way to fund the project. Until recently, your choices have been very limited: use your own capital or try and secure financing on your own. Neither of those is very attractive or very easy to do given the current economic state. Jet Utilities' Submeter Conversion Program offers owners and managers a turn key solution including the funding for the equipment and installation. There are no loans to qualify for, no up-front capital, and no cost to you. How can we do this, you ask? It is simple. We already have the funding for these projects. We simply install an Automatic Meter Reading (AMR) System and utility grade water meters at each space, and then bill you a flat monthly fee that Oregon law allows you to pass directly through to the tenants.

There are some very important laws and regulations that go into the preparation of this as well as the requirement for a Unilateral Amendment to the Rental Agreement which is now available to MHCO members in the "Forms" section of the MHCO website. (MHCO Form 14 - Unilateral Amendment to Rental Agreement for Sub-Metering). This is the first step in preparing for Submeter Conversion.

For more information and a quote for your park, please visit our website www.jetutilities.com or call 1-844-JET-UTIL (844-538-8845) and ask for Erik.

Fair housing law generally prohibits discrimination based on familial status, but there’s a limited exception that applies to senior housing communities that qualify as “housing for older persons.” To qualify, senior housing communities must meet strict technical requirements. Unless they satisfy those requirements, communities may not enforce “adult only” policies or impose age restrictions to keep children from living there.

The focus of this article is on federal law, but it’s important to check the law in your state governing senior housing communities. The specifics may vary, but you could draw unwanted attention from state enforcement agencies if you exclude families with children without satisfying legal requirements to qualify for the senior housing exemption.

Example: In January 2019, the California Department of Fair Employment and Housing (DFEH) announced a $10,000 settlement in a fair housing complaint alleging familial status discrimination against the owners of a six-unit rental community and a residential real estate brokerage firm that managed the property.

Fair housing advocates filed the complaint, alleging that the property was advertised online as an “adult complex” and included a restriction of “maximum 2 adults.” During a follow-up call, the property manager reportedly told a tester that children weren’t allowed. DFEH found that the complex wasn’t a senior citizen housing development and that there was cause to believe a violation of state fair housing law had occurred.

“In California, senior housing developments can, with some exceptions, exclude residents under 55 years of age if they have at least 35 units and meet other requirements,” DFEH Director Kevin Kish said in a statement. “All other rental properties violate the law if they categorically exclude families with minor children. By identifying such policies through testing, fair housing organizations such as Project Sentinel play an important role in ensuring that families with children have access to housing.” 

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) bans housing discrimination based on race, color, religion, sex, national origin, familial status, or disability—what’s known as “protected classes.”

Congress added familial status to the list of federally protected classes when it amended the FHA in 1988. In a nutshell, the familial status provisions make it unlawful to discriminate against applicants or residents because they have, or expect to have, a child under 18 in the household. Specifically, the FHA’s ban on discrimination based on familial status apply to one or more children under 18 living with:

• A parent;
• An individual with legal custody; or
• An individual who has the written permission of the parent or custodian.

The familial status provisions also apply to pregnant woman and anyone in the process of securing legal custody of one or more children under 18.

Nevertheless, Congress recognized the need to preserve housing specifically designed to meet the needs of senior citizens. Consequently, the 1988 amendment created an exemption from the FHA’s familial status requirements for communities that qualified as “housing for older persons.” Congress later amended the law in the Housing for Older Persons Act of 1995 (HOPA), resulting in the current version of the federal exemption for senior housing.

The exemption allows senior housing communities that meet specific requirements to legally exclude families with children. The exemption applies to housing communities or facilities, which are governed by a common set of rules, regulations, or restrictions. A portion of a single building isn’t considered a housing facility or community, according to HUD. The senior housing exemption applies only to the FHA’s familial status provisions; communities must still abide by the law’s protections based on race, color, national origin, religion, sex, and disability.

The law describes three types of communities that are eligible for the senior housing exemption:

• Publicly funded senior housing communities: Housing communities where HUD has determined that the dwelling is specifically designed for and occupied by elderly persons under a federal, state, or local government program;
• 62-and-older communities: Communities intended for, and occupied solely by, persons who are 62 or older; and
• 55-and-older communities: Communities that house at least one person who is 55 or older in at least 80 percent of the occupied units and adheres to a policy that demonstrates intent to house persons who are 55 or older.

7 RULES TO FOLLOW TO AVOID FAIR HOUSING TROUBLE

IN SENIOR HOUSING COMMUNITIES

Rule #1: Comply with Technical Requirements for Senior Housing Exemption

Senior communities must adopt policies and procedures to ensure strict compliance with the technical requirements of the senior housing exemption. If you don’t comply with the law’s requirements, then you lose the exemption, which in essence makes your community automatically liable for excluding or discriminating against families with children. 

Complying with the law governing the 62-and-older exemption is relatively straightforward. To qualify, the community must be intended for and occupied solely by persons aged 62 and older. For example, HUD regulations explain that a 62-and-older community would have to refuse the application of a 62-year-old man whose wife is 59. In the same vein, a community would lose its exemption if it allowed continued residency by a current resident who married someone under the age of 62.

Complying with the law governing the 55-and-older exemption is more complicated. To qualify, the community must satisfy each of the following requirements:

• At least 80 percent of the occupied units must have at least one occupant who is 55 years of age or older;
• The community must publish and adhere to policies and procedures that demonstrate the intent to operate as “55 or older” housing; and
• The community must comply with HUD’s regulatory requirements for age verification of residents.

1. 80 percent rule. To meet this requirement, a community must ensure that at least one person 55 or older lives in 80 percent of its occupied units. The law doesn’t restrict the ages of the other occupants in those units. Furthermore, there are no age limits for the occupants of the other 20 percent, so communities may accept families with children, although they don’t have to do so.

The 80 percent rule applies to the percentage of “occupied units,” which includes temporarily vacant units if the primary occupant has resided in the unit during the past year and intends to return on a periodic basis. That means that a unit would count toward the 80 percent requirement if its 55-year-old occupant resided in the unit for only part of each year.

To maintain eligibility for the exemption, it’s a good idea to ensure that more than 80 percent of your occupied units are occupied by at least one person aged 55 or older. If you skate too close to the line, your community could be forced into a difficult situation—for example, if a 60-year-old resident dies, leaving a 54-year-old surviving spouse.

To prevent just such a problem, HUD advises communities to plan with care when renting the 20 percent portion of the remaining units to incoming households under age 55. Such planning should address notice to incoming households under the age of 55 regarding how the community will proceed in the event that the 80 percent requirement is threatened.

2. Intent to operate as senior housing. A community must publish and adhere to policies and procedures that demonstrate its intent to operate as housing for persons 55 years of age or older. HUD offers some examples of the types of policies and procedures to satisfy this requirement, including:

• The written rules, regulations, lease provisions, or other restrictions;
• The actual practices of the community used to enforce the rules;
• The kind of advertising used to attract prospective residents to the community as well as the manner in which the community is described to prospective residents; and
• The community’s age-verification procedures and its ability to produce, in response to a familial status complaint, verification of required occupancy.

3. Verification of occupancy. To qualify under the 55-and-older exemption, communities must able to produce verification of compliance with the 80 percent rule through reliable surveys and affidavits.

HUD regulations require communities to develop procedures to routinely determine the occupancy of each unit, including the identification of whether at least one occupant is 55 or older. The procedures may be part of the normal leasing arrangement. And, every two years, communities must update, through surveys or other means, the initial information to verify that the unit is occupied by at least one resident age 55 or older.

In addition, communities must establish procedures to verify the age of the occupants in units occupied by persons 55 and older through reliable documentation, such as birth certificates, driver’s licenses, passports, immigration cards, military identification, and other official documents that show a birth date. HUD regulations also allow a certification signed by any member of the household aged 18 or older asserting that at least one person in the unit is 55 or older.

Rule #2: Market Your Community as Senior Housing

For 55+ communities, it’s essential to ensure that your advertising and marketing doesn’t undercut your ability to qualify for the senior housing exemption.

To qualify for the senior exemption, the law requires communities to demonstrate an intent to provide housing for older persons. The manner in which your community is described to potential residents is among the relevant factors listed in HUD regulations to determine whether a community has complied with the intent requirement. Using the wrong words to describe yourself not only may trigger a fair housing complaint, but also undercut your ability to demonstrate your intent to operate as “55 or older” housing.

As an example, fair housing expert Doug Chasick points to the increasing number of housing developments that market themselves as “Active Adult” or “Empty Nester” communities. Yet, he points out, using the term “Adult Only” housing was outlawed back in 1988, when President Reagan signed amendments to the FHA into law. He says that some state and local enforcement agencies claim that using these phrases are always illegal because they’re incompatible with the intent requirement.

HUD doesn’t take it that far. It’s true that HUD regulations state that “Phrases such as “adult living,” “adult community,” or similar statements in any written advertisement or prospectus are not consistent with the intent that the housing facility or community intends to operate as housing for persons 55 years of age or older. But HUD says that the use of these terms does not, by itself, destroy the community’s ability to meet the intent requirement, according to HUD. If a facility or community has clearly shown in other ways that it intends to operate as housing for older persons, meets the 80 percent requirement, and has in place age verification procedures, then HUD says that the intent requirement can be met even if the term “adult” is occasionally used to describe it.

That’s not to say that Chasick says it’s a good idea to use those terms in your advertising or marketing materials. In fact, he recommends against it unless you want to be caught up in an expensive investigation or enforcement action. Instead, Chasick recommends using words like “senior housing,” “senior living community,” “a 55 and older community,” or even a “55 and Better Community” when describing your community to demonstrate your intent to operate as housing for older persons.

Rule #3: Don’t Discriminate Based on Race or Other Protected Characteristics

The FHA’s senior housing exemption is limited: It offers protection from federal fair housing claims based upon familial status as long as your community meets the FHA’s requirements to qualify as housing for older persons. It doesn’t exempt senior housing communities from any claims based on race, color, national origin, religion, sex, or disability, or other characteristic protected under state or local law.

That means that senior communities must take steps not only to qualify under the senior housing exemption, but also to ensure they don’t exclude or otherwise discriminate against applicants or residents based on race or other protected characteristic. For example, senior communities must adopt nondiscriminatory policies and procedures governing the application process and treatment of residents in addition to complying with the age-verification and other requirements to qualify for the senior housing exemption. And train your staff to apply those policies consistently to all applicants and residents, regardless of race, color, national origin, religion, sex, or disability, or other characteristic protected under state or local law.

Rule #4: Enforce Rules to Prevent Harassment by or Against Residents

Take steps to enforce rules to prevent harassment or other misconduct by or against residents. If a resident complains about being harassed by other residents based on her race, sex, or any other protected class, then you should take the complaints seriously.

You shouldn’t be expected to police the behavior of your residents, but you should make it clear that bullying or any other forms of harassment based on protected characteristics won’t be tolerated. Depending on the circumstances, you could face liability under fair housing law if you knew that a resident was subjected to severe and persistent abuse from other residents, but you did nothing to stop it.

Example: In August 2018, a federal court reinstated a fair housing case against an Illinois retirement community for harassment and retaliation. The complaint alleged that the resident endured months of physical and verbal abuse by other residents because of her sexual orientation, and that despite her complaints, the community did nothing to stop it and in fact, retaliated against her because of her complaints.

Fair housing law prohibits discriminatory harassment that creates a hostile housing environment. To prove the claim, the resident had to prove that: (1) she endured unwelcome harassment based on a protected characteristic; (2) the harassment was severe or pervasive enough to interfere with her tenancy; and (3) there was reason to hold the community responsible.

The resident’s complaint satisfied the first and second requirements. She alleged that she was subjected to unwelcome harassment based on her sex, and the community agreed that the court’s earlier ruling—that employment discrimination based on sexual orientation qualifies as discrimination based on sex—applied equally to housing discrimination claims. And the alleged harassment could be viewed as both severe and pervasive—for 15 months, she was bombarded with threats, slurs, derisive comments about her families, physical violence, and spit.

The complaint also satisfied the third requirement. When the case goes back for further proceedings, the focus will be on the management defendants to determine whether they had actual knowledge of the severe harassment that the resident was enduring and whether they were deliberately indifferent to it. If so, then they subjected the resident to conduct that the FHA forbids [Wetzel v. Glen St. Andrew Living Community, August 2018].

Rule #5: Watch for Potential Disability Discrimination Claims

Senior housing communities must pay particular attention to fair housing protections for individuals with disabilities. The FHA prohibits communities from excluding individuals with disabilities or discriminating against them in the terms, conditions, and privileges of the tenancy.

Example: In December 2018, the owners and operators of a California senior housing complex agreed to pay $2,500 to resolve claims that they violated state fair housing laws by denying housing to a prospective resident because she has a disability.

In her complaint, the prospect alleged that the property manager initially approved her tenancy application but rescinded the approval after meeting her and seeing that she uses a wheelchair. The prospect’s daughter had handled most aspects of the application process, including viewing the unit. When the prospect arrived in a wheelchair to sign the lease, the property manager allegedly refused to rent her the unit and accused her and her daughter of misrepresenting the prospect’s identity by bringing other individuals to view the unit.

“The Fair Employment and Housing Act promises that all tenants, regardless of disability, have equal access to housing,” Kevin Kish, Director of the California Department of Fair Employment and Housing, in a statement. “Housing providers have a legal obligation to eliminate unlawful bias from every stage of the housing application process.”

Fair housing law bans discrimination against applicants and residents because they—or someone they’re associated with—is a member of a protected class. HUD says that the FHA’s disability provisions were intended to prohibit not only discrimination against the named tenant, “but also to prohibit denial or housing opportunities to applicants because they have children, parents, friends, spouses, roommates, patients, subtenants or other associates with disabilities.”

Example: In December 2018, HUD announced that a New Jersey condo association representing residents of a 55-and-older condominium development has settled a complaint alleging that it refused to sell a condo to a man with disabilities and his wife because the couple planned to have their adult disabled daughter live with them. The settlement requires the association to pay a $9,000 civil penalty to the United States, undergo fair housing training, and make changes to the associations’ bylaws as they relate to reasonable accommodations. The wife, now a widow, is pursuing claims against the association in state court. The association denies that it discriminated against the family.

“No family whose members have disabilities should be denied the reasonable accommodations 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. “Hopefully, today’s ruling will remind homeowner associations of their obligations under the Fair Housing Act and encourage them to follow the law” [Secretary, HUD v. Tamaron Association, December 2018].

Senior communities must be prepared to comply with the full array of disability protections. For example, the FHA requires communities to make reasonable accommodations to rules, policies, practices, or services to enable an individual with a disability to fully enjoy use of the property. The law also requires owners to permit residents with a disability, at their expense, to make reasonable modifications to the housing if necessary to afford them full enjoyment of the premises.

Example: In December 2017, the owner and property manager of a California community agreed to pay $11,000 to resolve a HUD complaint alleging disability discrimination against a resident with a mobility impairment. According to her complaint, the resident requested to have a live-in aide and a key to a locked gate near her unit to make it easier for her to come and go. In both instances, she said that the owner and property manager asked her intrusive questions about her disability, challenged whether she really had a disability, asserted that the development was for individuals who could live independently, and ultimately denied her requests.

“Residents with disabilities have the right to reasonable accommodations that allow them to use and enjoy their home, without unnecessary and invasive questioning,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement. “HUD will continue to work with housing providers to ensure they meet their obligation to comply with national fair housing laws.”

Example: In December 2018, the Fair Housing Justice Center (FHJC) announced that a settlement has been reached with the remaining defendants in two federal lawsuits against the operators of dozens of nursing homes and assisted living facilities for allegedly refusing to make American Sign Language (ASL) interpreter services available to deaf and hard-of-hearing residents. Though denying the allegations, the defendants in the latest settlement agreed to pay $245,675 in damages and attorney’s fees to resolve the case.

The FHJC says that the settlements in these cases ensures that deaf and hard-of-hearing people will have access to ASL services and other auxiliary aids and services as a reasonable accommodation in 61 nursing homes and 35 assisted living facilities in the New York City region. The settlement agreements reached with the defendants in these two cases also yielded a total monetary recovery of nearly $1.2 million in damages and attorney’s fees.

Rule #6: Review ‘Independent Living’ Requirements

Depending on the circumstances, you could face a fair housing complaint for imposing independent living requirements on applicants or residents. Courts have found that a policy requiring applicants to demonstrate an ability to live independently violates fair housing laws protecting individuals with disabilities [Cason v. Rochester Housing Authority, August 1990].

Example: In September 2017, the owner and managers of a 41-unit community in California agreed to pay $18,500 to resolve allegations of discrimination against elderly residents with disabilities who relied on support from caregivers. A fair housing organization filed the complaint on behalf of an elderly resident facing eviction after returning from the hospital with support from a part-time caregiver. Allegedly, the owner and property manager said that they didn’t want the “liability” of her remaining in her home, threatened to call the county to have her “removed,” ordered her to move out, and asked invasive questions about the extent of her disabilities. According to the organization’s complaint, its investigation corroborated the resident’s allegations and revealed that testers calling for disabled relatives were told that the complex was for “independent living” and people who “can take care of themselves.”

Example: In Michigan, fair housing advocates recently sued an affordable senior housing apartment complex, alleging that the community applies “independent living” requirements to force residents with disabilities to move, even if those residents are meeting all the requirements of the lease. The complaint asks the court to recognize the community’s practices as discriminatory and prevent the complex from forcing tenants with disabilities to leave their homes when they remain capable of meeting all of their lease obligations.

“Civil rights laws ensure that people with disabilities can decide for themselves where and how to live in the community of their choosing,” says Susan Silverstein, Senior Attorney at AARP Foundation. “The law doesn’t allow landlords to refuse to accommodate tenants with disabilities,” adds a lawyer for the Michigan Clinical Law Program, “and it certainly doesn’t allow landlords to refuse to let tenants age in place just because they might need some outside help.”

Example: And in New York, fair housing advocates and two individuals sued the state and four adult care facilities, alleging that they maintained and enforced blanket policies barring wheelchair users, regardless of their individual needs or abilities, and steered applicants who use wheelchairs to nursing homes.

One of the individual plaintiffs, an elderly woman with disabilities, alleged that she was barred from returning to one of the communities once she began using a wheelchair. According to the woman, the community tried to evict her because of an internal policy barring admission of people who use wheelchairs and state health department regulations that supported such policies at these and other facilities.

The lawsuit also alleges that New York State promotes disability discrimination through its regulations and policies, including its policy permitting adult homes to ban wheelchair users from admission. Until recently, state health department regulations stated that adult homes and assisted living programs should not admit or retain people who are “chronically chairfast.”

The state has since amended the regulations to eliminate the phrase “chronically chairfast” and to add language that operators may not exclude individuals solely because they primarily use a wheelchair for mobility and must make reasonable accommodations as necessary to comply with the law. Last fall, the court issued an order directing the community to allow the elderly woman to return to her home. The case is still pending in federal court.

Rule #7: Comply with Applicable State and Local Laws

It’s critical to review applicable state and local fair housing laws because the laws affecting senior housing may vary substantially, depending on your location. For example, HUD points out that federal fair housing law doesn’t cover age discrimination, which is a protected characteristic under some state and local fair housing laws.

Moreover, HUD notes that some state and local governments with fair housing laws that have been determined to be substantially similar to the federal law may not include an exemption from the familial status discrimination for housing for older persons.

Alternatively, some state or local laws impose different standards for the senior housing exemption. In California, for example, the legislature adopted more stringent requirements on senior housing than is required under the FHA “in recognition of the acute shortage of housing for families with children” in that state. The law imposes specific requirements related to accessibility, common areas, and refuse collection.

Still other state and local laws apply an older version of the federal exemption. Under the original 1988 legislation, 55-and-older communities had to have “significant facilities and services specifically designed to meet the physical or social needs of older persons” to qualify for the exemption.

Though Congress eliminated the “significant services and facilities” requirement from federal fair housing law, some states didn’t follow suit. In Georgia, for example, communities are still required to furnish “significant facilities and services specifically designed to meet the physical or social needs of older persons” to qualify for the senior housing exemption.

Tip: HUD urges communities to check all relevant state, local, and federal laws, as well as any requirements imposed as a term of governmental financial assistance before implementing policies and procedures that limit residents’ eligibility. Because of the complexity of the issues involved, you should get legal advice from an attorney well versed in the legal requirements for senior housing issues in your jurisdiction. 

Form 1099 and Protecting Your Investment Article provided by Kathleen Landau, Accounting Manager for Commonwealth Real Estate Services since 2009. Kathleen brings over 20 years of accounting experience and knowledge to the Commonwealth team, and as a multi-site property owner herself, understands the unique needs facing property investors and small business owners. ### So before I give you another accounting rule we are enforcing, let me say the goal is to protect your investment! We live in a very litigious society and need to be aware of potential risks and ways to protect our assets. Commonwealth employees are insured through workers' compensation policies and also provided regular training regarding workplace safety. Another area we are striving to improve risk management and compliance is in the area of hiring contractors. When a contractor is hired, the onsite manager must obtain verification that the contractor is licensed, bonded, and insured. In addition, a Form W-9 must be provided for purposes of reporting non-employee compensation on a Form 1099-Misc at the end of the year. The downturn in the economy resulted in many contractors allowing their insurance and licensing to lapse. We are currently working on two projects to confirm all contractors are still in compliance. The first will be a "preferred vendor" list by location. Commonwealth is compiling lists by geographic areas of approved vendors so in an emergency situation your onsite manager or regional manager knows what vendors have up-to-date information on file. Secondly, we will be combining this vendor list with our accounting program to alert us when we need to update the insurance information. The reason to remind our customers of this policy is that some may have "tried and true" contractors that would not be eligible to work at the communities unless they can provide the necessary information requested OR become an employee to complete the task you wish to hire them for. I mention the latter as it is a legal remedy to tackling some of the small jobs that may be better served by hiring specialized temporary employees through agencies. Another option is hiring an individual on a task by task basis for their special skill. Commonwealth wants to be sure we are doing our best to protect your investment by limiting your risk exposure, both legal and financial, associated with contractors working at your communities. Another reminder is that we do send 1099-Misc forms to all contractors annually. The form 1099-Misc reports all non-employee compensation. Amounts paid for employee compensation are reported on a Form W-2. Employees cannot receive a 1099-Misc and Form W-2 from the same employer for similar work. In order to keep away from any proof of control issues, our company policy is to send a W-2 to all employees and make sure all compensation for that individual runs through payroll. All independent contractor payments are reported on a 1099-Misc.

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) bans housing discrimination based on race, color, religion, sex, national origin, familial status, or disability—what’s known as “protected classes.”

Congress added familial status to the list of federally protected classes when it amended the FHA in 1988. In a nutshell, the familial status provisions make it unlawful to discriminate against applicants or residents because they have, or expect to have, a child under 18 in the household. Specifically, the FHA’s ban on discrimination based on familial status apply to one or more children under 18 living with:

• A parent;
• An individual with legal custody; or
• An individual who has the written permission of the parent or custodian.

The familial status provisions also apply to pregnant woman and anyone in the process of securing legal custody of one or more children under 18.

Nevertheless, Congress recognized the need to preserve housing specifically designed to meet the needs of senior citizens. Consequently, the 1988 amendment created an exemption from the FHA’s familial status requirements for communities that qualified as “housing for older persons.” Congress later amended the law in the Housing for Older Persons Act of 1995 (HOPA), resulting in the current version of the federal exemption for senior housing.

The exemption allows senior housing communities that meet specific requirements to legally exclude families with children. The exemption applies to housing communities or facilities, which are governed by a common set of rules, regulations, or restrictions. A portion of a single building isn’t considered a housing facility or community, according to HUD. The senior housing exemption applies only to the FHA’s familial status provisions; communities must still abide by the law’s protections based on race, color, national origin, religion, sex, and disability.

The law describes three types of communities that are eligible for the senior housing exemption:

1. Publicly funded senior housing communities: Housing communities where HUD has determined that the dwelling is specifically designed for and occupied by elderly persons under a federal, state, or local government program;
2. 62-and-older communities: Communities intended for, and occupied solely by, persons who are 62 or older; and
3. 55-and-older communities: Communities that house at least one person who is 55 or older in at least 80 percent of the occupied units and adheres to a policy that demonstrates intent to house persons who are 55 or older.

7 RULES TO FOLLOW TO AVOID FAIR HOUSING TROUBLE

IN SENIOR HOUSING COMMUNITIES

Rule #1: Comply with Technical Requirements for Senior Housing Exemption

Senior communities must adopt policies and procedures to ensure strict compliance with the technical requirements of the senior housing exemption. If you don’t comply with the law’s requirements, then you lose the exemption, which in essence makes your community automatically liable for excluding or discriminating against families with children. 

Complying with the law governing the 62-and-older exemption is relatively straightforward. To qualify, the community must be intended for and occupied solely by persons aged 62 and older. For example, HUD regulations explain that a 62-and-older community would have to refuse the application of a 62-year-old man whose wife is 59. In the same vein, a community would lose its exemption if it allowed continued residency by a current resident who married someone under the age of 62.

Complying with the law governing the 55-and-older exemption is more complicated. To qualify, the community must satisfy each of the following requirements:

• At least 80 percent of the occupied units must have at least one occupant who is 55 years of age or older;
• The community must publish and adhere to policies and procedures that demonstrate the intent to operate as “55 or older” housing; and
• The community must comply with HUD’s regulatory requirements for age verification of residents.

1. 80 percent rule. To meet this requirement, a community must ensure that at least one person 55 or older lives in 80 percent of its occupied units. The law doesn’t restrict the ages of the other occupants in those units. Furthermore, there are no age limits for the occupants of the other 20 percent, so communities may accept families with children, although they don’t have to do so.

The 80 percent rule applies to the percentage of “occupied units,” which includes temporarily vacant units if the primary occupant has resided in the unit during the past year and intends to return on a periodic basis. That means that a unit would count toward the 80 percent requirement if its 55-year-old occupant resided in the unit for only part of each year.

To maintain eligibility for the exemption, it’s a good idea to ensure that more than 80 percent of your occupied units are occupied by at least one person aged 55 or older. If you skate too close to the line, your community could be forced into a difficult situation—for example, if a 60-year-old resident dies, leaving a 54-year-old surviving spouse.

To prevent just such a problem, HUD advises communities to plan with care when renting the 20 percent portion of the remaining units to incoming households under age 55. Such planning should address notice to incoming households under the age of 55 regarding how the community will proceed in the event that the 80 percent requirement is threatened.

2. Intent to operate as senior housing. A community must publish and adhere to policies and procedures that demonstrate its intent to operate as housing for persons 55 years of age or older. HUD offers some examples of the types of policies and procedures to satisfy this requirement, including:

• The written rules, regulations, lease provisions, or other restrictions;
• The actual practices of the community used to enforce the rules;
• The kind of advertising used to attract prospective residents to the community as well as the manner in which the community is described to prospective residents; and
• The community’s age-verification procedures and its ability to produce, in response to a familial status complaint, verification of required occupancy.

3. Verification of occupancy. To qualify under the 55-and-older exemption, communities must able to produce verification of compliance with the 80 percent rule through reliable surveys and affidavits.

HUD regulations require communities to develop procedures to routinely determine the occupancy of each unit, including the identification of whether at least one occupant is 55 or older. The procedures may be part of the normal leasing arrangement. And, every two years, communities must update, through surveys or other means, the initial information to verify that the unit is occupied by at least one resident age 55 or older.

In addition, communities must establish procedures to verify the age of the occupants in units occupied by persons 55 and older through reliable documentation, such as birth certificates, driver’s licenses, passports, immigration cards, military identification, and other official documents that show a birth date. HUD regulations also allow a certification signed by any member of the household aged 18 or older asserting that at least one person in the unit is 55 or older.

Rule #2: Market Your Community as Senior Housing

For 55+ communities, it’s essential to ensure that your advertising and marketing doesn’t undercut your ability to qualify for the senior housing exemption.

To qualify for the senior exemption, the law requires communities to demonstrate an intent to provide housing for older persons. The manner in which your community is described to potential residents is among the relevant factors listed in HUD regulations to determine whether a community has complied with the intent requirement. Using the wrong words to describe yourself not only may trigger a fair housing complaint, but also undercut your ability to demonstrate your intent to operate as “55 or older” housing.

As an example, fair housing expert Doug Chasick points to the increasing number of housing developments that market themselves as “Active Adult” or “Empty Nester” communities. Yet, he points out, using the term “Adult Only” housing was outlawed back in 1988, when President Reagan signed amendments to the FHA into law. He says that some state and local enforcement agencies claim that using these phrases are always illegal because they’re incompatible with the intent requirement.

HUD doesn’t take it that far. It’s true that HUD regulations state that “Phrases such as “adult living,” “adult community,” or similar statements in any written advertisement or prospectus are not consistent with the intent that the housing facility or community intends to operate as housing for persons 55 years of age or older. But HUD says that the use of these terms does not, by itself, destroy the community’s ability to meet the intent requirement, according to HUD. If a facility or community has clearly shown in other ways that it intends to operate as housing for older persons, meets the 80 percent requirement, and has in place age verification procedures, then HUD says that the intent requirement can be met even if the term “adult” is occasionally used to describe it.

That’s not to say that Chasick says it’s a good idea to use those terms in your advertising or marketing materials. In fact, he recommends against it unless you want to be caught up in an expensive investigation or enforcement action. Instead, Chasick recommends using words like “senior housing,” “senior living community,” “a 55 and older community,” or even a “55 and Better Community” when describing your community to demonstrate your intent to operate as housing for older persons.

Coach’s Tip: Chasick warns against using the phrase “active adult” in your advertising and marketing materials. Every senior should be welcome, whether they’re active or not, he says.

Rule #3: Don’t Discriminate Based on Race or Other Protected Characteristics

The FHA’s senior housing exemption is limited: It offers protection from federal fair housing claims based upon familial status as long as your community meets the FHA’s requirements to qualify as housing for older persons. It doesn’t exempt senior housing communities from any claims based on race, color, national origin, religion, sex, or disability, or other characteristic protected under state or local law.

That means that senior communities must take steps not only to qualify under the senior housing exemption, but also to ensure they don’t exclude or otherwise discriminate against applicants or residents based on race or other protected characteristic. For example, senior communities must adopt nondiscriminatory policies and procedures governing the application process and treatment of residents in addition to complying with the age-verification and other requirements to qualify for the senior housing exemption. And train your staff to apply those policies consistently to all applicants and residents, regardless of race, color, national origin, religion, sex, or disability, or other characteristic protected under state or local law.

Rule #4: Enforce Rules to Prevent Harassment by or Against Residents

Take steps to enforce rules to prevent harassment or other misconduct by or against residents. If a resident complains about being harassed by other residents based on her race, sex, or any other protected class, then you should take the complaints seriously.

You shouldn’t be expected to police the behavior of your residents, but you should make it clear that bullying or any other forms of harassment based on protected characteristics won’t be tolerated. Depending on the circumstances, you could face liability under fair housing law if you knew that a resident was subjected to severe and persistent abuse from other residents, but you did nothing to stop it.

Example: In August 2018, a federal court reinstated a fair housing case against an Illinois retirement community for harassment and retaliation. The complaint alleged that the resident endured months of physical and verbal abuse by other residents because of her sexual orientation, and that despite her complaints, the community did nothing to stop it and in fact, retaliated against her because of her complaints.

Fair housing law prohibits discriminatory harassment that creates a hostile housing environment. To prove the claim, the resident had to prove that: (1) she endured unwelcome harassment based on a protected characteristic; (2) the harassment was severe or pervasive enough to interfere with her tenancy; and (3) there was reason to hold the community responsible.

The resident’s complaint satisfied the first and second requirements. She alleged that she was subjected to unwelcome harassment based on her sex, and the community agreed that the court’s earlier ruling—that employment discrimination based on sexual orientation qualifies as discrimination based on sex—applied equally to housing discrimination claims. And the alleged harassment could be viewed as both severe and pervasive—for 15 months, she was bombarded with threats, slurs, derisive comments about her families, physical violence, and spit.

The complaint also satisfied the third requirement. When the case goes back for further proceedings, the focus will be on the management defendants to determine whether they had actual knowledge of the severe harassment that the resident was enduring and whether they were deliberately indifferent to it. If so, then they subjected the resident to conduct that the FHA forbids [Wetzel v. Glen St. Andrew Living Community, August 2018].

Editor’s Note: The appeals court’s ruling—that discrimination based on sexual orientation qualifies as sex discrimination—applies to all the states within the court’s jurisdiction, including Illinois, Indiana, and Wisconsin. But more recently, a court in Missouri came to the opposite conclusion—that discrimination claims based on sexual harassment don’t qualify as sex discrimination—and dismissed a complaint filed by a married lesbian couple who alleged that a senior living community turned them away because of their sexual orientation [Walsh v. Friendship Village of South County, January 2019].

Rule #5: Watch for Potential Disability Discrimination Claims

Senior housing communities must pay particular attention to fair housing protections for individuals with disabilities. The FHA prohibits communities from excluding individuals with disabilities or discriminating against them in the terms, conditions, and privileges of the tenancy.

Example: In December 2018, the owners and operators of a California senior housing complex agreed to pay $2,500 to resolve claims that they violated state fair housing laws by denying housing to a prospective resident because she has a disability.

In her complaint, the prospect alleged that the property manager initially approved her tenancy application but rescinded the approval after meeting her and seeing that she uses a wheelchair. The prospect’s daughter had handled most aspects of the application process, including viewing the unit. When the prospect arrived in a wheelchair to sign the lease, the property manager allegedly refused to rent her the unit and accused her and her daughter of misrepresenting the prospect’s identity by bringing other individuals to view the unit.

“The Fair Employment and Housing Act promises that all tenants, regardless of disability, have equal access to housing,” Kevin Kish, Director of the California Department of Fair Employment and Housing, in a statement. “Housing providers have a legal obligation to eliminate unlawful bias from every stage of the housing application process.”

Fair housing law bans discrimination against applicants and residents because they—or someone they’re associated with—is a member of a protected class. HUD says that the FHA’s disability provisions were intended to prohibit not only discrimination against the named tenant, “but also to prohibit denial or housing opportunities to applicants because they have children, parents, friends, spouses, roommates, patients, subtenants or other associates with disabilities.”

Example: In December 2018, HUD announced that a New Jersey condo association representing residents of a 55-and-older condominium development has settled a complaint alleging that it refused to sell a condo to a man with disabilities and his wife because the couple planned to have their adult disabled daughter live with them. The settlement requires the association to pay a $9,000 civil penalty to the United States, undergo fair housing training, and make changes to the associations’ bylaws as they relate to reasonable accommodations. The wife, now a widow, is pursuing claims against the association in state court. The association denies that it discriminated against the family.

“No family whose members have disabilities should be denied the reasonable accommodations 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. “Hopefully, today’s ruling will remind homeowner associations of their obligations under the Fair Housing Act and encourage them to follow the law” [Secretary, HUD v. Tamaron Association, December 2018].

Senior communities must be prepared to comply with the full array of disability protections. For example, the FHA requires communities to make reasonable accommodations to rules, policies, practices, or services to enable an individual with a disability to fully enjoy use of the property. The law also requires owners to permit residents with a disability, at their expense, to make reasonable modifications to the housing if necessary to afford them full enjoyment of the premises.

Example: In December 2017, the owner and property manager of a California community agreed to pay $11,000 to resolve a HUD complaint alleging disability discrimination against a resident with a mobility impairment. According to her complaint, the resident requested to have a live-in aide and a key to a locked gate near her unit to make it easier for her to come and go. In both instances, she said that the owner and property manager asked her intrusive questions about her disability, challenged whether she really had a disability, asserted that the development was for individuals who could live independently, and ultimately denied her requests.

“Residents with disabilities have the right to reasonable accommodations that allow them to use and enjoy their home, without unnecessary and invasive questioning,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement. “HUD will continue to work with housing providers to ensure they meet their obligation to comply with national fair housing laws.”

Example: In December 2018, the Fair Housing Justice Center (FHJC) announced that a settlement has been reached with the remaining defendants in two federal lawsuits against the operators of dozens of nursing homes and assisted living facilities for allegedly refusing to make American Sign Language (ASL) interpreter services available to deaf and hard-of-hearing residents. Though denying the allegations, the defendants in the latest settlement agreed to pay $245,675 in damages and attorney’s fees to resolve the case.

The FHJC says that the settlements in these cases ensures that deaf and hard-of-hearing people will have access to ASL services and other auxiliary aids and services as a reasonable accommodation in 61 nursing homes and 35 assisted living facilities in the New York City region. The settlement agreements reached with the defendants in these two cases also yielded a total monetary recovery of nearly $1.2 million in damages and attorney’s fees.

Rule #6: Review ‘Independent Living’ Requirements

Depending on the circumstances, you could face a fair housing complaint for imposing independent living requirements on applicants or residents. Courts have found that a policy requiring applicants to demonstrate an ability to live independently violates fair housing laws protecting individuals with disabilities [Cason v. Rochester Housing Authority, August 1990].

Example: In September 2017, the owner and managers of a 41-unit community in California agreed to pay $18,500 to resolve allegations of discrimination against elderly residents with disabilities who relied on support from caregivers. A fair housing organization filed the complaint on behalf of an elderly resident facing eviction after returning from the hospital with support from a part-time caregiver. Allegedly, the owner and property manager said that they didn’t want the “liability” of her remaining in her home, threatened to call the county to have her “removed,” ordered her to move out, and asked invasive questions about the extent of her disabilities. According to the organization’s complaint, its investigation corroborated the resident’s allegations and revealed that testers calling for disabled relatives were told that the complex was for “independent living” and people who “can take care of themselves.”

Example: In Michigan, fair housing advocates recently sued an affordable senior housing apartment complex, alleging that the community applies “independent living” requirements to force residents with disabilities to move, even if those residents are meeting all the requirements of the lease. The complaint asks the court to recognize the community’s practices as discriminatory and prevent the complex from forcing tenants with disabilities to leave their homes when they remain capable of meeting all of their lease obligations.

“Civil rights laws ensure that people with disabilities can decide for themselves where and how to live in the community of their choosing,” says Susan Silverstein, Senior Attorney at AARP Foundation. “The law doesn’t allow landlords to refuse to accommodate tenants with disabilities,” adds a lawyer for the Michigan Clinical Law Program, “and it certainly doesn’t allow landlords to refuse to let tenants age in place just because they might need some outside help.”

Example: And in New York, fair housing advocates and two individuals sued the state and four adult care facilities, alleging that they maintained and enforced blanket policies barring wheelchair users, regardless of their individual needs or abilities, and steered applicants who use wheelchairs to nursing homes.

One of the individual plaintiffs, an elderly woman with disabilities, alleged that she was barred from returning to one of the communities once she began using a wheelchair. According to the woman, the community tried to evict her because of an internal policy barring admission of people who use wheelchairs and state health department regulations that supported such policies at these and other facilities.

The lawsuit also alleges that New York State promotes disability discrimination through its regulations and policies, including its policy permitting adult homes to ban wheelchair users from admission. Until recently, state health department regulations stated that adult homes and assisted living programs should not admit or retain people who are “chronically chairfast.”

The state has since amended the regulations to eliminate the phrase “chronically chairfast” and to add language that operators may not exclude individuals solely because they primarily use a wheelchair for mobility and must make reasonable accommodations as necessary to comply with the law. Last fall, the court issued an order directing the community to allow the elderly woman to return to her home. The case is still pending in federal court.

Rule #7: Comply with Applicable State and Local Laws

It’s critical to review applicable state and local fair housing laws because the laws affecting senior housing may vary substantially, depending on your location. For example, HUD points out that federal fair housing law doesn’t cover age discrimination, which is a protected characteristic under some state and local fair housing laws.

Moreover, HUD notes that some state and local governments with fair housing laws that have been determined to be substantially similar to the federal law may not include an exemption from the familial status discrimination for housing for older persons.

Alternatively, some state or local laws impose different standards for the senior housing exemption. In California, for example, the legislature adopted more stringent requirements on senior housing than is required under the FHA “in recognition of the acute shortage of housing for families with children” in that state. The law imposes specific requirements related to accessibility, common areas, and refuse collection.

Still other state and local laws apply an older version of the federal exemption. Under the original 1988 legislation, 55-and-older communities had to have “significant facilities and services specifically designed to meet the physical or social needs of older persons” to qualify for the exemption.

Though Congress eliminated the “significant services and facilities” requirement from federal fair housing law, some states didn’t follow suit. In Georgia, for example, communities are still required to furnish “significant facilities and services specifically designed to meet the physical or social needs of older persons” to qualify for the senior housing exemption.

Coach’s Tip: HUD urges communities to check all relevant state, local, and federal laws, as well as any requirements imposed as a term of governmental financial assistance before implementing policies and procedures that limit residents’ eligibility. Because of the complexity of the issues involved, you should get legal advice from an attorney well versed in the legal requirements for senior housing issues in your jurisdiction. 

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

Coach Source

Douglas D. Chasick, CPM, CAPS, CAS, ADV. RAM, CLP, SLE, CDEI: The Fair Housing Institute, Inc.; Norcross, GA;

So before I give you another accounting rule we are enforcing, let me say the goal is to protect your investment! We live in a very litigious society and need to be aware of potential risks and ways to protect our assets. Commonwealth employees are insured through workers' compensation policies and also provided regular training regarding workplace safety. Another area we are striving to improve risk management and compliance is in the area of hiring contractors. When a contractor is hired, the onsite manager must obtain verification that the contractor is licensed, bonded, and insured. In addition, a Form W-9 must be provided for purposes of reporting non-employee compensation on a Form 1099-Misc at the end of the year.

The downturn in the economy resulted in many contractors allowing their insurance and licensing to lapse. We are currently working on two projects to confirm all contractors are still in compliance. The first will be a "preferred vendor" list by location. Commonwealth is compiling lists by geographic areas of approved vendors so in an emergency situation your onsite manager or regional manager knows what vendors have up-to-date information on file. Secondly, we will be combining this vendor list with our accounting program to alert us when we need to update the insurance information. The reason to remind our customers of this policy is that some may have "tried and true" contractors that would not be eligible to work at the communities unless they can provide the necessary information requested OR become an employee to complete the task you wish to hire them for. I mention the latter as it is a legal remedy to tackling some of the small jobs that may be better served by hiring specialized temporary employees through agencies. Another option is hiring an individual on a task by task basis for their special skill. Commonwealth wants to be sure we are doing our best to protect your investment by limiting your risk exposure, both legal and financial, associated with contractors working at your communities.

Another reminder is that we do send 1099-Misc forms to all contractors annually. The form 1099-Misc reports all non-employee compensation. Amounts paid for employee compensation are reported on a Form W-2. Employees cannot receive a 1099-Misc and Form W-2 from the same employer for similar work. In order to keep away from any proof of control issues, our company policy is to send a W-2 to all employees and make sure all compensation for that individual runs through payroll. All independent contractor payments are reported on a 1099-Misc.

Article provided by Kathleen Landau, Accounting Manager for Commonwealth Real Estate Services since 2009. Kathleen brings over 20 years of accounting experience and knowledge to the Commonwealth team, and as a multi-site property owner herself, understands the unique needs facing property investors and small business owners.

 Two states away, Kimberly, a park owner, and her park manager were driving through her park, Maple Creek, and pulled over to stop and pick up a coke can. It was unusual to have to stop and do this. But that was due to the consistent actions of residents being held accountable for keeping their homesites and home exteriors clean and in good repair. It had taken over two years to get the 400 residents onboard, but now the community swelled with pride of ownership.

            What do Eleanor’s Whispering Maples and Kimberly’s Maple Creek communities have in common? Maples! No, that’s not it. One key common thread is good resident relations. Another common trait is the owners’ and managers’ mission of having the cleanest communities and best residents in the market. What does this have to do with profitability? The answer is pretty much everything. 

            How did the owners and managers get to a high level of compliance in rent collections and home appearance? Eleanor and Kimberly understood that to attract and retain the best residents, they needed to start with their websites. For prospective residents, the pictures, testimonials, and ease of finding information made these parks stack up well against other housing options. Prospective residents want to feel good about telling friends, family and co-workers, about where they will be living. Existing tenants liked the resident section of the website where they could find answers to their questions, copies of the leases and rules, and even a payment portal. They also like the compliments about their community they received from family and friends looking at pictures from the website. 

            The secret of the website was the number of prospects that came from and were directed from ads on Facebook and other social media, as well as, print media that directed prospects to the website for more information and online applications. These ads increased traffic to the website which increased the number of applicants. This increased applicant pool allowed the managers to pick the best possible tenants from the ever-increasing pool of prospects, thus making the best rental decisions possible. You can guess (and accurately, too) that making the best possible rental decisions helped fill vacant sites and vacant homes quickly, and with quality tenants. It was a win/win. 

            The mindset of these owners is that of abundance; there are plenty of credit worthy, conscientious, pride-of-home-appearance-having prospects (whether it’s a home buyer or renter). It is essential, though, to increase the applicant pool. How did they do this? One tactic was lots of quality community pictures of the homes (ones actually in the park, not just stock images), the signage, landscaping, and even the residents. They realized most people are visual. More pictures, not less, especially of the homes, is key.

            A tactic of Julio Jaramillo, founder and CEO of Evergreen Communities with 4,000 sites in 8 states, is for every community manager to talk to three park residents every day. Because Julio’s managers are compensated for home sales and home rentals, this practice makes the residents feel acknowledged and listened to. As a result, Julio’s managers sell and lease more homes. The managers are also very aware of any issues in the community and can get ahead of issues before something even becomes a problem – such as moving tenants.

            Successful community owners and managers find it helpful to have a vision. Helen Keller was asked, “Can you think of anything worse than being blind?” “Yes” she said, “Being able to see but having no vision.”

 Getting Real:

            There probably are some community owners and managers that are just naturally happy people. They wake up in the morning and can’t wait to get to the community. Statistically, this number might be as high as 20%. Like Warren Buffet, they tap dance into work each day.  For most people, it takes some concentration, mental gymnastics, and a pot of coffee, to keep their eyes on the prize. 

Building a Resident Relations Vision:

1. Owners and managers need to have an ‘abundance’ mindset. Today, because apartment rents and house prices have appreciated so much, many prospective community residents and current residents don’t qualify to buy a site-built house or rent a newly built apartment. The MH Community business has plenty of people that want what your park has to offer.

2. Current residents that consistently pay late, or have to be filed on, may have to find other housing. In our communities, we offer a free listing service. It’s available to all but it is meant to help the residents, who won’t comply with timely rent or home & lot rules, relocate as painlessly as possible. Al, an owner of 2,000 sites, offers a cash for keys program for residents that won’t comply. The last thing anyone wants or needs is an eviction on their record.

Arty is a park manager at Green Meadows, a medium sized park. He felt exhausted and annoyed with the park residents and their homes. “And it’s only 11 am on Monday” he laments. A whole week lay in front of Arty, of grinding it out – collecting rents, confronting non-payers, “Noticing” ungovernable residents, mowing and trimming their homes, since “they wouldn’t just do it”. Arty wondered if he should quit and look for another job, maybe a greeter at Wally World.

The Benefits of Resident Relations:

• Resident Relations keeps managers and owners energized, focused on achieving initiatives. Whether it’s 100% rent collections, pet policy enforcement, home compliance, 100% occupancy or park expansion, they (to quote Walt Disney) “Keep moving forward.”
• Resident Relations involves proper marketing, tenant selection, and ongoing manager training. Resident Relations should never be at the bottom of the to-do list; it NEEDS to be a daily habit of every manager and owner.
• Resident Relations is a measurable quality. It is quantifiable in terms of:
  • • Profitability
    • Return of Investment (ROI)
    • Home Compliance Rate
    • Increased Applicant Pool
    • Increased Rental Rates and Home Sale Prices

You can see it. There even is a waiting list of prospective residents. There are no rundown POH’s nor abandoned homes that need to be removed. Let’s stop calling these ‘handyman specials” and allowing them to sit there month after month. We all know that the odds are slim that an actual handyman is coming along to buy, fix up and move into one of these homes.

• Mission-oriented managers and owners are players, not victims. Properly trained owners and managers understand the vital role housing plays in the lives of their residents. They care about being accountable to the mission and initiatives of their parks. They are players, strategizing for the best outcomes for maximizing the bottom line. “Victim” owners and managers can’t grasp why the residents don’t pay on time, and why their yards are not mowed. They blame the tenants, the city, the economy… As time goes on there are more homes out of compliance and more late payers. 
• Let’s play a game… (this is a spin on the Florida man birthday Google search game) You type in affordable housing, your birthday (affordable housing, January 15^th) in Google then click the news tab. How many articles did you get? Most towns and cities have weekly newspapers articles and TV news reports on the lack of affordable housing. It’s a key topic of discussion for local, state, and national elections. Mobile home parks can be an important part of the solution for affordable housing, but not if the political candidate or their staff drive through a park and see unsightly abandoned homes, tires stacked in yards, or weeds three feet high. Resident Relations are the face of mobile home parks.

Three Things Owners and Managers Can Start Doing to Have the Fastest Resident Relations Outcomes:

1. Review your mission, initiatives, and goals for the year. It is not too late to get going on the things that have fallen through the cracks. Your mission, initiatives and goals need to be in writing, and you need to look at them every morning.

2. Contact three residents every day. This means if you have a 200-site park, you have called each resident at least once in the past three months. (21 workdays per month, times 3= 189)

3. Every resident, prospective resident, local official, political candidate, journalist ought to be able to look at your website (your virtual front door) or drive the community and have a favorable impression. If the homes in your community are in compliance, what might the prospective tenants think when they drive through? Guaranteed, they just drove through a competing park, where the rules have not been enforced.

The good news is that mobile home parks are filling up. This is the time to be selective in renting and selling homes. Check out the tenants’ budget. Can they afford to live in your community? Ideally 30% or so of their gross income is their budgeted housing cost. If the homes in your community are out of that price range, don’t rent to them. Being selective with your prospects and keeping your homes in compliance is good for your park’s image and for your stress level!

Joanne Stevens is a national Mobile Home Park broker.  Sign up for her free industry E-newsletter at www.joannemstevens.com  To request a mailed copy of her newsletter, contact Joanne at: joannestevens@iowarealty.com M: 319-310-0641 / O: 319-378-6786