South Florida Attorneys Weigh in on Planned Fair Housing Rule Change
A proposed change in the law's disparate impact rule is stirring debate on its potential impact on housing discrimination claims.
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The Trump administration wants to make it harder for minorities and other protected classes to claim housing discrimination under the Fair Housing Act’s disparate impact rule, prompting mixed reactions in South Florida real estate circles.
A Miami housing attorney said this would gut protections against discrimination and potentially bar claims altogether. But a Coral Gables attorney said this merely balances protection for residents as well as landlords who imposed legitimate, nondiscriminatory policies intended to maintain safe, well-run communities.
The U.S. Department of Housing and Urban Development on Monday published a 35-page plan to change the Fair Housing Act standard. Stakeholders can weight in by Oct. 18 before the change could be implemented.
Currently, a protected class of residents can claim disparate impact from housing policies that weren’t meant to discriminate but ended up having this effect. The classes are based on sex, religion, race, color, national origin, disability and families with children.
For example, a landlord may have a policy barring lease renewals for residents who called police several times during their tenancy in an attempt to keep a community safe and crime free. But the policy could end up discriminating against women who are domestic violence victims and called police for help.
The change would set a higher threshold for disparate impact claims against landlords, insurers and lenders.
“This new rule raises the standard for someone challenging the practices. It creates a new burden for a plaintiff suing an apartment owner. Now, they can’t just say, ‘Hey your practices are resulting in a disparate impact,’ ” said attorney Joe Hernandez, who leads the real estate practice at Weiss Serota Helfman Cole & Bierman in Coral Gables. “ There’s five criteria as I read it that are basically now placed on a plaintiff. Basically, it’s placing additional burdens on the plaintiff to show how the particular practice that the defendant is engaging in creates the disparate impact.”
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Residents who sue would have to show a landlord’s policy is arbitrary, artificial and unnecessary; there’s a “robust causal link” between the policy and the disparate impact; the disparity has an adverse effect and is significant; and there’s a direct link between the disparate impact and the alleged injury, according to the HUD proposal.
Attorney Keenya Robertson, CEO of the nonprofit Housing Opportunities Project for Excellence Inc., said this could essentially bar disparate impact claims.
“That is a large concern,” Robertson said. “This is a key civil rights protection that’s been in place. It’s really undoing a protection that’s been utilized with regards to banks, landlords.”
The impact standard is important in South Florida in light of its affordable housing crisis. There’s pent-up demand for affordable and workforce units, while developers favor high-end condominiums and market-rate apartments.
“In South Florida, because we have a limited supply of affordable housing as related to the need, we definitely need the ability to attack any policy and practice that even further limits the availability of housing,” Robertson said.
Hernandez said this is only an attempt to balance the interests of tenants versus those of landlords, lenders and insurers.
Once a disparate impact claim is filed under current regulations, the burden shifts to landlords who must show they are within their legal rights to adopt a policy that is justified, legitimate and nondiscriminatory.
“That’s tremendously hard to do. That’s like saying, ‘All I gotta do is say you are guilty and all you have to do is prove your innocence,’ which of course is a tougher standard,” Hernandez said.
He said he isn’t making a judgment for or against the policy change but thinks his clients likely are happy with the proposal.
“My developer clients and those who own multifamily projects are probably glad to see how the standard for potentially holding them liable for having discriminatory practices is higher,” Hernandez said. “I believe the lenders or insurance companies out there are probably happy with the new rule.”
The National Association of Realtors and the National Apartment Association support the change. The apartment association said it aligns with HUD’s disparate impact rule adopted in 2013 and a 2015 U.S. Supreme Court decision that clarified the impact standard.
The Realtors association supports the burden shifting.
It ”opposes requirements that real estate professionals conduct unreasonable research into whether policies or practices have a disparate impact or discriminatory effect and support requirements that the entity alleging discrimination has the burden of proof for showing that policy or practice has a discriminatory effect and for showing that there is an alternative means to achieving any stated business purpose without being unduly burdensome,” the association said in a statement.