Legal Update: What's Happening in the Courts

In this special issue of Fair Housing Coach, we'll update you on recent developments in fair housing law in Washington, state legislatures, and the courts.

In this special issue of Fair Housing Coach, we'll update you on recent developments in fair housing law in Washington, state legislatures, and the courts.

Housing discrimination remained at a near historic level in 2009, according to the National Fair Housing Alliance (NFHA), which reports on fair housing trends each year. The 2010 trends report, “A Step in the Right Direction,” analyzes national data on housing discrimination, including the total fair housing complaints and cases reported by private and government fair housing organizations between 1999 and 2009.

The 2009 data show a total of 30,213 cases, down slightly from the all-time high of 30,758 filed the previous year, according to NFHA. People with disabilities continue to report the most discrimination claims, with race discrimination a close second. Rental cases still represent the largest number of complaints—23,744 were filed with public and private fair housing groups last year, according to the NFHA. Private groups reported 15,624 complaints—close to last year's record of 16,041—which was more than 20 percent higher than the previous year.

One explanation for the increased number of complaints in the rental housing market was the current foreclosure crisis, according to the report. NFHA says that many families lost their homes and went on to face discrimination in the rental market because of their race, national origin, or because they had children or a family member with a disability. NFHA says that up to 12 million foreclosures are still expected in the next five years.

“For the second year in a row, the American public reported over 30,000 incidents of housing discrimination,” NFHA President and CEO Shanna L. Smith said in a statement. “Although this is over a 10 percent increase in the number of annual reported violations in recent years, it is barely a drop in the bucket compared to the millions of incidents of housing discrimination that we know occur each year. Now, more than ever, as we brace ourselves for impending foreclosures and work to rebuild our communities, we must be vigilant in our fight against fair housing violations.”

The NFHA applauded HUD and the Justice Department for stepping up efforts to enforce fair housing law. The report details efforts by HUD to directly confront housing discrimination by withholding funds from municipalities that allegedly discriminate against people protected by the federal Fair Housing Act (FHA). Meanwhile, the NFHA said that the Justice Department filed its highest number of Fair Housing Act lawsuits since 2002 and established a dedicated fair lending unit to investigate lending discrimination.

Nevertheless, NFHA said that long-recognized deficiencies in fair housing enforcement remain unaddressed. A backlog of fair housing complaints continues to exist, while private nonprofit fair housing organizations—which processed nearly twice as many complaints as all government agencies tasked with enforcing the FHA—struggle to stay afloat due to inadequate federal funding, according to NFHA.

“Today, countless people are illegally denied homes or given unacceptable terms or conditions in housing,” said Smith. “In order for the goals of the Fair Housing Act to be met, we must see a serious commitment from Congress and the Administration to enforce the act in a systemic way, rather than allowing individual case files to gather dust. Existing laws must be enforced, and they must be strengthened to include sexual orientation, gender identity, and source of income.”

Legislative update: Since the NFHA's report was released, the House Subcommittee on Housing and Community Opportunity approved legislation to enhance efforts to combat housing discrimination. The bill, the Housing Fairness Act of 2009 (H.R. 476), was forwarded to the Committee on Financial Services with a favorable recommendation. Upon a favorable vote by the full committee, it will go on for a vote by the House of Representatives.

If enacted, the legislation would reauthorize the Fair Housing Initiatives Program (FHIP) for five years, authorize $15 million annually for HUD to administer a nationwide testing program to measure housing discrimination, and require HUD to implement a competitive matching grant program for nonprofits to study the causes and effects of housing discrimination. With bipartisan support, the testing program would include veterans and military personnel who have been targeted for housing discrimination.

“This legislation will help prevent millions of fair housing violations from taking place in America's neediest communities,” Congresswoman Maxine Waters, the subcommittee chair and among the bill's 64 cosponsors, said in a statement. “FHIP was established to provide grants to fair housing centers to enforce fair housing laws and educate consumers, but the program has never been fully funded, and as a result many fair housing violations are occurring each year.”

Earlier this year, the subcommittee conducted hearings at which witnesses testified about discrimination faced by minorities, individuals with disabilities, families with children, and others when searching for housing, and called for more testing to better prevent housing discrimination. Government agencies responsible for overseeing and enforcing housing policies actually process only a fraction of discrimination complaints, according to Waters.

“It is clear that federal agencies have either been unable or unwilling to effectively identify and address the issue of housing discrimination,” Waters said. “We know that racial steering occurs frequently and continues to adversely affect minorities. Too little is being done to ensure fair and equal access to housing among minority populations, but passing H.R. 476 will make a difference.”


The current foreclosure crisis—combined with discriminatory Internet advertising—may be contributing to the rise in discrimination complaints in the rental market, according to NFHA's report. When families are forced from their homes into the rental housing market, many do not know that refusal to rent to families with children is illegal under federal law because of the prevalence of discriminatory Internet ads, such as “No Kids,” or “One child OK.” “When you repeatedly see advertisements saying ‘No Kids,’ you begin to think it must be legal,” NFHA said.

The report lauded recent efforts by state authorities in Massachusetts and Indiana to crack down on unlawful advertising on the Internet. It was a good start, NFHA said, but more needs to be done to stop the proliferation of discriminatory ads on the Internet. Under current law, individuals and private fair housing agencies must go after each discriminatory ad. But NFHA said that it would be much more effective to stop the ads at the source by changing federal law to hold Internet service providers, like Craigslist, liable for preventing discriminatory ads from reaching the public.

Enforcement update: As part of its ongoing investigation into reports of discriminatory Internet advertising, Massachusetts Attorney General Martha Coakley recently sued a property management company for allegedly posting discriminatory rental advertisements on Craigslist. According to the complaint filed in June 2010, four ads, all for the same unit, discriminated against families with young children and against recipients of public assistance by stating, “The apartment may have lead paint so if you have young children under 6 years old or are on Section 8 this will not work for you.”

“Hiding under the anonymity of the Internet is no longer an option for landlords, property managers, or real estate brokers that are trying to thwart housing discrimination laws in Massachusetts,” said Coakley, who promised to continue to monitor Craigslist and to take action against landlords and real estate professionals who violate the law.


NFHA recommended strengthening the federal Fair Housing Act by adding federal protections against discrimination based on sexual orientation and gender identity. NFHA urged support of legislation currently before Congress to extend the FHA to prohibit discrimination based on sexual orientation and gender identification.

In recent months, HUD has taken steps of its own to address housing discrimination based on sexual orientation and gender identity. Earlier this year, HUD announced plans for its first-ever national study of discrimination against members of the lesbian, gay, bisexual, and transgender (LGBT) community in the rental and sale of housing.

In June, HUD announced that, for the first time in its history, it will require grant applicants seeking HUD funding to comply with state and local antidiscrimination laws that protect LGBT individuals. The requirement applies to all of HUD's competitively awarded grant programs for fiscal year 2010.

Traditionally, HUD required all applicants for competitive grant funding to comply with all applicable federal fair housing and civil rights requirements. Now HUD also will require applicants and their subrecipients to comply with state or local laws proscribing housing discrimination based on sexual orientation or gender identity. HUD estimates that 20 states and the District of Columbia have laws banning discrimination based on sexual orientation; in addition, 12 states and the District of Columbia prohibit discrimination based on gender identity.

“We're using every avenue to shut the door against discrimination,” HUD Secretary Shaun Donovan said in a statement. “Today, we take an important step to insist that those who seek federal funding must demonstrate that they are meeting local and state civil rights laws that prohibit discrimination based on sexual orientation or gender identity.”

HUD also announced enhanced customer services for members of the public who bring fair housing complaints to the department's attention on the basis of LGBT status. Specifically, in places where state or local laws already prohibit LGBT-related housing discrimination, HUD has directed its intake staff to ensure these complaints are directed to the appropriate state and local antidiscrimination offices.

In addition, HUD has beefed up training so its intake staff can identify when a complaint based on LGBT status falls under the Fair Housing Act. For example, HUD says that if a man alleges that he is being evicted because he is gay and his landlord believes he will infect other tenants with HIV, then the claim may involve discrimination based on disability because the man is regarded as having a disability, HIV/AIDS. Similarly, according to HUD, if a female prospective tenant is alleging discrimination by a landlord because she wears masculine clothes and engages in other physical expressions that are stereotypically male, then the allegation involves discrimination based on sex.


The NFHA report also pressed for amending the FHA to add protections based on source of income. Absent applicable state or local laws, the NFHA pointed out that housing providers may lawfully refuse to accept applicants who intend to pay rent with federal or state rental subsidies, Social Security benefits, or child support. In some cases, according to NFHA, such a decision may act as a proxy for illegal discrimination against African Americans, Latinos, families with children, or individuals with disabilities, who may rely on those funds to afford available housing.

In the meantime, HUD announced that it will for the first time require applicants seeking grant funding to comply with state and local laws that prohibit housing discrimination based on a person's source of income. Beginning in fiscal year 2010, HUD said that grant applicants must comply with all state and local antidiscrimination laws based on “lawful source of income,” including Section 8 Rental Assistance, Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), or earnings from seasonal employment.

“A family's source of income should never be used as a basis to discriminate against them,” HUD Secretary Shaun Donovan said in a statement. “We are sending a very clear message to those who seek federal funds that we intend to stand up for the cause of civil rights and expect them to do the same.”

John Trasviña, HUD assistant secretary for Fair Housing and Equal Opportunity (FHEO), added, “Prohibiting this form of discrimination provides an essential protection for many Americans, including disabled veterans, seasonal workers, and persons that are using housing choice vouchers to maintain housing for themselves and their children. Racial discrimination is often perpetrated through denials of housing opportunities to Section 8 voucher holders. It is wrong, and HUD will now keep systemic violators from applying for HUD funds.”

State and local developments: Though many state and local laws ban housing discrimination based on lawful source of income—such as earnings, child support, and public assistance payments—courts have come to differing conclusions on whether they also apply to federal Section 8 housing vouchers or other housing assistance.

The federal Section 8 program provides eligible low-income tenants a subsidy for a portion of the rent in participating private rental housing communities. With funding from the federal government, the local housing authority issues a voucher to the tenant, who pays a percentage of the monthly rent; the housing authority pays the balance directly to the landlord.

Federal law provides that participation by housing communities in the Section 8 voucher program is voluntary, so many communities do not participate, citing the burden of complying with the administrative and regulatory requirements associated with the program.

In some areas of the country, however, communities have been on the losing end of litigation under state or local antidiscrimination laws based on source of income if they exclude applicants with Section 8 housing vouchers—or decide to withdraw from the program. In Connecticut, for example, the state's highest court ruled that the state ban on discrimination based on “lawful source of income” barred an owner from excluding a prospect with a Section 8 housing voucher [Commission on Human Rights and Opportunities v. Sullivan, January 2008].

In the past few months, however, courts in California and Minnesota have come to the opposite conclusion, ruling that state antidiscrimination laws did not require communities to participate in the Section 8 voucher program.

In April 2010, a California appeals court ruled that the state's ban on discrimination based on source of income did not apply to Section 8 housing vouchers. The case arose when a community refused a request to accept a Section 8 assistance payment on behalf of a longtime resident, who became eligible under the program after her husband's death.

California law defined “source of income” as “lawful, verifiable income paid directly to a tenant or paid to a representative of a tenant.” Since rent subsidies under the Section 8 program were paid directly by the public housing authority to the landlord, the court reasoned that they were not paid to a tenant or a tenant's representative—particularly because the definition also stated that, “for purposes of this section, a landlord is not considered a representative of a tenant.” In 2004, when that language was added, the court said that the legislature knew that there were landlords who refused to participate in the Section 8 program and that it posed an obvious problem for persons depending on Section 8 assistance payments.

Nevertheless, the court ruled that there was nothing in the law itself or its legislative history to suggest that it was the purpose and intent of the legislature to compel landlords to participate in the Section 8 program. In fact, the legislature chose to do the opposite: The only conceivable purpose of stating that a landlord was not a tenant's representative was to ensure that Section 8 assistance payments to a landlord were not considered to be the tenant's income [Sabi v. Sterling, April 2010].

In June 2010, the Minnesota appeals court ruled that a community did not violate state antidiscrimination protections based on “status related to public assistance” when it refused to renew to a resident's lease as part of a phased withdrawal from the Section 8 program.

Between 1999 and 2004, the community qualified for lower property tax assessments due to its participation in the Section 8 program. When the state repealed the favorable tax provisions in 2004, the community decided to withdraw from the program, stating that the tax benefit no longer offset the administrative burdens of the program.

The community stopped accepting new applicants with Section 8 vouchers and implemented a phased plan to not renew the leases of existing residents with Section 8 housing assistance. In 2005 and 2006, the community did not renew leases for one- and two-bedroom units; in 2006 and 2007, leases for three-bedroom townhouses were not renewed. The community said its phased withdrawal from the program was intended to reduce the financial impact on its business plan and to mitigate the impact on the greater number of families who lived in three-bedroom townhouses.

A resident, Edwards, received Section 8 housing assistance to rent a two-bedroom unit. In 2006, he received notice that his lease would not be renewed when it expired. According to Edwards, the community refused his request to renew his Section 8 lease as a reasonable accommodation for his disability. After moving out, he sued the community for violating the Minnesota Human Rights Act's ban on discrimination “because of…status with regard to public assistance.”

The appeals court ruled that the community did not engage in discrimination because of his status with regard to public assistance when it refused to renew his lease. The court said that neither federal nor Minnesota law required property owners in Minnesota to participate in the Section 8 voucher program. Since participation was voluntary, it was not unlawful to either refuse to rent, or refuse to continue renting, to tenant-based Section 8 housing recipients based on a legitimate business decision not to participate in Section 8 housing programs [Edwards v. Hopkins Limited Partnership, June 2010].

Legislative update: Recently, state and local lawmakers in New York have proposed antidiscrimination laws based on source of income that would apply to Section 8 housing subsidies and other forms of rental assistance.

In June, Westchester County tried to joined New York City and Nassau County in approving legislation to ban discrimination based on source of income, including assistance under Section 8 and other programs. Ultimately vetoed by the county executive, the law would have made it unlawful to deny a lease to a person based on Section 8, Social Security, or any form of federal, state, or local public or housing assistance, assistance grant, or loan from a private housing assistance organization. In issuing his veto, the county executive said the law was “hopelessly flawed,” partly because it would discourage landlords from building affordable units in the county.

Meanwhile, measures are underway to extend protections based on source of income statewide. In June, the New York Senate approved a bill (S7613/A10689) to prohibit housing discrimination against people who rely on public rental subsidies. According to its sponsors, State Senator Daniel Squadron and Assembly Member Jonathan Bing, the measure is similar to a local law in New York City, which makes it a discriminatory practice to reject tenants solely because they rely on public assistance programs, such as Social Security Disability Insurance, Supplemental Security Income, and Section 8 and Advantage housing vouchers. The bill passed the Assembly in May, and at press time, was awaiting action by the New York governor.


Finally, the 2010 NFHA report called on HUD to adopt a regulation to formally recognize liability under the FHA for claims involving disparate impact—policies or practices that appear to be neutral at face value, but have the effect of discriminating against a protected class. Although courts have recognized that disparate impact claims may be brought under the FHA, the Supreme Court has never directly addressed the issue. NFHA believes that a formal regulation is needed to clarify that seemingly neutral policies that have a discriminatory effect are unlawful under federal fair housing law.

A recent court ruling illustrates how a community may find itself defending a fair housing claim based on disparate impact when it applies a neutral policy that allegedly has an unfair effect on protected classes.

In June 2010, a New Jersey appeals court breathed new life into a lawsuit filed by an applicant who, due to a number of disabilities, was unable to work and qualified for Social Security benefits. She also qualified for a rental assistance voucher under a state program (known as S-RAP), which was intended to allow disabled residents to obtain market-rate housing.

In 2005, according to the complaint, Bell applied for a one-bedroom unit at a community, even though her benefits and S-RAP rental subsidy were not enough to satisfy the community's policy requiring applicants to have a minimum annual income of $28,000. Allegedly, the community refused her request to waive the income policy as a reasonable accommodation of her disability.

Bell sued the community, alleging multiple violations of federal and state fair housing law. The case was first heard by the federal court, which dismissed her claim that the community violated the FHA by failing to provide a reasonable accommodation for her disability in the form of a waiver to its minimum income requirement [Bell v. Tower Management Service L.P., July 2008].

The case went back to state court for consideration of her remaining claims under New Jersey's antidiscrimination law.

The case was dismissed, but the appeals court reversed, and ordered further proceedings on the state law claims. Among them was a disparate impact claim under the state law's ban on discrimination “because of the source of any lawful income received by the person or the source of any lawful rent payment to be paid for the real property.” Bell's claim was that the facially neutral minimum income policy had an unfair effect—that is, a disparate impact—on persons who paid their rent using government subsidies, and that the policy was not justified by business necessity because it had little or no relationship with an S-RAP voucher holder's ability to afford the rent.

The court said that both federal and state antidiscrimination law recognized claims for disparate impact, which generally involved enforcement of a policy that was neutral on its face but which had the effect of disproportionately excluding a class of persons who are protected under antidiscrimination law. However, the law also recognized a defense of business necessity: Even if the applicant proved disparate impact, the community may defend itself from liability by proving that there is a business necessity for the policy.

In this case, there was enough to justify further proceedings on the disparate impact claim. The court ruled, “The complaint clearly states a cause of action for discrimination based on the adoption of a policy that is allegedly not justified by business necessity but which allegedly has the impact of excluding almost all applicants who intend to pay their rent through an S-RAP subsidy” [Bell v. Tower Management Services, L.P., June 1010].

Fair Housing Act: 42 USC §3601 et seq.